Legislative Assembly of Ontario

The House resumed at 8 o clock, p.m.

Mr. R. F. Nixon (Leader of the Opposition): Mr. Chairman, before you get on with the sections of the bill, I know you would like to join with me and other members in welcoming members of the Liberal associations of Scarborough North, Yorkview and York West who are in the galleries tonight. You would want to join with me, wouldn’t you?

Mr. Chairman: Oh, yes; I do.

Mr. J. R. Breithaupt (Kitchener): We’re certainly happy to see the strength of the NDP benches this evening, Mr. Chairman. The NDP are here in strength.

Mr. R. F. Ruston (Essex-Kent): Yes, all 19 seats.

LAND SPECULATION TAX ACT (CONTINUED)

On section 1:

Mr. Chairman: When we rose at 6 o’clock we were considering subclause (e). Does the minister have an announcement to make on this?

Hon. A. K. Meen (Minister of Revenue): Mr. Chairman, before dinner I told the member for Huron-Bruce (Mr. Gaunt) I would give some thought to his suggested addition to subclause (e) on page 5 of the bill. I don’t think he introduced it as a formal amendment. For the record, and he will be able to read this in Hansard when he gets a copy of it in due course and perhaps his leader who is in his seat can relay this to him; although I have some sympathy for his suggestion that we extend the definition of farming as set out in the Act, I also have some misgivings about that. I indicated to the hon. member before dinner that the form of definition in the Succession Duty Act, section 17, subsection (a), and that until such time as we have some- thing a little more definitive from the Ministry of Agriculture and Food relating to the report of the farm classification committee which has made some rather extensive recommendations in this area, particularly so, in connection with the definition of what constitutes farming, until we’ve had a chance to assess the impact of that kind of definition on this Act, I would like to leave this definition as it stands.

What it does, if I may just take a minute of time, is to reward the “little fellow” who keeps a farm in production whether he is also, say, the driver of the local school bus or any- thing of that sort from which he may derive a substantial income, or for that matter in addition to owning a farm and operating it, he could be a member of this Legislature and would still then be entitled --

Mr. R. F. Nixon: We’re all little fellows.

Hon. Mr. Meen: I wasn’t intending to suggest a conflict of interest to the hon. member for Brant (Mr. R. F. Nixon) either in that.

The definition of farming, as we presently have it under (e), would permit the 10 per cent per annum rollover as we discussed earlier this afternoon. If we were to extend that definition, we would unfairly prejudice the small operator who then would lose out on that definition. If I can take the members forward briefly to the definition of net maintenance costs on the next page, page 6, they will see --

Mr. J. A. Renwick (Riverdale): No you can’t. We haven’t reached that yet.

Hon. Mr. Meen: -- that in this definition of net maintenance costs, which refers to mortgage interests, property taxes and the like, at the end there’s a specific exclusion. So that in determining the maintenance costs under this section, if you are a farmer who is carrying on farming now on the property and whose chief source of income is from farming and who owns the designated land, then the income the farmer earns from the land is not deductible from that additional 10 per cent that he’s entitled to charge.

I’m pleased the member for Huron-Bruce has returned, because I was just commenting on his suggested amendment to the definition of farming, Mr. Chairman.

What happens in the net result under this is that the farmer, who is carrying on farming and whose chief source of income is from farming and who owns the land, has three things really. He can transfer this property to his son without any attraction of tax and on through the farming family under section 4(h), as it presently stands. He has a 10 per cent cumulative figure on the base price; and he has his net maintenance costs up to 10 per cent per annum unreduced by income. That’s a characteristic unique to the farmer who is carrying on farming and whose chief source of income is derived from it.

Mr. R. F. Nixon: What are maintenance costs? All costs?

Hon. Mr. Meen: Net maintenance costs are under subsection (j), Mr. Chairman. The hon. member might like to take a look at that section when we get there.

Mr. Renwick: No, we cannot look at that cost. We are not there.

Hon. Mr. Meen: I am explaining to the hon. members, over the objections from the member for Riverdale, that it would be quite unwise for us to alter the definition of farming under subclause (e) as it would unnecessarily and unfairly prejudice the small farmer, the very person I think the hon. member for Huron-Bruce may have been trying to help the most.

Mr. M. Gaunt (Huron-Bruce): Mr. Chairman, I think the situation the minister envisages, and I have in mind, is where a man is operating 100 acres of land and driving a school bus in the morning and at night. His operation is not large, so that if he has a bad year it may be that the income from the school bus endeavour would exceed the income from his farm. I think the minister is arguing that if we expanded this definition we would be harming the very person we are trying to help.

Under those conditions, if you broaden it to accord with the definition of the farm classification committee where it defines principal activities for the purposes of farming, and if one were to say which activities are the principal one of those so engaged -- and that was the amendment I suggested to the minister -- I would still argue that the person I just cited would still have as his principal activity the operation of that farm, even though he was driving the school bus.

Hon. Mr. Meen: With respect, I think we would be in some difficulty if, as the hon. member says, he wound up making more money out of his bus driving than he did from the farm. How would one ascertain his chief occupation under these circumstances? It might well be bus driving.

Mr. Renwick: I think that is very unreal; would it really ever be the case?

Hon. Mr. Meen: That is why I was suggesting this section be left as is. It leaves it in the position where he can still qualify --

Mr. R. F. Nixon: But it is a very bad situation.

Hon. Mr. Meen: -- for the 10 per cent cumulative figure even though --

Mr. Renwick: It is a very poor section.

Hon. Mr. Meen: -- he does not qualify under the other area for the remaining 10 per cent non-cumulative. I might point out, for the benefit of the full-time farmer on the farm, his capital value for his adjusted cost would double about once every 4% years, and that isn’t bad.

Mr. Breithaupt: Mr. Chairman, there are some problems to consider further when it comes to working on this definition of farming.

As the member for York North (Mr. W. Hodgson) had mentioned earlier, he thought a possible definition of farming would include someone who made up to 75 per cent of his or her income from the operations of a farm. What it seems to me you have done here, Mr. Minister, is to allow a person who is not necessarily a bona fide farmer to, in effect, benefit from the distinctions you are making in this statute. We go back to the original question as to who the people are that you are trying to get involved because of this bill.

We have suggested earlier that you are casting your net very broadly and that it would seem as though the bigger fish are able to get through and the smaller fish are being caught. This is really quite a comment on the kind of net you are using. But here, as we referred to earlier in this afternoon’s debate, there is the opportunity for someone to have on his or her property a number of animals, livestock of one sort or another; the cow and the bull situation, or indeed by your own definition, since it includes the keeping of bees, presumably two bees are sufficient to define what a farm is.

It really seems rather strange to me that the maintenance of a group of bees, if such were the case -- or indeed of some other very minor involvement on a hobby farm situation -- would allow a person who might otherwise be considered a speculator to avoid the operation of this statute. But it would catch the person who is maintaining a farming operation, even though the income from it might be substantially improved upon because of driving a school bus or working in some other kind of industry, or on a part-time or even an almost full-time basis. It is therefore surprising to me that this definition stands over the comments made by the member for Huron-Bruce.

It seemed to us, as we looked at the attempts to improve upon this definition, that the comments made by the member for Huron-Bruce, both, in caucus and here in the House, are worthy of substantial consideration. We are, of course, interested in ensuring that a bona fide farmer is going to be relieved from the burdens of this tax bill.

Indeed, there will likely be amendments brought forward which will attempt to treat equally all the persons involved in the various kinds of land and building ownership. The way of doing that, of course, would be to allow a common period of time for a person, no matter what investment that person had -- be it a farm; a commercial enterprise; an apartment; the widow’s fourplex we have had brought before us on a number of occasions; or whatever -- if they were treated equally because of the passage of time, whether it is a five-year term with a reduction of tax thereafter, I would think the tax being applied would, in effect, deal with people equally and would bring the required result. If the required result is to deal with speculation, of course, someone who is involved in farming is not going to be the person one would wish to get by this kind of a tax.

I put it to you, Mr. Minister, that the definition here will be a loophole available to persons who are not really seriously interested in farming and will allow them to avoid the attraction of the kind of tax which you wish to impose. It may be, of course, that lands will be kept out of the development you are looking for, since your colleagues in the cabinet advise us, both here in the House and in the public press, that this bill will stimulate an increase in housing within Ontario.

I suggest in your example of definition you are casting your net so broadly and painting such a broad picture in the circumstance, that you will catch the people you wish to release and you will not catch those who are able to put a coat of paint on the fences, to put a stallion and a couple of mares out on the pasture or raise a hutch of rabbits or keep a swarm of bees. As a result, they will avoid the imposition of this tax. If that is the way, then for someone who has the wealth or the almost easy approach of avoiding the tax, you are not achieving what you say you are attempting to achieve.

Mr. Chairman, the bill as amended now has a title which deals with the imposition of tax on land in respect to certain speculative transactions. Here you are allowing a loophole to remain which will give a person who really has a very minor interest in any farming profit from a property the right to say that is a farming property.

I may not have seen through the meaning you wish to attend on the word farming -- and you may be prepared to correct me if I am wrong -- in that I see this being a manner of avoiding the taxation you rightfully think should be attracted by a property if that property is, in your view, held for speculative purposes. I’d like to hear from the minister as to why this definition is deemed to be satisfactory in light of the examples of possible avoidance we have already suggested.

Hon. Mr. Meen: Mr. Chairman, I am not convinced that these are areas of avoidance. We have a number of objectives in this bill. I think you can’t lose sight of one of these objectives as being to keep farm lands producing food. If we were to drive out of business the little farmer, the fellow who needs to supplement his farm income by some other source of income, as would be the case, as I suggested earlier, by the proposed amendment by the member for Huron-Bruce, then I think we would be doing all of Ontario a great disservice. No one wants to do that.

The member for Kitchener talked about broadening this section of farming. I suggest to him, that he would be narrowing it; he would be substantially reducing the scope of what constituted a farming operation.

Mr. R. F. Nixon: He has a further amendment to subsection (h).

Hon. Mr. Meen: I am aware that one of the members opposite was proposing an amendment to subsection (h).

Mr. R. F. Nixon: If the minister will permit me, what the member for Kitchener is surely proposing is to draw the net tightly, so that it is not everyone who can go out and buy a plot of land and put a hive of bees on it and call himself a farmer, but that those who are designated farmers are free of the attachment of any tax.

Hon. Mr. Meen: I’d like to think we had some way of doing that without licensing farmers or going to that kind of mechanism, but it makes you wonder if you don’t have to do that.

Mr. R. F. Nixon: How are you going to do that?

Mr. Renwick: You can’t do it.

Hon. Mr. Meen: No, I agree; and you don’t have to. You can’t do that and I don’t want to suggest it either. If we are going to designate a farmer, then we are talking about licensing him and keeping some kind of indication on who qualifies and who doesn’t.

Under 4(h), as I understand it, the member for Brant was proposing to remove the entire reference and just say that after a period of years or whatever the transfer would be free of any kind of tax.

Mr. Renwick: No, that wasn’t his intention.

Hon. Mr. Meen: We are assisting the farmers in three different areas, as I have mentioned, albeit it’s a difference approach from that used with respect to housing investment properties under section 20. The fact remains there is a good deal of assistance being extended to them in these three different quarters, the two as to tax and the third as to the capacity for passage from father to son to grandson and so on without attraction of any tax; in fact with a continual rollup of the accumulation of 10 per cent, the accumulative effect annually of 10 per cent, and the annual maintenance costs as well when the farm is kept in farming by the owner-occupant.

It seems to me we should leave this definition at least to see how it works. I am not happy about narrowing it.

Mr. Renwick: You can’t possibly leave it alone.

Hon. Mr. Meen: The members opposite are talking about casting the net too wide. Actually if I were to narrow that down, I’d be making an even finer mesh than before and I would catch the little farmer where we don’t really want to do so.

Mr. Renwick: You are unreal.

Hon. Mr. Meen: I would like to have the kind of credit available to him that he would rightfully receive, even though he had other income derived from some supplementary sources.

Mr. R. F. Nixon: Mr. Chairman, the point the minister makes so reasonably when he says that he is giving every assistance to the farmer and talks about the special dispensations with regard to inheritance and passing the property on to family, is based on his assumption the farmer to begin with is a speculator. That’s the part we simply can’t accept. If the farm land is owned for six months and is purchased for $800 an acre and then that so-called farmer, who maybe has a couple of goats on the land, goes out and sells it for $5,000 an acre, that’s speculation. Those profits should certainly be taxed at the 50 per cent level, or much higher in my view.

Mr. Renwick: Right.

Mr. R. F. Nixon: But if you are talking about farm land that has been kept in production over a number of years, and we are suggesting in an amendment which we’ll present to you later, Mr. Chairman, that 10 years is probably an appropriate period of time, or 10 years scaled down, following that then they should be free of the encumbrance of the provisions of this bill entirely. I simply want to say this again to the minister. When he talks in those reasonable, generous terms, that his generosity is based on his designation of all farm land owners as being speculators, and that’s the unacceptable part.

It’s true, no matter how we seem to turn in the amendment, there are problems presented. The minister is aware of it, and so are the people who have advised him over so many days from his ministry. Someone has suggested that under one term, where it requires 75 per cent of income being based on farming practice, somebody like, say, the well known Armstrong brothers in Brampton might very well be able to come under that classification when they are selling their $50,000 race horses or what have you.

But the thing is that their property is, of course, extremely valuable and well developed; and we might even be prepared to allow that fish to slip through the net and hook him some other way.

The same is perhaps true of E. P. Taylor; I don’t know, since most of his major holdings are now out of this country. If he has a horse racing establishment here, he might very well slip through the net we are trying to design. But it seems to me that with the capital gains tax and the federal taxes applicable we are not using the ingenuity which is -- well if it isn’t in this House it should be available to the minister. It should be available to us to establish a provision which is going to be fair and equitable and move away from the presumption that the minister has in this bill that all farm land owners are speculators. Which as I say we cannot accept.

Mr. Breithaupt: Mr. Chairman, we have spoken at some length --

Mr. Chairman: You are presenting the same arguments over and over again. Now we will have to --

Mr. R. F. Nixon: We haven’t told you about the Armstrong brothers before.

Mr. Breithaupt: Mr. Chairman, we have spoken at some length on this bill. We’ve debated it for some nine hours and we are gradually making progress. The unfortunate part is, of course, that as we go through this debate we regretfully do not seem to have the attention of many of the members of the Legislature.

Mr. R. F. Nixon: Certainly not of the government.

Mr. Breithaupt: I do not believe, Mr. Chairman, unfortunately, that we have a quorum with us.

An hon. member: Six Conservative members, that’s all.

Mr. H. Worton (Wellington South): Six out of 76.

Mr. R. F. Nixon: There are two NDP members now; that is something. They started with none.

Clerk of the House: Mr. Chairman, there are 19 members present.

Mr. Renwick: How many?

Clerk of the House: Nineteen.

Mr. Renwick: Ring the bells.

Mr. Chairman ordered the bells rung for four minutes.

Clerk of the House: Mr. Chairman, there is a quorum present.

Mr. Renwick: And the Provincial Secretary for Social Development (Mrs. Birch).

Mr. Breithaupt: I was making some references earlier on the matter of farming, and I must report I am advised that it is a swarm of bees and not a group; which I really did know, but coming from a city riding perhaps I could be excused for that small comment.

Mr. Renwick: It’s a pride of lions.

An hon. member: It’s hornets where you come from.

An hon. member: It’s a wonder you didn’t call it a platoon.

Mr. Breithaupt: The minister has made comments with respect to this being an adequate manner of dealing with this by definition. He has suggested we should wait and see what kind of developments will result, because as he commented earlier there will be benefits which will mathematically assist the farmer.

At this point of course Mr. Chairman, all we can presume is that the minister may have reason to find this definition acceptable. We hope, of course, he will be amenable to change or amendment of this definition should that become apparent later on, either in this term, which will take us perhaps until the end of June, or in a fall session if one is called.

It is important that the ministry be amenable to an immediate change in definition to make sure the bona fide farmers of the province benefit by the definition so they are not having a burden imposed upon them because of some oversight on our part.

Hon. Mr. Meen: Mr. Chairman, I completely agree with the member. We have said repeatedly that if we find justification for amendment we will amend the Act.

Mr. Renwick: Come off it. The minister can’t do that.

Hon. Mr. Meen: I have already demonstrated that in the case of the Land Transfer Tax Act.

Mr. Renwick: This has been a tax loophole.

Hon. Mr. Meen: I would suggest that the farm classification committee’s report has quite a number of recommendations and observations in it some of which maybe inter-related. I would observe to the member that one of those is the matter of licensing farmers. I am sure the Minister of Agriculture and Food (Mr. Stewart) and his rural colleagues and my colleagues in this House are mightily concerned about all those recommendations and the extent of inter-relationship. I think it would be presumptuous of me to adopt one definition in isolation from an analysis and assessment of the entire report. That is the reason for leaving this alone as an accepted definition under the Succession Duty Act.

Mr. Renwick: You can’t leave it alone.

Hon. Mr. Meen: -- until such time as we get some good advice from that committee. I would certainly consider any amendment which at that time appeared desirable, either in this session or in the fall.

Mr. Renwick: The minister can’t deal with that.

Mr. Chairman: Shall this section stand as part of the bill?

Mr. Renwick: No.

Mr. Chairman: The member for Riverdale.

Mr. R. F. Nixon: The member for Riverdale is all alone again.

Mr. Ruston: They have all left the member for Riverdale again.

Mr. Renwick: As always in our party, it is the question of quality more than quantity.

Mr. R. F. Nixon: At least the member is going to get a chance to lead.

Mr. Breithaupt: The member for Riverdale could even decide how he wants them to vote.

Mr. Renwick: Yes.

Mr. R. F. Nixon: He can’t force a vote.

Mr. Renwick: The members would be surprised.

Mr. Breithaupt: He may convince us.

Mr. Worton: Stick with it.

Mr. Renwick: It is not a question of sticking with it. The minister may not understand it; my colleagues on the right may not under- stand, but the --

Mr. R. F. Nixon: There are not any there.

Mr. Renwick: -- definition of farming with respect to the speculative land tax reflects itself ultimately down the line in the riding of Riverdale, in Metropolitan Toronto, in the city of Toronto, in the area in which people have to pay exorbitant prices for poor accommodation.

Let’s not kid ourselves about the importance of this definition. I think the Liberal Party feels -- I can see the Minister of Revenue tapping, I had an uncle of mine who used to tap the desk when he was impatient with those who were playing bridge with him.

An hon. member: I had a teacher like that, too.

Mr. R. F. Nixon: What game is he playing?

Mr. Renwick: Now stop tapping the table.

Hon. E. A. Winkler (Chairman, Management Board of Cabinet): The member does it himself.

Mr. Renwick: The Minister of Revenue comes from York East. The minister thinks that something called the definition of farming in the Act to impose a tax on land in respect of certain transactions affecting the control and ownership of land out there somewhere in the country has no relationship to the cost of housing in his riding, or in my riding. His riding is north of my riding. They are, for practical purposes, identical.

So let’s not kid ourselves about it. One of the principal reasons for the exorbitant cost of land, and the interface between rural land and urban land, where the speculative profits are and have been historically made, are the very areas which this bill is designed to attack.

I don’t know whether I have the minister’s attention or not, or whether he’s going through some Freudian defensive mechanism about putting his pen in his pocket and getting out another one. I’d like him to sit back, stop making notes and look up at what we’re talking about. What we’re talking about is not a game that’s being played.

Mr. L. C. Henderson (Lambton): Attention!

Mr. Renwick: There is no question whatsoever that the definition of farming in this Act is defective. It may well be there are definitions of farming for many other purposes, for many other Acts of the Legislature of the Province of Ontario.

It may not be possible --

Interjections by hon. members.

Mr. Renwick: Thank you, thank you: if the minister will put his feet up on the desk --

Hon. Mr. Meen: I never do that.

Mr. Renwick: The minister never does that.

Hon. Mr. Meen: I leave that to the boys over there.

Mr. Renwick: I only do that. Yes, I agree with the minister.

Hon. Mr. Meen: It’s an affront to the chamber.

Mr. Renwick: It’s an affront to the chamber; yes, I understand that. I’d like to affront the minister.

I thank the minister for going so far in accommodating me as to --

Mr. Ruston: The member for Port Arthur (Mr. Foulds) always puts his feet up.

Mr. Renwick: -- as to be engaged in the discussion we’re on. I do not pretend for one single moment to suggest that as a representative for Riverdale I know a great deal about farming. I know something about farming, perhaps a lot more than people in this Legislature think; but that’s irrelevant to the discussion on which we’re engaged.

Mr. R. F. Nixon: Well there is a big man, as I recall.

Mr. Renwick: My friend, the hon. member for Kitchener is equally somewhat removed from farming. Isn’t that correct?

Mr. Breithaupt: Somewhat, Mr. Chairman.

Mr. Renwick: And the leader of his party is somewhat removed from farming.

Mr. R. F. Nixon: My shoes are dirtier than those of the member for Riverdale.

Mr. Renwick: That doesn’t alter the fact that one does not have to be a farmer to understand the speculative nature of the interface between the farming community and the urban community with respect to speculation in land. And I agree entirely with what the leader of the Liberal Party has said tonight. The minister can’t categorize one farmer as a speculator and another farmer as not a speculator. There’s just no way. That’s the way of the Minister of Housing (Mr. Handleman): that some people are bad guys and some people are good guys.

Mr. R. F. Nixon: And only the minister knows.

Mr. Renwick: Yes, and only the minister knows.

Hon. Mr. Meen: The member is talking about bona fide farmers. I wish he would tell me what one is.

Mr. Renwick: Does the minister understand that that kind of a classification, which has resulted in this bill, is the fundamental flaw in the bill? He can’t tell. There is no real person called somebody who speculates in land and somebody who doesn’t speculate in land. I’m delighted that the Liberal Party is attacking the bill on specific clauses. I only regret they didn’t understand the fundamental principle which was involved with respect to the bill in the first instance.

Mr. R. F. Nixon: We believe that speculative profits should be taxed. Doesn’t the member for Riverdale believe in the taxing of speculative profits?

Mr. Renwick: Well our problem is; and our problem is a very real problem: How do you distinguish between the speculative farmer and the non-speculative farmer?

Mr. Chairman: Order please. May I suggest that we are going over and over the same ground, repeating the same words?

Mr. Renwick: Well, Mr. Chairman --

Mr. Chairman: Order, please.

Mr. Renwick: Mr. Chairman, with the greatest respect for you, I certainly do not consider myself repetitive. I have been on my feet for only six minutes.

Mr. Chairman: Order, please. I have heard the same argument for the last several hours. Do we have an amendment to this?

Mr. Renwick: Oh now, Mr. Chairman, I’m not --

Mr. Chairman: Or shall we vote on it.

Mr. Renwick: That has nothing to do with the procedure of the House as I understand it.

Mr. Chairman: Well we are talking very generally here, and there is repetition.

Mr. Renwick: I will have an amendment if that is what you require. But I am certainly going to talk to the objective of this particular section of the bill.

While I am sure you don’t understand, Mr. Chairman, I am sure the minister does understand that the effect of this definition relates to an exemption under the provisions of section 4 of the Act.

Mr. Chairman, I know you would agree with me; I have always been one who has said we should debate sections 2, 3, 4 and subsequent sections of the bill and then come back to the definitions. But we always get hung up on section 1 of the bill, which is the definition part of the bill.

The definition part of this bill contains a definition called “farming” and a definition called “farming corporation.” The only significance of those definitions -- and we could define them from now until kingdom come -- is with respect to the exemptions contained in section 4. I think the minister agrees with me that that is the only significant problem. He has nodded his head, as I can see, up and down.

Mr. Chairman: Order, please. Do you wish to hold this until section 4 as we sort of agreed this afternoon?

Hon. Mr. Meen: Section 4(h).

Mr. Chairman: Is it section 4(h)?

Hon. Mr. Meen: Yes, Mr. Chairman.

Mr. Chairman: It was generally agreed by the House that this definition section (e) and the earlier section (v), as well as section 4(h) possibly should be considered together. Would that be better?

Mr. Renwick: Well, would you bring me up to date? I unfortunately had to be in that Taylor’s division of the administration, that Montesque you made between the courts, the assembly and the administration.

Mr. Chairman: We stood down subsection (v) on page 3, and we were going to stand down subsection (e) on page 5, which is being discussed, until section 4(h). It was agreed to do that this afternoon; we can still do that.

Mr. Breithaupt: Well it was certainly asked this afternoon, Mr. Chairman. I didn’t realize it was agreed that all three items would be discussed when we reached section 4(h), either later this week or next.

Mr. Chairman: I thought it was agreed section 4(h) was the appropriate place.

Mr. Breithaupt: If the minister is content to leave this matter at this time, that is certainly fine.

Hon. Mr. Meen: Well, the point I was making this afternoon was that it gets very complicated, because of all the intervening definitions and sections, to do it this way.

Mr. R. F. Nixon: How much better then the other way?

Hon. Mr. Meen: I don’t think anybody who has looked at this Act can understand it. However, if the Chairman can cope with this, then I am content to have subclause (v), which we were talking about, and subsection (e) held down until we reach section 4(h).

Mr. S. Lewis (Scarborough West): It taxes the chair’s capacities, but he will endeavour to do it.

Mr. Chairman: We’ll manage.

Mr. Renwick: Mr. Chairman, I am in your hands entirely.

Mr. Chairman: Then sit down until we discuss the three sections together.

Mr. Lewis: Do you think you can handle that, Mr. Chairman? It is very complicated.

Mr. Chairman: One, two, three.

Interjection by an hon. member.

Mr. Lewis: As a matter of fact, I think it was a very modest supper.

Mr. Renwick: Mr. Chairman, I take it that what you are asking us to agree to is to stand down subsections (e) and (f).

Hon. Mr. Meen: No, just subsection (e).

Mr. Chairman: Just subsection (e), I believe. Also, back on page 3, subclause (v).

Mr. Breithaupt: Section 1(1)(a)(v).

Mr. Chairman: Yes, sections 1(1)(a)(v) and 1(1)(e) on page 5 until we get to section 4(h).

Mr. Renwick: You are asking me to stand down section 1(1)(a)(v)?

Mr. R. F. Nixon: And section 1(1)(e).

Mr. Renwick: And sections 1(1)(e) and 1(1)(f)?

Mr. R. F. Nixon: No.

Mr. Chairman: I understand there is no desire to stand that one down.

Mr. Renwick: Well does farming corporation come in earlier than that?

Hon. Mr. Meen: Well there was simply no agreement to deal with anything but section l(l)(a)(v) and section l(l)(e) along with section 4(h).

Mr. Chairman: I was making another note, it will not be forgotten.

Mr. Renwick: Well may I ask my friends on my right here whether it doesn’t make sense to deal with the definition of farming corporations at the same time as we deal with --

Mr. Breithaupt: I would think so, Mr. Chairman, if the minister was so minded. This is the only other portion that deals with the matter of farming, and I think we might have some progress if we were able to include that along with these other two matters of (1)(a)(v) and (1)(e) when we get to 4(h).

Hon. Mr. Meen: I really don’t object to that. We are referring in section 4(h) to farming corporation, so I would agree to that.

Mr. Renwick: Mr. Chairman, it is particularly important because of the interest of the government in the 4-H operation, which comes under the Minister of Agriculture and Food.

Mr. Chairman: All right. Then we will go at the top of page 6, subsection (g), (h) or (i); anything on those three?

Mr. Breithaupt: On subsection (g), Mr. Chairman, I am wondering if the minister has given any thought to what might be called marriages of convenience?

It would appear to me that in looking over this definition, a person would be able to pass the title to a property without being subject to this kind of taxation, if through the simple matter of marriage -- if marriage can ever be defined as simple -- there were established a relationship between the vendor and the purchaser.

In this case when we refer to nephews and nieces, or we refer to uncles and aunts, it could well be, knowing the ingenuity of mankind, that substantial amounts of taxation could be avoided through such a relationship being established. I don’t think that’s too farfetched really when one looks not only at the large amounts of money involved, but also at the relative ease by which divorce actions are handled within our courts.

Mr. R. F. Nixon: And the side benefits that accrue.

Mr. Breithaupt: There are indeed the possibilities that certain --

Hon. Mr. Winkler: It is a complex question.

Mr. Breithaupt: Well it is indeed, Mr. Chairman. The suggestion could I think be practically raised that we have in this subsection come, as we had in earlier subsections, once again to a matter of avoidance of this tax. I am wondering if the minister has considered that as a possible means which some may choose to employ in order to avoid the tax?

Hon. Mr. Meen: About my own personal family, Mr. Chairman, I hadn’t really given any consideration to that as yet. My youngsters are rather young.

To be serious though, and I question whether the hon. member really is, I would remind him that the same kind of incentive might apply under the Succession Duty Act and a few others of our statutes. I suppose if somebody is prepared to go to that horrendous extent, he can be my guest.

Mr. Breithaupt: Of course, Mr. Chairman, as they say you know, when you marry for money you earn every cent of it; and in this circumstance that might well be the case.

Mr. Chairman: The member for Riverdale; were you on this point?

Mr. Renwick: If I may. Why not include the definition that the members of the family means the table of the devolution in the case of an intestacy? Why not do that?

Mr. Lewis: Now that is an excellent suggestion.

Mr. Renwick: Do you understand?

Well the member for York East, the Minister of Revenue, obviously knows about the Devolution of Estates Act and the table of intestacy -- if a person dies intestate it sets out who the members of the family are.

Isn’t that a sufficiently broad designation? As a matter of fact I think the chairman of the Law Reform Commission found a missing member of the family recently, and included it in a recommendation which we incorporated in an Act to amend the table which is attached to the Devolution of Estates Act.

What makes the minister think there isn’t some skillful accountant or lawyer who can devise a method by which somebody could become somebody’s grandmother for the purpose of the evasion of this Act. Have you given any thought to it? You obviously haven’t. The minister hasn’t --

Hon. Mr. Meen: I told you I haven’t; it is really a very straightforward procedure.

Mr. R. F. Nixon: But it only applies to farming anyway.

Mr. Renwick: Not really, it applies all across the board.

Hon. Mr. Meen: At least I am being consistent in adopting a provision in the Retail Sales Act for this, Mr. Chairman.

Mr. Chairman: Shall clause (g) stand as part of the bill then?

Mr. Renwick: On clause (h) the minister means the Minister of Revenue. I’d like to propose an amendment that “minister” means the ex-Solicitor General of the Province of Ontario, who happens to be in his seat tonight. Would that be possible? I think that the member for Bellwoods (Mr. Yaremko) would be an ideal person to administer this Act because he has a very intimate knowledge on the question of speculative land transactions.

I see the member for Bellwoods has leaned back in his chair. He hasn’t taken off his glasses, which is usually done by the Minister of Community and Social Services in the Province of Ontario (Mr. Brunelle).

I would suggest that perhaps a minister knowledgeable about these matters should be the minister who deals in them. So far as I know the Minister of Revenue, the member for York East, while he is beginning to learn about them, has had no personal experience in the question of speculative land gains. It would seem to me to be quite appropriate- do you remember, Mr. Chairman, that when Franklin Roosevelt wanted to deal with the Securities and Exchange Commission in the US he appointed Joe Kennedy to take charge of the Securities and Exchange Commission, because Kennedy had made all his money during the 1920’s. He knew all the rules of the game, and Franklin Roosevelt came in --

Mr. R. F. Nixon: He knew how to get around every one of them.

Mr. Renwick: And Franklin Roosevelt came in in 1932 and established the Securities and Exchange Commission and appointed John Kennedy. Wouldn’t it be the part of wisdom on the Tory government to --

Mr. Worton: Joe Kennedy.

Mr. Renwick: Yes, Joe Kennedy. Wouldn’t it be wisdom on the part of the Tory government to suggest that the person responsible for the operation of this should be somebody knowledgeable about what has taken place?

Mr. Worton: They have several.

Mr. Lewis: How do you choose?

Mr. Renwick: It is very difficult to choose, because after all, you have the member for St. Andrew-St. Patrick (Mr. Grossman); you have the member for York Mills (Mr. Bales); you have any number of members; and then there are those members about whom we in the opposition know little --

Mr. Lewis: And don’t wish to know.

Mr. Renwick: -- but who we significantly believe have substantial land holdings in the Province of Ontario, and rather than -- Mr. Chairman, rather than -- what is that threesome operation in Russia that they have --

Mr. Breithaupt: The troika.

Mr. Renwick: The troika -- rather than have a troika, which I think would be inimical to the interests of the people in our province, because we are not used to that term --

Hon. Mr. Winkler: Some people snap their fingers, some throw their glasses away.

Mr. Renwick: I would suggest, and I now move that the word “minister,” which means the Minister of Revenue, be deleted to mean, “The minister means the member for Bell-woods” and I so move.

Mr. Chairman: Order, please. That is a frivolous amendment and will not be accepted.

Mr. Lewis: What is frivolous about it?

Mr. Chairman: It is frivolous. Shall clause (h) stand as part of the bill?

Mr. Renwick: Mr. Chairman --

Mr. Chairman: Carried.

Mr. Renwick: What do you mean carried? I am still on my feet.

An hon. member: Not for long.

Mr. Chairman: Order, please. Clause (h) stands as part of the bill.

Mr. Renwick: You have got to rule, Mr. Chairman.

Mr. Chairman: Order, please.

Mr. Renwick: Mr. Chairman, after all, I am a lawyer and the only way those things can be ruled out is if you call them both frivolous and vexatious. Prepare to rule it frivolous and vexatious --

Mr. Chairman: It is frivolous and vexatious. It is out of order.

Mr. Renwick: But the point is well made.

Mr. Chairman: I declare clause (h) standing as part of the bill in section I.

Mr. Renwick: Do you declare it; and my friend had nothing to say about it?

Mr. Chairman: Any comments, questions or amendments on clause (i)?

Carried.

On clause (j) the hon. minister has an amendment.

Hon. Mr. Meen moves that clause (j) of subsection (1) of section 1 of the bill be amended by inserting after the word “costs” where it occurs the second time in the first line, the words “including interest payments and property taxes.”

Mr. Chairman: Shall this motion carry?

Some hon. members: No!

Mr. Chairman: The member for Huron-Bruce.

Mr. Gaunt: Mr. Chairman, I must say I am somewhat confused with respect to this particular section --

Interjection by an hon. member.

Mr. Gaunt: -- because I had understood from the minister earlier that farmers would have the advantage of the 10 per cent, plus the advantage of this section.

Now I must be missing something, because it says halfway down in the section:

But no deduction shall be made with respect to income earned from farming the designated land by a farmer who is carrying on farming thereon and whose chief source of income is from farming and who owns the designated land.

That tells me that this doesn’t apply to him.

Hon. Mr. Meen: No, Mr. Chairman; that’s a deduction from the 10 per cent maintenance cost.

Mr. Gaunt: A deduction? I am sorry, would the minister come again on that? This is a deduction from the 10 per cent maintenance cost? In other words, you get your 10 per cent maintenance cost and then this is deducted from it?

Hon. Mr. Meen: In the case of farming, the limitation is 10 per cent, but here is the definition:

Maintenance costs means all costs, including interest payments and property taxes, incurred in connection with maintenance of the designated land to which the expression has been applied, other than costs incurred in connection with the disposition of the designated land --

Mr. Renwick: Yes, but it is 10 per cent or the lesser.

Hon. Mr. Meen: And, if the hon member will look at this:

And after deducting any income howsoever earned by the transferor from the designated land, including income from his own use of the designated land or from the granting of any right or interest therein.

So that you have your net maintenance costs always identified; and then you deduct from those, to determine what becomes your net maintenance cost, your income earned from the property -- except that if you are a farmer on the designated land you make no such deduction.

Mr. Renwick: Oh, forget the farmer, we will deal --

Hon. Mr. Meen: And so you got your full maintenance cost of interest payments, property taxes and the like, up to a total of 10 per cent.

Mr. Chairman: Shall this motion carry?

Mr. Gaunt: No, Mr. Chairman. I would like to -- Does the member for Riverdale want to speak on this one?

Mr. Renwick: Well, I am only speaking for the purpose of trying to understand what the minister is now saying about this section of the bill. Because this raises for the first time -- and I am in the minister’s hands, Mr. Chairman, as to the point in time that he wants to discuss the question of whether net maintenance costs are related to the question of the costs incurred for the purpose of renovation. This is a major problem in the bill on the basis of the tax jurisprudence as it presently stands. I don’t believe this bill is adequate to change that tax jurisprudence without very clear and significant indication from the minister on what it’s about. Now that may all sound gobbledygook; but then tax jurisprudence is that way.

The minister tells us he is now defining the term “net maintenance costs,” and he has proposed an amendment to include interest payments and property taxes. Apart from that, the definition of net maintenance costs is identical with the definition as it appeared in the bill originally presented to the Legislature.

As I understand it, the only significance of the term net maintenance costs relates to the previous section of the bill, which has been dealt with. And that is the question of adjusted value. In adjusted value there is a reference to the fact that the fair market value should be so and so and so and so, determining the cost of improvements made by the transferror to the designated land after April 9, 1974. And then in sub (iv) it says:

For each 12-month period that does not commence earlier than the 9th day of April, 1974, during which the transferor owns the designated land prior to his disposition of it, the lesser of either, (A) 10 per cent of the amount determined under either subclauses (i) or (ii) --

That’s the cost of the land for practical purposes depending on whether it was before or after April 9, or -- and I come to this:

-- or the aggregate of 1. the net maintenance costs incurred by the transferor after the 9th day of April with respect to the designated land and the cost incurred ... in connection with the disposing of the designated land ...

That’s a separate question.

What we’re now talking about is something called net maintenance costs, which are going to be added to the question of the acquisition costs for the purpose of determining the adjusted value in order to determine whether or not, for practical purposes, there will be a tax levied.

I’m simply saying to the minister -- I assume up to this point he agrees with me about that question. I would like to have the minister’s explanation of where else in the Act the phrase net maintenance costs comes into operation?

Hon. Mr. Meen: By and large I agree with the member, but I want to draw to his attention, since he was asking the question whether improvements and capital investments for repairs and the like, would be included in net maintenance costs that I say no, they aren’t. We’ve got a special section there under subclause (iii); he may have noticed it under section 1(1)(a)(iii); it deals with the cost of improvements made by the transferor. That’s included in the base. It’s not included in net maintenance costs but it’s certainly included in what the farmer may add in order to determine his adjusted value.

Mr. Renwick: No, we’re not talking about farming here.

Mr. Chairman, on a point of order, I think we agreed a little while ago we would deal with the question of the implications of this tax for the farming community when we came to the question related to the specific exemption under section 4 subsection (h) of the Act. We’ve got to have some clarity about an immensely complicated bill. I do not want to deal with the farming question until we arrive at that point in time.

That’s why, as I understood it, we stood down the question of the definition in clause 1, subsection 1, subclause (v); and section 1, subsection (1), clause (e), the definition of farming; subsection (1), clause (f) the definition of farming corporations.

I’m now talking apart altogether from the immensely important interface between farm land and urban land and speculative land operations. I’m now talking about a very technical question about net maintenance costs. So far as I understand it, Mr. Chairman, the only place net maintenance costs are of significance is with respect to the determination of adjusted value in the definition which was imposed in subsection (1) clause (a) of section 1 of the bill. All I’m trying to do is to delimit the area of debate. That’s my understanding of the only place where net maintenance costs are of any significance. The point I want to make, Mr. Chairman, is that that poses a fundamental problem with respect to those questions about what are involved in the term net maintenance costs as distinguished from the questions which are involved later on in the statute, that is the questions with respect to those transactions in land which may be exempt because they happen to include in the operation the phraseology that the transferor has renovated or caused to be renovated at a cost of not less than 20 per cent such and such amounts of the value.

The minister knows what I’m talking about. The minister knows very clearly what I’m talking about. I’m talking about the problem of determining what are maintenance costs as distinct from what are alterations and improvements which may be included in renovation costs. I’m talking specifically about the decision of the Exchequer Court of Canada in the case of Canada Steamship Lines and the Minister of National Revenue in 1966.

Mr. Chairman, I know that this is difficult. I know for those of us who have only a smattering of knowledge about tax jurisprudence that these things tend to become tedious. But they are of immense importance with respect to the question of taxing statutes as to whether or not expenditures made by a person who owns land on which there are buildings -- and he expends the money -- whether the dollars which he expends will be determined to be included in the phrase net maintenance costs, on the one hand, or whether they will be determined to be within the expression used subsequently in the bill, in particular in section 4(g) of the Act, whether they will be considered to be renovation costs.

I realize there is practically no political sex appeal to the point which I am trying to make. From the point of view of tax jurisprudence, from the point of view of the problems which the minister is interjecting into the tax community, I am simply saying in my judgement this is one of the fundamental flaws in the bill.

You face people with the impossible situation. On the one hand, for income tax and capital gains tax purposes, you are arguing the expenditures which they make are deductible for tax purposes, and on the other hand you’re saying to them the identical expenditures which they make in that year they must try to include as expenses which are incurred for the purpose of renovation in order to escape this tax.

I am simply saying that this is irresponsible tax legislation on those technical terms. I’m not suggesting for one single moment either that I’m a tax expert or that other people in this Legislature are tax experts, but I am saying to the minister that in the strange way in which you have brought in this bill you have totally overlooked that problem.

And one does not have to approve or disapprove of land speculators. One doesn’t have to approve or disapprove of what may be done in the building community. But you cannot place people in legitimate business operations in situations where they’ve got to argue under the laws of the Province of Ontario that an expenditure which they make is for renovation purposes; and that for the purposes of the Income Tax Act of Canada and the Corporations Tax Act of the Province of Ontario they are maintenance costs.

Frankly, I think the minister and his advisers didn’t appreciate that problem and that they still don’t understand it. I’m simply saying to the minister that I am not prepared to allow a section of the bill disguised as a very technical amendment under subsection (1) of the Act about net maintenance costs to drift by because they think we don’t understand its consequences. The consequences are immense and there is no way anybody can resolve those consequences until the minister makes a definitive statement.

There are no notes from his adviser on a small slip of paper that can solve this problem. I raised the problem on second reading, and unless he has a definitive answer today about the problem -- and the minister during the course of second reading to me communicated that he understood what I was talking about -- there’s no way that a slip of paper can answer that problem.

I am prepared to listen to the minister, but if the minister cannot give me the answer -- and I am very sorry, I have to leave at about 9:15 tonight.

Mr. I. Deans (Wentworth): No, you don’t. The leader has cancelled it.

Mr. Renwick: There is absolutely no way that that can be done.

Mr. Lewis: It is done. It has been done now. I am asserting my leadership.

Mr. Renwick: It’s unfortunate, but others of my colleagues can read into the record, Mr. Chairman, the important part of an article which appears in the income tax handbook in 1972, the 22nd edition, on tax reform by Arthur W. Gilmour. Even in the NDP there can come moments of rebellion.

Mr. Lewis: Now, now, now!

Mr. Renwick: You are about to see one of them. I am rebelling against the leader of the party and the House leader of the party. As chairman of caucus, I am quite certain if I rebel all the other members of caucus will walk out with me.

Mr. Lewis: And particularly those who attended a United Church function.

Mr. Renwick: I have an equal feeling in the intense interest which is exhibited in this debate that the Liberal Party members will walk out with me and the Tory backbenchers --

Mr. Lewis: What backbenchers?

Mr. Renwick: -- will walk out with me; and you will never ever get a quorum again, Mr. Chairman.

Mr. G. Nixon (Dovercourt): Right here.

Mr. Lewis: There is no back bench to speak of; there is a thin front bench.

Mr. Chairman: Order please.

Mr. Renwick: Mr. Chairman, I have another two and a half minutes and then I have to go.

Mr. Deans: You have got 15 minutes.

Mr. Renwick: Well all right. My friend the House leader is trying to quell the rebellion.

Mr. Lewis: Do you want me to read that into the record?

Mr. Renwick: No, I would like to deal with it briefly; then my friend, the leader of the NDP, will deal with the topic “Attitude of Canadian Courts.”

Mr. Lewis: Right.

Mr. Breithaupt: At some length.

Mr. Deans: We better have a very long vote.

Mr. Renwick: Let’s not fool around about it. Those of us who engaged in the practice of corporate law and who wanted to be knowledgeable about the tax implications of various matters always turned to a book called Gilmour s “Income Tax Handbook.” It is still called a handbook because when the first edition came out, which I have to say was just shortly after I started to practise law, it was in fact a handbook. He was a partner of Clarkson Gordon and still is. It’s now in the 22nd edition. The Minister of Revenue knows about it. If he doesn’t know it --

Mr. Deans: He bloody well should.

Mr. Renwick: -- he should never have been practising the kind of law which he was practising. This man tried to state in simple terms for people what was involved in the taxing statutes; in other words, to demystify the whole game. I am talking about the 22nd edition which is the “Income Tax Handbook, 1972,” Arthur W. Gilmour, partner of Clarkson Gordon and Co., page 365, chapter 11, repairs, alterations and improvements.

He goes on at some length to set out the very distinctions which must be made for the purpose of determining -- let me qualify my language -- whether an expenditure made in the course of a year would for tax purposes be classified as an expense deductible in the year or whether it must be capitalized as an expense deductible for the purposes of the depreciation and amortization schedules. The minister nods, the minister understands that distinction. The difficulty of distinction always is to apply the principle to the particular circumstances. Is that correct? And, the minister nods again.

Then there are current accounting practices relating to repairs and improvements, which is the second heading in the course of his chapter on this particular problem. He then deals with the attitude of the Canadian courts, and he deals extensively with the case of Canada Steamship Lines Ltd. and the Minister of National Revenue.

Mr. Chairman, I want to make very clear to the minister with a perfect analogy -- that is, the scraping out the whole hull of a ship to re-do the whole ship; to turn the ship from an Onassis oil tanker into the Queen Elizabeth II or to turn a corvette into an Onassis luxury liner.

Mr. Lewis: Kind of like turning Meen into White.

Mr. Renwick: Yes, that is the kind of problem which is involved -- whether these expenditures are or are not deductible for tax purposes depending on what is beneficial to the taxpayer. But, the problem for a taxpayer is, you can’t blow hot and cold. You can’t do it one way for one tax purpose and an- other way for another tax purpose, because all of the taxing statutes are distinguishable in the sense that they are uniformly implied in the question of that relationship, unless the minister gives some guidance. And the minister gave no guidance.

My leader, the leader of the New Democratic Party, will undoubtedly read into the record during the course of my absence the decision of Mr. Justice Jackett, the president of the Exchequer Court in that particular case. Because it was of significance that the major costs which Canada Steamship, having gutted ships, wanted to deduct for tax purposes were in fact deductible because there was something called net maintenance costs and repairs. But, they were not available for renovation purposes.

The argument that I am making to the minister is that the 20 per cent renovation clause is meaningless, when we come to it further on in the clauses of the bill. It is meaningless because of the confusion which it is going to establish.

But you know, Mr. Chairman, the funny thing about it is that if the minister and his advisers and the government had known what they were about, they could very well have solved the problem. And that is exactly what I am trying to say -- that the government has brought in a bill precipitately, without thought, without due knowledge of what is required.

I can always tell when the minister is concerned about my remarks because he looks all around the room, but not at me.

An hon. member: He can’t stand it.

Mr. Renwick: Now, look at me because I am now going to quote to the minister, again from Gilmour. And they did solve the problem in this particular situation. At this particular point, I’m not talking about whether I approve or disapprove of what the minister is doing in the bill. I am talking about the taxpayer. I disapprove of what the minister is doing in the bill and that should have been abundantly clear. Whether I approve or disapprove, I am not prepared to leave the taxpayer, under a taxing statute of the Province of Ontario, in a situation in which he doesn’t know where he stands. I am accusing the government of total incompetence in the tax field.

Hon. A. Grossman (Provincial Secretary for Resources Development): Shame. Withdraw.

Mr. Chairman: Order, please.

Mr. Renwick: Mr. Chairman, I don’t withdraw and I accept the reprimand you gave to the Provincial Secretary for Resources Development because he deserves that.

Mr. Deans: He should have been reprimanded years ago.

Mr. Renwick: This government has fooled around for so long with its version of kidding about with people who make profits, mainly corporations, in the Province of Ontario, that its sole response is to adapt our taxing statutes to the federal ones. It has become lazy, inadequate and incompetent in dealing with the fundamental concepts of taxation. It has done it in this bill. It has launched an initiative in this bill from an atrophied base of tax knowledge, tax skill and tax ability.

We have sat through amendments to the Corporations Tax Act of the Province of Ontario which have always been introduced on the basis, “We are doing this because they did it up in Ottawa.” This time the government is trying to do it itself. I am telling the Conservatives that unless they get some tax experts, they are inevitably wrong, not because of the merit or demerit of the tax -- as a matter of fact, as an exception, I am going to repeat myself once tonight.

Hon. Mr. Meen: An exception?

Mr. Renwick: Yes. The exception tonight is I am simply going to say to the minister, you can’t do this to taxpayers, be they farmers, businessmen, speculators or anybody else. They are entitled to know what the rules of the game are.

When the federal government, because it is sophisticated, had to deal with this kind of problem in taxes, strangely enough they had a heading “Expenditures for repairs, replacements, alterations or renovations” capitalized under “Uniform classifications of Canadian Transport Commission.” It goes on to say:

Where a uniform classification and system of accounts and returns prescribed by the Canadian Transport Commission requires that an expenditure incurred by a taxpayer for repairs, replacements, alterations or renovations of depreciable property of a prescribed class shall not be written off as an expense [Do you get that?] but shall be treated as some other manner than:

(1) No deduction in respect of the expenditures may be made in computing the income of the taxpayer for a taxation year.

(2) The taxpayer shall be deemed to have acquired depreciable property of the prescribed class at a capital cost equal to the amount of the expenditure.

Let’s get it clear. Let’s not fool around.

The government of the Province of Ontario can’t get away with the trite phrase of the Treasurer of the Province of Ontario that he must bring in a series of amendments over the years to cope with the problem, or suggest for one single moment that the government is embarking on unknown seas. There are no unknown seas in the field of taxation. The seas are well known.

The distinction between capital expenditure and current expenditure is elementary and the minister, his advisers, the government, the Treasurer are incompetent.

Interjection by an hon. member.

Mr. Renwick: All right. It is very nice to smile and laugh and so on. You have no idea of the immense consternation you are talking about.

If I wanted to subsume a principle, it would not be a question of distinguishing this person, in a subjective sense, as a speculator, distinct from that person. Or, as the Leader of the Opposition in the Liberal Party had to say, how do you distinguish a speculative farmer from a non-speculative farmer? Or as my friend, the member for Kitchener had to say, how do you distinguish those things? You can’t distinguish them any more than your colleague who is absent from his seat tonight, but usually sits to your right, could distinguish who is the speculator in land and who isn’t. That is no criterion on which to make any judgement of any value in tax purposes.

Mr. Deans: That’s the key, that’s the key.

Mr. Renwick: And this is why I hope my friends on the right will understand that you can’t fight a bill on that principle. What we are saying to the government, and saying very clearly to them, is that we in the New Democratic Party are clear. We understand intellectually, we understand emotionally, what the problem is. We are not prepared to allow the Tory government -- disguised as a venture into new areas -- to display its incompetence at the expense of the ordinary citizen.

Because, Mr. Chairman, I was up at -- you know, I don’t know why I ever accept this kind of engagement -- Trent University with my friend, the member for Oxford (Mr. Parrott), and with my friend, the member for St. George (Mrs. Campbell). And in the course of the discussion, a man from the area stood up and said to me, “I have bought a parcel of land as my investment, as a person who is a Canadian citizen, born and brought up. I bought it out of the money that I saved.” He finds now that he is going to be subjected to a tax at the rate of 50 per cent on the profit, and he said, “I think that is wrong.”

Now, you had better start listening, because you can’t make the distinctions unless you lay down the rules. A lot of people don’t understand, but the minister probably remembers -- the man’s name escapes me -- the men who made the killing in Shell Oil before we had the insider trading laws.

Hon. Mr. Grossman: Shulman?

Mr. Renwick: No, no, no. He’s a member.

Mr. Deans: Charlie Shulman, remember him?

Mr. Renwick: The member for High Park is a former member of the Conservative Party. This fellow still is a member of the Conservative Party. You know, he has renovated all those houses on Yorkville. Do you know what the Canada Steamship case says? That all of those renovations are repairs. They are not renovations.

Now, whether you take this view or that view of the question of sandblasting brick houses in Toronto, gutting them, replacing the wiring, making them look immensely attractive, whether its in Trefann Court, whether it’s on Wellington St. W. where Sir John A. Macdonald used to live, whether it’s the streets on Church St., or whether it’s houses in Donvale, I want the minister to know that on the basis of the Canada Steamship case, as I read it, they do not reach the 20 per cent criterion. And therefore they do not escape the tax.

And again, I am saying I don’t understand the pros and the cons of that kind of civic renovation. I am inclined to think that that is a good thing for the city. But you are imposing a 50 per cent tax on that kind of renovation. Other people, including members of my party, may have different views about whether or not the renovation of a house in Trefann Court should or should not be subject to the 50 per cent tax. But I am simply saying that the gutting of old houses and the renovation of them under this minister’s bill is, for all practical purposes, maintenance costs only and has nothing to do with their ability to avoid the 50 per cent tax under the provision later on in the bill.

I am only using this as an example. I don’t pretend to suggest that I know, but as I read the Canada Steamship case which was before the court -- I have now got to go because I have overstayed my time.

Mr. Lewis: But you are making very interesting points.

Mr. Renwick: What was that chap? What did they say to that chap? Good God, go now -- or you stayed too long here, eh? I remember Amory said that time in the House of Commons --

Mr. Breithaupt: Don’t stand upon your going, but go.

Mr. Renwick: And I think somebody else said that at the end of the Long Parliament, but --

Mr. Lewis: -- exactly what Charles said before the axe fell on his head.

Mr. Renwick: I think it was the end of the Long Parliament, or something. “You have sat too long here,” or “Good God, go,” or something like that, and I would be glad if somebody would give me that admonition, because I want to go anyway.

I think, perhaps, Mr. Chairman, I have kind of made the point I want to make which is that you can’t fool around. You are supposed to be a government of competence. This bill shows you to be a government of dismal incompetence and this definition of net maintenance cost, and your lack of appreciation of the problems raised for tax purposes in Gilmour’s book just leaves me kind of cold.

I can’t say anything more. I can’t change anything about it, but I want the minister to understand that I think it is a disaster, and the disaster is only measured by the fact that once again, of course, the Treasurer, who introduced the bill -- because he always has these flashes of insight at the last minute just before budgets come in. I said to my colleague, the member for Parkdale (Mr. Dukszta), last night, that the last chap who really had one of those flashes of insight at least had the grace to change his name from Saul to Paul. The Treasurer never has the grace to change his name when he has one of these insights of his as to what we are going to do. We were going to tax food, and then we were going to tax fuel, and now we are going to tax land. The progression is almost what could be --

Mr. Deans: The man is not very bright.

Mr. Renwick: -- said with respect to --

Mr. Deans: He is taking you right out of the picture.

Mr. Renwick: -- you know, it’s unfortunate that the man is no longer here, but Sigmund Freud would designate his insights as a form of hysteria, intellectual hysteria against which all of us must defend ourselves. Thank you, Mr. Chairman.

Mr. Lewis: That is rather well put.

Mr. Chairman: Shall subsection -- The member for Huron-Bruce.

Mr. Gaunt: Mr. Chairman, as I understood the minister, this section, plus subsection 5, which we discussed earlier on, would mean that a farm property -- and I am getting back to that now -- would double in price in 4½ years. As I read this section, I think it’s the lesser of the two and not an accumulative progression.

Hon. Mr. Meen: Perhaps I could be of some assistance in that respect. The 10 per cent is the top limit, but it assumes he spends that amount each year on legitimate net maintenance costs. They are limited to 10 per cent of the original acquisition cost of the property, but that is in addition in the case of farm land, in its totality, up to 10 per cent. But it could be less than that, if he spent less than 10 per cent on the acquisition property --

Mr. Gaunt: So it could be less?

Hon. Mr. Meen: Yes, it’s 10 per cent -- it’s the lesser of 10 per cent, i.e. a ceiling of 10 per cent, or the actual net maintenance cost. It could be less than that, but that’s a fairly generous figure if you look at taxes, for example, and if you look at interest on a mortgage that represents a part of the total value, and so on.

The member for High Park made the point the other night that if you had a mortgage to an amount equal to the whole of the value, you could well go over the 10 per cent in net maintenance. I feel you could, but in the normal farm operation, the amount of any mortgage encumbrance is going to be a good deal smaller than the actual acquisition, or you might say base cost, as I am inclined to say.

An hon. member: You’re right.

Hon. Mr. Meen: So, in the net effect, the 10 per cent is probably a realistic level. I don’t think in many cases they would get to that, but the actual expenditures that they would make are not unduly low and too depressing. But in a farm operation, up to that total amount of their expenditures, what- ever they are, up to a limit of 10 per cent of the base price, would be added in each year on an annual basis, non-cumulative.

Mr. Gaunt: So there is no possible way that the value of the property would double in 4½ years? It would be 7½ years?

Hon. Mr. Meen: Oh no, the hon. member is missing the fact that in addition to that there is the 10 per cent per annum cumulative. What I am talking about is the simple per annum basis with respect to costs; and he can use that to add on each year. But in addition to that, he gets 10 per cent of the base cost, which is cumulative and is unrelated to any expenses he incurs so long as he keeps it in the family and as a farming operation. When those two are added together, if you take the one cumulative by itself, it would be about seven years before that would roll up to double. If you take that and combine it with the simple rather than the compound arrangement for net maintenance costs, up to 10 per cent, and assuming they do go to about that limit each year, then in about 4½ years you have doubled up on the price.

Subsection (j), as amended, agreed to.

Mr. Chairman: Are there any comments, questions or amendments prior to and including clause (1)?

Hon. Mr. Meen moves that clause (1) of subsection (1) of section 1 of the bill be amended:

(a) By striking out “includes” in the first line and inserting in lieu thereof “means;”

(b) By striking out “or” at the end of subclause (i); and

(c) By deleting subclause (ii) and substituting the following therefor:

(ii) Where designated land is transferred to comply with the terms of an option that provides for the acquisition of the designated land, and that has been exercised, the value of the consideration given for the granting of the option, plus the value of the cost provided for in the option of acquiring the designated land upon the exercise of the option, or

(iii) An amount equal to the fair market value of the designated land disposed of where the disposition is

(A) A transferor to a person or persons with whom the transferor is not dealing at arm’s length at the time of the disposition;

(B) To a corporation in consideration of the allotment and issue of its shares;

(C) To an organization, syndicate, association of persons, partnership, joint venture or corporation without share capital in consideration of the admission to membership therein of any person, or

(D) By way of gift.

Mr. Breithaupt: Mr. Chairman, I was just wondering if the minister could enlighten us as to the reasons for bringing in these changes to the definition and what particular problems there were in the earlier description of the words that have been developed further as a result of this change?

Hon. Mr. Meen: Yes, I would be happy to, Mr. Chairman. It is a complicated one too.

This new amendment deals with options and draws a distinction between buying an option and exercising one. I might say that it spells out in detail the meaning of proceeds of disposition as that term applies to dealings in these options -- the sale and transfer of an option -- and the exercise of the rights under those options that results eventually in the acquisition of the land.

Clause (1), as amended, agreed to.

Mr. Chairman: Are there any comments, questions or amendments prior to clause (p)?

Hon. Mr. Meen: Mr. Chairman, I have an amendment to clause (p) but I might just ask you at this point if it is really necessary to read it in full -- under the rules of the House it isn’t. I will abide by your ruling, but this is a long amendment, and it seems to me a needless use of the House’s time to go through it when it is all printed right in the bill.

Mr. Lewis: It is then printed in the bill, I take it? Why not take it as read?

Mr. Chairman: Does the House agree to dispense with the reading?

Mr. Lewis: Sure.

Mr. Chairman: Shall the amendment carry?

Motion agreed to.

Mr. Chairman: Are there any comments, questions or amendments prior to section 9 on page 10?

Hon. Mr. Meen: Section 9 -- you meant subsection 9, I think, Mr. Chairman?

Mr. Chairman: Yes.

Hon. Mr. Meen: There is a minor amendment in subsection 6; I think you will notice it in your copy.

Hon. Mr. Meen moves that in the third line the word “and” to be changed to read “or.”

Mr. Chairman: Shall this carry?

Motion agreed to.

Mr. Chairman: Are there any comments, questions or amendments prior to subsection

9, page 10?

Hon. Mr. Meen moves that section 1 of the bill be amended by adding thereto subsection 9 as it appears on page 10 of the reprinted copy.

Mr. Chairman: Shall this amendment carry?

Motion agreed to.

Section 1 agreed to.

On section 2:

Mr. Chairman: Are there any comments, questions or amendments prior to section 2, subsection 2?

Mr. Breithaupt: On section 2, Mr. Chairman. This is the section in which the minister had suggested an amendment would be placed by him to ensure that the tax rate would not be greater than 50 per cent no matter what the interpretation might be by the federal authorities as to the deductibility of certain expenses, and as to the deductibility of this tax from the federal amounts which would be otherwise payable. Does the minister have that amendment now to put before us in section 2?

Hon. Mr. Meen: Mr. Chairman, I recall a discussion on that at second reading or earlier in this debate, I have forgotten which; I guess it was last week in committee. We have looked into this and that does not appear to be appropriate, notwithstanding that it occurred to me as being not a bad idea to place a limit of 81 per cent or 87 per cent if it was a private corporation or a public corporation.

My advisers tell me that if we put in such a provision as that -- for example, as was suggested by the member for Ottawa Centre (Mr. Cassidy) that we put in a limit of 90 per cent as the outside top figure -- we would be inviting an interpretation in the courts on the question of our position in the scale of tax levying on the taxpayer. I don’t think the members opposite would want to see the province deprived of that income by having that sort of thing disallowed; that is, having our position disallowed.

What we have said is that if the rules as applied by Ottawa in the past continue to be applied -- and I think any taxpayer is entitled to assume the laws will remain as they are when he governs his own affairs and establishes his own course of action -- if we were to put in such a top limit we would be inviting an interpretation that could lead to an adverse ruling on this Act. I therefore suggest we should not do it.

I would not want to put it into the Act. It would be the Act that would be taken before the courts for interpretation without benefit of Hansard or any previous bills or anything of that sort. I have assured the members that if it were to happen and an interpretation rendered the taxpayer in a disadvantageous position, paying higher than the rate we presently anticipate, and in a position of paying virtually confiscatory tax, which would place that taxpayer in a position where he would not want to put his lands on the market -- indeed, he couldn’t afford to put them on the market -- then we would take suitable steps, but at this time it would be folly, in the opinion of my advisers, to include such a provision in the Act.

Mr. Breithaupt: Mr. Chairman, that is a substantial disappointment to those of us who had received the benefit of the minister’s early comments. I think it was clear, certainly at the time these original comments were made, that we were well aware that any interpretation of this statute would be without the benefit of Hansard or without the benefit of any articles in the media concerning the intentions of the Legislature.

Those of us who are lawyers have well known the phrase with respect to the interpretation of statutes, wherein a judge may say something to the following effect: “The Legislature, in its wisdom, has passed a certain section I am not about to look into Hansard or anything else, but simply am going to interpret the section as it appears within the statute to which I am turning my attention.”

Now, this seems to us to go to the basic principle of this bill, because as the earlier debate set forth a week or so ago, a debate which took up several hours of the time of the House, we were particularly concerned with the matter of federal interpretation and accommodation of the principle to which this bill was pointing itself.

It seemed important at that point, as it does to us now, to once again call to the attention not only of the House but to the public of this province, that this statute has been so drawn as to not be a sure and clear tax statute. It is, of course, a commonplace that any of these statutes that deal with taxation must be very clear. They must not be open to a variety of interpretations and they must be so construed and designed that the courts will only be able to have one clear and obvious interpretation of the words that are meant.

The minister earlier on had accepted the view that some kind of phraseology would be necessary in this bill to ensure that the principle we were called upon to support would be the one that would guide the citizens of Ontario no matter how other courts might view the ability, or lack of ability, to deduct these various expenses, especially with respect to federal taxation.

Now, the minister earlier on had talked about the rules of the game. This evening, he comments that, of course, citizens must be able to make some kind of disposition or plans in the light of the law as it is.

We have no reason at this point to know whether, in fact, the minister’s interpretation of the law will be the correct one. I suggest it is wrong to pass a section in this statute which will require the interpretation of the courts and which will be so uncertain as to bring us back for further amendments to the section.

The minister was going to bring in an amendment, as he had suggested earlier, but now feels that that amendment would weaken the case of someone who chose to rely on this Act.

I suppose it would weaken the case if, in fact, there was some strong guidance, some strong statement in this House that these matters had been looked into and that they were clear. But, the minister and presumably his advisers, have not chosen to make those statements. We simply don’t know whether this statute will bring the kinds of benefits of deductibility that the minister believes it would do. Surely that whole debate of a week ago led us to the conclusion that the minister was uncertain as to the whole result that this would bring. Perhaps if the minister is certain now he could advise us.

Hon. Mr. Meen: Mr. Chairman, I told the members last week, and I’ll repeat it for the benefit of those here tonight, that no one can really be certain of the application of a new Act until it has been in force for a time. There are always court interpretations on these new pieces of legislation.

What we are convinced of is that we are right. We believe that this being a tax on land and with respect to a transaction, falls squarely within the practice that has been followed under the federal legislation up until now, as an allowable expense of doing business and of the conduct of the affairs of the taxpayer and is completely unrelated to his taxable income in the taxation year. He could have a loss picture or he could have a very profitable picture. His tax is unrelated to that. We believe -- and it’s the best tax advice we have, both in this government and elsewhere, but within our own staff primarily -- that this is a perfectly allowable deduction, and we believe that the Treasurer’s approach is absolutely correct.

All I’m expressing any misgivings about is that at least one tax consultant has indicated some doubts in his mind; others have said no, they had no doubts, it looked as if it was a satisfactory allowable expense. But there was one who had, I think, the temerity to take the opposite position and cast some doubts in the commercial community, because it is a quite respectable concern.

Mr. Lewis: Who was that? Who was that?

Hon. Mr. Meen: It was quoted by your friend, and so I was --

Mr. Lewis: I’m just asking you who it was, that’s all.

Hon. Mr. Meen: Well, it’s Peat Marwick.

Mr. Lewis: Mr. Marwick?

Hon. Mr. Meen: Yes. They are a very responsible firm.

Mr. Lewis: They are.

Hon. Mr. Meen: They did not say that it was not deductible; they said there might be some doubt as to whether it was. We don’t think there is any doubt. But they have, therefore, because of their stature in the community, cast some doubt on this.

When the hon. member for Ottawa Centre was discussing this I said, fine, maybe I could put something into the Act. But I think my counsel on this is a counsel of wisdom, that we as a Legislature would be very unwise to do that. Then the courts would have that to look to and might very well take a different kind of approach, if they wanted to. They could say that within the four corners of the Act there had been some doubts in the mind of this Legislature.

I’ll just repeat, I doubt very much if the hon. members opposite want to prejudice the province to that extent. I think we as a Legislature would, therefore, be very unwise to incorporate it.

Mr. R. F. Nixon: Does the minister really mean that he feels, and his advisers feel, that if he were to add something cogent to that section saying that the overall tax payable would not exceed 90 per cent, or some reasonable figure, the people in Ottawa are liable to say “Aha! These people have some doubts about the constitutional validity of their case, or the interpretation of the regulations or the procedures or customs, and therefore we should probably keep the money for ourselves, because the people in Ontario are not going to increase the tax”?

Surely the minister has got to make it clear to the House -- as the hon. member for Kitchener has said -- in the statute, his intention, which he has stated clearly, that the tax is not going to be levied at both levels? I don’t know how he is going to do that unless he puts it in the bill.

Hon. Mr. Meen: We can’t stop it from being levied at two levels if that comes about by the action of the federal government and is confirmed by the courts. I can’t stop the communication of the transcript of the proceedings in this House from being communicated to the federal government. They are doubtless aware of the nature of our discussions on this. But what I can preclude, and what we as a Legislature can preclude, is the inclusion in a bill of any such section that would give rise to a similar kind of discussion in another forum, that’s all.

Mr. R. F. Nixon: Yes, but didn’t you say that there would not be double taxation and that you undertook to see that there would not be?

Hon. Mr. Meen: I have said that it is not the government’s intention to have confiscatory taxation; that we consider that something of the level of 80 to 90 per cent of the overall proceeds, you might say, of a transaction is a sufficient disincentive to speculate. That’s the point I’m making, and I have said that if it should turn out that the position we have taken was held by the courts to be untenable and that the taxpayers wound up having to pay a tax of the order of 110 to 112 per cent, then we would certainly see that our own tax was adjusted. We would have to take some kind of steps to see that the taxpayer did not sustain a confisuatory levy.

Mr. J. E. Bullbrook (Sarnia): You said there would be a rebate.

Hon. Mr. Meen: Well, that tax has been paid.

Mr. Chairman: Order please, the hon. member --

Mr. Lewis: You would, in fact, amend the legislation or provide to those who have been thus confiscated an equivalent. But what perplexes me, Mr. Chairman, is that I really don’t understand the processes here, and perhaps that is because we don’t have the same sophistication over here that you have there.

I understood when the Treasurer said that it was impossible for him to discuss the matter with Ottawa before April 9, because one doesn’t want to discuss with large numbers of people the introduction of a speculative land tax. All right, that is fair. This is, you claim, the first tax of its kind, specifically applied to land, and therefore you don’t want it to leak into the community inadvertently. So you apply budget secrecy. And before April 9 not a word is said.

Five weeks have passed since April 9. How is it possible that you haven’t yet sat down with the senior tax consultants of the Ministry of National Revenue in Ottawa, and asked them if, in their opinion the tax will conform? Or asked them if the deductible features continue to apply? And said if so, can you give me your recommendation in writing so that I can present to the provincial Legislature of Ontario an indication from federal tax experts that this will not result in a confiscatory consequence?

Five weeks later you continue to put this bill through the Legislature. You’re in clause by clause, and you still don’t have that kind of guarantee or commitment. We are still in this never-never land where the Leader of the Opposition is asking you for a commitment. I suspect the Liberal Party probably has an amendment drafted, which would put an upper level on it of 85 or 90 per cent. Perfectly intelligent, perfectly acceptable. At least it would safeguard it. And why shouldn’t that kind of amendment be introduced when you refuse to give us any guarantee?

Oh, you say, it’s a land transaction, the tax is applied, it’s independent of other taxable income, you can take a loss, you can take a gain. On the other hand, you trumpet the reality that it’s the first tax of its kind, so that its consequences and application have not yet been measured, but on which you could get a professional and expert opinion from the federal tax people.

The select committee on economic and cultural nationalism got from the Peat, Marwick consultants more reports than I have ever seen produced from one consultant outfit, all of them exemplary, all of them invested with knowledge. So don’t cast aspersions on Peat, Marwick in this House, using words like “temerity.” If Peat, Marwick says that something about your taxing bill may be screwy or out of whack, don’t cast aspersions on them. Go to Ottawa and ask the tax experts whether they can give you some data.

You are a most remarkable minister in a most remarkable government. You are a most extraordinary partisan whom, if marched to the cliff and told to walk over, would gladly walk over. I mean, you are of that kind, I understand it, I accept it --

Mr. R. F. Nixon: Polluting all the way down.

Mr. Lewis: All the way down you would be ringing cheers for those who plunged you to the death. Ready, aye ready, I’ve never seen such partisanship. I suppose it’s good that one can sleep with one’s conscience.

And on top of that, you are remarkably inflexible. It takes three hours to get you to suspend the amendments on title, it takes another two hours this afternoon to get you to suspend the sections on the farm community, to introduce some sanity into the wording. And now, five weeks after the blessed bill was introduced, you still cannot tell us with confidence that you consulted with the federal authorities.

Mr. Bullbrook: But it’s not his fault, it’s the Treasurer’s fault.

Mr. Lewis: Well, I suppose. But the Treasurer isn’t here. All right, I accept that it’s the Treasurer’s fault. Where now are the notes from the mandarins under the gallery? Why don’t they now flow across the floor, so you can clutch it, so you can --

Mr. Bullbrook: Where is the applause from the Speaker’s gallery? Where is the applause from up there?

Mr. Lewis: Well, you know, the applause -- who is up in the Speaker’s gallery?

Mr. Chairman: Order, please. The hon. member for Scarborough West has the floor.

Interjection by an hon. member.

Mr. Lewis: In all of the previous debate tonight, every time there was the slightest sense of uncertainty, the notes ran from under the gallery, from those who perform your work and your wonders, and you clutched them in your hand and you read the answers back to us. Well, where are the notes from under the gallery now telling you that you have consulted with the federal tax experts? Well, I am sorry, you can dismiss it --

Mr. Bullbrook: No, you can’t dismiss it.

Mr. Lewis: I want to tell you, and I admit to being a novice, that I think it is a singular failing on the Treasurer’s part and on your part that five weeks after this bill was introduced, you still have not asked for a federal tax opinion as to its application. That is incredibly incompetent. That shows a kind of feckless irresponsibility on your part that doesn’t engage the applause of this House. You have had a long time to deal with it.

When you are introducing a tax which a major tax consultant says may be confiscatory, if you are not certain in your own mind, if it has never been applied before, then you go to those federal tax experts and ask them for a judgement; you get it in writing and introduce it into the House, and we know where the devil we stand. You don’t bring in a 50 per cent tax of this kind, replete with all its loopholes, exemptions and definitions and not know whereof you speak.

It may be fine to define the wording of this clause or that clause in conjunction with your civil service colleagues, but section 2 is the guts of the bill -- and you don’t know whether or not it will work. Is that clear? You are introducing a bill to control land speculation, and the central feature is undefined. You haven’t got federal clearance. You don’t know whether it will work before the courts, after the courts or at any time.

How do you engage the definition of your responsibility? What is this, some kind of pleasurable joy you are engaged in? What is this with the Treasurer that everything is secret until April 9, and then for five weeks he cannot find the time to discuss it with the federal people?

Mr. Breithaupt: Or even be here to listen to it?

Mr. Lewis: As a matter of fact, you can’t plead the election. The minister without portfolio responsible for municipal affairs indicated to us in the question period today that he was about to conclude an agreement with the federal authority governing the development of northwestern Ontario. There will be endless provincial-federal arrangements over the next two months of the election. Why can you not give us a certain definition of what will happen?

Hon. Mr. Meen: Can I ask you one question?

Mr. Lewis: Yes, sure.

Hon. Mr. Meen: Where were you when I gave the answer?

Mr. Lewis: What do you mean, where was I? Have you got something from the federal people?

Hon. Mr. Meen: I responded in this House to that question and pointed out -- and it would be two weeks ago today --

Mr. Lewis: Yes.

Hon. Mr. Meen: -- that Allan Lawrence, the member for Northumberland-Durham --

Mr. E. W. Martel (Sudbury East): Who, “the white knight”?

Hon. Mr. Meen: -- asked Finance Minister John Turner in the Commons, in the question period, two weeks ago this afternoon --

Mr. R. F. Nixon: Is that the way you contact the government of Canada?

Hon. Mr. Meen: -- what he proposed to do --

Mr. R. F. Nixon: That’s completely irresponsible. That’s ridiculous.

Mr. Chairman: Order, please.

Hon. Mr. Meen: -- about the question of the relativity of the two taxes. Mr. Turner said in reply that he would make no ruling on that until the bill was law. He would not entertain any application from the Treasurer of Ontario. He would make no ruling on it until the bill was law. And he knew what he was dealing with.

Mr. Bullbrook: That’s terrible.

Mr. A. J. Roy (Ottawa East): Can you blame him?

Hon. Mr. Meen: Now, that is a complete explanation of the present position, and it is a completely tenable position.

Mr. Lewis: It is not a complete explanation.

Mr. Bullbrook: Are you saying that you do business with the federal government through the question period in the House of Commons? Is that what you are saying --

Hon. Mr. Meen: No, I am not.

Mr. Bullbrook: Wait, let me finish. If you are saying that, then we are bereft of direction in connection with this bill, because I understand you to say that you are relying on a response made to a question put by an opposition member in the House of Commons.

Now do you say that’s an alternative to an undertaking by the Minister of Revenue? It is not up to the Minister of Finance to begin with, do you understand that? It is up to the Minister of National Revenue at Ottawa in connection with what he will say with respect to the imposition of your tax.

I don’t mean to belabour this point, but surely Allan Lawrence asking John Turner cannot deprive us of our responsibility here, because you have got to recognize what is happening in the world of taxation. These finance people are putting you revenue collecting people in an untenable position. Your Treasurer did that to you and you know he did it. Do you know what he has done to you personally? He has denigrated your position as a cabinet minister. For five weeks you have been on this. Isn’t that terrible what you have done to the economy of this province, and, more important, when you stand up in your place and say that you don’t have to ask the revenue people -- not the finance people the revenue people? Surely you as Her Majesty’s minister responsible for the collection of taxation in the Province of Ontario can’t get up and tell the leader of the New Democratic Party that you don’t feel that there is anything to be done with Ottawa because Allan Lawrence asked the Minister of Finance. The Minister of Finance, my friend, has nothing to do with the collection of taxation in the Dominion of Canada -- not one thing to do with it.

It is indescribable that you would put up with this type of test, that you would say that you don’t have to ask Ottawa about it, because the Minister of Finance said to Allan Lawrence we will get to it in our good time, when nobody from your ministry that sits under that gallery, and has sat with us day in and day out, night in and night out, can recognize that I, as a lawyer, in my responsibility professionally, have taken up many times with the Ministry of National Revenue its attitude with respect to a tax problem, and they are prepared to do it.

I have never once had the absolute stupidity to take it up with the Minister of Finance, because do you know what the Minister of Finance would say to me? I say to you the Minister of Finance would say to me, “Mr. Bullbrook, you had better understand what the responsibilities of portfolios in the federal government are.” Then, Mr. Chairman, you have your minister say to me that we don’t have to take it up because Allan Lawrence, that giant intellect that we dealt with here year in and year out, took up with the Minister of Finance what his attitude is. The Minister of Finance has nothing to do with this, nothing at all to do with it. The Minister of National Revenue has to do with it. To put a response to an intelligent member of the House such as the leader of the New Democratic Party --

Mr. Lewis: Well, but you rose to my defence!

Mr. Bullbrook: -- is something that is indescribable. How you can do it? You must not sit there squirming, I say this respectfully, in your own ignorance of what goes on with respect to the collection of taxes, because the problem is here. That is not the response that you make, that really facetious, almost tongue-in-cheek response.

Mr. Lewis: It was not facetious; he meant it. It was a superior coup de grace.

Mr. Bullbrook: I can’t believe for a moment that in sincerity, understanding, knowledge and ability, the Minister of Revenue for Ontario would say that he is content with the position of the federal government because of a response from the Minister of Finance, who has nothing to do with the collection of tax but has to do with financial, fiscal and economic policies on the federal level. I can’t believe that that would suffice for him to develop what he called -- and let me read for a moment the comment made on May 9, 1974. He said:

If it is altered upward by an adverse ruling, say, in the courts, if it comes to that, there would be a rebate. In fact, I would anticipate that would be a cornerstone of our whole practice of collection of these moneys.

That is what we are dealing with here, and I could go on at length. You dealt with my colleague from Downsview (Mr. Singer), you recall, and what you said in effect on that occasion was this: We are dealing in principle now, but when we get down to digest this section, and to the impact of this section on a section by section evaluation of the bill, I will have more to do with you. And I recognize -- and I paraphrase without fault -- I’ll have something more to do with you in connection with what I recognize is a fault in this legislation.

For me to sit here, and I am going to say it once more for the sake of understanding, for me to sit here and hear the Ontario Minister of Revenue reply to a colleague in the Legislature and say that we can’t deal with the people in Ottawa because Allan Lawrence asked a question of the Minister of Finance, and he made a response, beggars description.

I say to you this, I have been your heartfelt colleague in this problem, because this is a problem through ad hoc-ery. As I said this afternoon, and as has been said many times, you are enveloped with this problem, not of your own making, but because of the grandiose schemes, the megalomaniacal attitude of the Treasurer. He wanted to point out to his 60 friends up there that he wanted to have people like the member for Lambton banged to death behind him while he talked about a land speculation tax.

I want to tell you what he did. He never, nor did his advisers, for one moment -- I am talking about the senior advisers of the minister of finance, the chief economist of the Province of Ontario -- never for one moment did he give consideration to the onus that he placed upon the Minister of Revenue and his senior advisers in trying to implement the collection of that tax on an equitable basis.

Mr. R. F. Nixon: They both went to Paris together.

Mr. Bullbrook: I know it. The minister knows it. The advisers of the Ministry of Revenue know it. The advisers of the Minister of Finance know it. And, by God, when you hear the Minister of Revenue of Ontario saying that that type of response is sufficient for him, then I want to say this to you. I am not finished in connection with section 2, subsection 1. I yield again to the leader of the New Democratic Party. But when you give him that type of response, what you do to me personally is that you say to me you don’t know what you are talking about.

Mr. Lewis: That’s right.

Mr. Bullbrook: Can you imagine for a moment saying to hon. members of this House that the federal Minister of Finance has made a comment in the House of Commons? That is your attitude, when he doesn’t even have the responsibility concurrent with this statute or concurrent with the federal obligation.

Interjection by an hon. member.

Mr. Bullbrook: You told us -- I’m not going to read right now. I will read it afterwards. You just hearken back. You get out your copy of Hansard for May 9, 1974, and you see what you said in response to the opposition in this House with respect to their comments in connection with the confiscatory aspects of this tax. You see what you said. You equivocated.

An hon. member: That’s right.

Mr. Bullbrook: And I give you credit for that. And it is the only thing you could do, because the very essence of this statute is equivocation. You have equivocated and I understand that. But what you led us to believe and what you led my colleague, the member for Downsview -- who is on another legislative responsibility tonight -- to believe was that you would give sincere consideration to enshrinement in this statute of a proposition where the court couldn’t misunderstand -- or any other tribunal couldn’t misunderstand -- that this tax concurrent with the federal tax would not be a confiscatory burden.

That is all the Leader of the Opposition asked. That is all the leader of the New Democratic Party asked. They don’t ask for that -- I think it was “huggery muggery” your colleague said one day. They don’t ask for that type of response in connection with the Minister of Finance in Ottawa.

They just say to you, as I could do: Five weeks I My God, my friend, may I say to you, most respectfully, you are Her Majesty’s Minister of Revenue in Ontario. Do you know all you have to do to get some type of feeling from Ottawa? You have to pick up the phone, my friend. You don’t have to rely on Allan Lawrence. May I say to you, with respect to my six years with him that I wouldn’t rely on him for a traffic ticket, let alone coming to some conclusion with respect to the obligations of the taxpayers of Ontario.

Mr. Lewis: Exactly.

Mr. Bullbrook: But I close in saying this to you, I want you to respond to me. I want you to respond in only one fashion. I want you to tell me how you feel. Just please do this for me. Direct yourself for one moment as to how you feel. The Minister of Finance has one thing to do with the federal position in connection with the collection of your tax.

The fact of the matter is, and I say it without reservation, without misunderstanding, he has nothing to do with it. It is the Minister of National Revenue who has something to do with it. I will sit down, and I want you to address yourself to that.

Tell me how the Minister of Finance has one thing to do with this, because if he has something to do with it then get your Treasurer in here. We have been crying for him for six days now. Get him in here; get him involved in it.

We talked about the farmers this afternoon -- and I digress just for one moment -- in a significant manner involving the farm population of Ontario this afternoon, we discussed a matter of essential policy, equity and justice, as far as the farmers are concerned. The Treasurer of Ontario who stood in his place that day and who just swelled -- if he could swell any more -- in the laudatory applause of his government colleagues said that he was going to impose this tax. And not for one moment has he stood in his place to defend the implementation of the tax and if there is anything more that I really am concerned about, as much --

Hon. Mr. Mean: Where were you this afternoon when he was in?

Mr. Breithaupt: For five minutes.

Mr. Bullbrook: He was here and he didn’t say one word.

Hon. Mr. Meen: He was here.

Mr. Bullbrook: He said not one word.

An hon. member: He just came in to gloat.

Mr. R. F. Nixon: He was in and out like a speculator.

Mr. Chairman: Order, please.

Mr. Bullbrook: No, that is the type of thing that incenses an opposition member. Do you not recognize that this afternoon I spoke as vigorously as I could --

Mr. R. F. Nixon: That is pretty vigorous.

Mr. Bullbrook: -- with respect to the farm position? Do you realize that every time I stood up, and my colleague stood up, and my colleagues from the New Democratic Party stood up, he left the House? As a matter of fact, he didn’t have the good grace to stay here when the member for York North (Mr. W. Hodgson) stood up and I want to say to you -- is it York North or York South?

Mr. Lewis: Yes, it is York North.

Mr. Bullbrook: York North -- I want to say to you, in closing, that I want to record, for my own benefit, my great appreciation for the courage, stability and understanding of the member for York North. Because if it wasn’t for him do you know what would have happened this afternoon? We would have divided on subsection (v). We would have. And you know the problem would have faced you -- an even more traumatic problem than has faced you thus far -- your colleagues would not have supported you. Some of them couldn’t have, in conscience, supported you. You began with a resistance. If you recall, on my initial involvement I said, “Please stand this down. Please let us look at it,” and you resisted that. But after his intervention you didn’t resist it any more, and I give you credit for that. I don’t chastise you. You are not the villain of this piece. Not in any way are you the villain of this piece. The Treasurer is the villain of this piece.

Mr. R. F. Nixon: He is doing his dirty work like he did last year.

Mr. Bullbrook: Mr. Chairman, I’m sorry. I went on too long and I apologize. I ask you, just tell me how, in any semblance of reason and intelligence, you can say to the leader of the New Democratic Party that your involvement in Ottawa was foreclosed by a question from the federal member from Northumberland to the Minister of Finance? I can’t understand that, because that the very type of thing that activates me to my feet and activates others to their feet. We want to get this damn thing through.

I phoned your deputy minister yesterday and I said to him, “How can you implement this type of thing?” Do you know what he suggested to me? He’s a fine man. I was really taken with his sincerity on the phone. He said, “Mr. Bullbrook, perhaps we must give undertakings with respect to this.”

I say this to you, and my colleague from St. George said this this afternoon, and I close now, do you realize taxation statutes are very significantly interpreted? They are. They are interpreted with great care by the courts and understandably so. And they are interpreted in favour of the taxpayer, and thank God for that. But, by goodness gracious, I am personally sick and fed up with attempting to deal with a statute where we can’t understand its meaning.

This afternoon I brought up, on subsection (v) -- and I’m almost finished, Mr. Chairman, you’ve been very indulgent -- the obvious advantage you give to corporations. We divided the House on that. It’s understandable what you’ve done there, but to give this type of response, that the Minister of Finance in Ottawa has told Allan Lawrence that he is not going to make any commitment, that’s beneath not only the dignity of your portfolio, but I say to you without personal deprecation, it’s beneath your ability to understand what the function of the Minister of National Revenue is.

Hon. Mr. Meen: Mr. Chairman, I thought that I had made it clear earlier that there had been correspondence between the Treasurer (Mr. White), and his counterpart, the Minister of Finance, and there has been. The Minister of Finance had said in correspondence with the Treasurer of Ontario that he could not and would not consider the bill until it was an Act.

What I was referring to in reply to the member for Scarborough West was, very simply, that it was also a matter of public record that just two weeks ago the question was asked of the Minister of Finance, who, in designing to answer, answered for the government of Canada and consequently for his colleague, the Minister of National Revenue. I see nothing inconsistent with that whatsoever. If he deigned to answer the question, he did so on behalf of the Minister of National Revenue and of the government of Canada, of which he is a minister.

Mr. Chairman: The member for Scarborough West.

Mr. Lewis: If I can pick it up, I hardly need to take up the cudgels on my own behalf; the member for Sarnia has put it all, virtually all.

Don’t talk to us about Allan Lawrence. Allan Lawrence never gave an intelligible answer while he was a minister, how could he ask an intelligible question? For all I know, Allan Lawrence asked about the sales tax or the non-resident land transfer tax. I don’t know what Allan Lawrence asked and I wouldn’t imagine it to be anything other than -- what was the term the Chair used earlier this afternoon?

Mr. Breithaupt: Frivolous and vexatious.

Mr. Lewis: Frivolous and vexatious. I don’t expect John Turner to answer in anything other than the combative terms which are engendered by the House of Commons.

If you want to find out where you stand on this tax you can find out by speaking to the senior civil servants in the Department of National Revenue, Ottawa. You know it and we know it.

How is it if there are letters between the provincial Treasurer and the federal treasurer that we haven’t had them tabled in the House? How is it that you refer to them now at 22 minutes after 10, five weeks after the bill was introduced, after we have been in several days of debate?

I want to ask you a direct question as well. Has any senior civil servant in your ministry or have you as the minister written or phoned or spoken to in person any senior civil servant or the Minister of National Revenue in Ottawa about whether or not section 2 of this bill will be seen as you are now interpreting it in the House?

Hon. Mr. Meen: Mr. Chairman, I have already indicated that but I will say it categorically: No I have not. So far as I know --

Mr. Lewis: No, you haven’t?

Interjection by an hon. member.

Mr. Lewis: I don’t need embellishment. If you haven’t done that you’ve just abdicated. I am sorry -- you don’t know what your responsibilities are and the government doesn’t know what its responsibilities are.

You are taking such a juvenile, adolescent view of this bill which is so important, which is causing very serious ripples in the economic community. Everybody is commenting day in and day out as to whether it is inflating land values, holding land off the market or reducing land values. Tax law, as I understand it from my colleague from Riverdale who has specialized in it from time to time and from the other lawyers in the House, is a terribly serious complex matter and you don’t toy with it in this fashion. This is not a tempest in a teapot, this little exchange tonight. It goes right to the heart of this bill.

Clause 2 of this bill attempts to implement its so-called principle. It may well turn out to be confiscatory in implementation. It will throw the bill into a shambles and the marketplace into chaos. In five weeks you haven’t had the interest, the courtesy or indeed the competence -- and I mean that of the government not of you personally -- to talk to the taxing officials in Ottawa and find out whether it can be clarified.

I’ll tell you it suggests to me that this whole bill is a falderal. As we stumble and lurch from clause to clause in a way which is embarrassing to the minister and absurd in the House nothing gets clarified in the process.

Mr. Chairman, I repeat what I said a few days ago. I know not of another piece of legislation in this province in the last several years which has had such inappropriate passage. It may not be so stormy; it will obviously get through at some point but it is inappropriate because from clause to clause, amendment to amendment, item to item, you know not where you stand. You are the Minister of Revenue and you take your responsibilities as a Minister of Revenue most cavalierly. If the Treasurer wants to come in here he’ll come in here and defend himself; you are the minister who supposedly is piloting this bill through the House.

I must say I would not have dreamed it possible that at this point in time, on May 14, you would still not have engaged in any consultations. I can’t get over that and you say it with a positive pride. I don’t know whether your deputy minister is syrupy and friendly on the phone -- I don’t think I have spoken to him on the phone -- and I am sure your civil servants are as earnest as hell and obviously competent in what they send you. Indeed, you couldn’t operate without their advice; you wouldn’t have anything to say if they didn’t script it for you. On this occasion, we deserve more than you are giving. You have thrown this whole bill into dispute again, into contention. I don’t know whether you intended to do that to the commercial community, the residential community, the investment community, to pit one tax consultant against another, but you have surely succeeded.

As I stand here I want to say a couple of things and then I’ll close -- only I will close when I say I will close -- and that is that the Minister of Housing is talking through his hat. I have never seen a minister on such a self-destructive course in my political life. That man is walking down the garden path, savouring the fruits on the trees -- and he had better eat them all because at the end he is going to leave the cabinet benches because this Land Speculation Tax Act isn’t going to work.

It is not bringing down the value of land. It is not bringing down the value of houses. It is a fraud and the government’s inability to define the central clause of this bill suggests to us just how mischievous is your whole approach. It is completely without foundation. You have no faith in this bill. You know it is not going to accomplish anything. You read the business pages of the Globe and Mail as I do. Read Donald Kirkup this morning, saying that the levelling off is a very temporary thing; that there is a drop of 20 per cent in housing starts across the board and that within a matter of months all the prices will skyrocket again.

You know what is going to happen. If you want to win public appeal on the basis of this bill you had better have an election before the middle of August or you are finished because this bill is a frivolous piece. You don’t even have enough confidence in it yourself to discuss it with the tax experts in Ottawa and you are going to have a very stormy passage with this piece of legislation because there is too much in it which is fallacious.

You know it but you are such a partisan, such a rough and ready Tory that you will go down the road to hell with this bill without for a moment turning back.

Mr. Breithaupt: Mr. Chairman, I would think there are many other comments which my colleagues and I will be making with respect to section 2. This might be an opportune time to suggest that the committee could rise and report, if that was so wanted.

Hon. Mr. Winkler moves that the committee rise and report.

Motion agreed to.

The House resumed; Mr. Speaker in the chair.

Mr. Chairman: Mr. Speaker, the committee of the whole House begs to report progress and asks for leave to sit again.

Report agreed to.

Hon. E. A. Winkler (Chairman, Management Board of Cabinet): Mr. Speaker, for Thursday, business as previously announced.

Mr. S. Lewis (Scarborough West): Just a second. What was the previous announcement? I am sorry.

Hon. Mr. Winkler: We will continue with the list which was announced on Thursday evening.

Mr. Lewis: Which is Bill 25?

Hon. Mr. Winkler: Yes.

Mr. Lewis: Are you going to be withdrawing any more sections, amending any more sections, deleting any more sections?

Hon. Mr. Winkler: No.

Hon. Mr. Winkler moves the adjournment of the House.

Motion agreed to.

The House adjourned at 10:30 o’clock, p.m.