The House resumed at 8 o’clock, p.m.
Mr. Speaker: I understand the order of business is the motion for second reading of Bill 80. The hon. Leader of the Opposition.
SUCCESSION DUTY ACT (CONCLUDED)
Mr. R. F. Nixon (Leader of the Opposition): Thank you, Mr. Speaker. The bill puts before us in the form of legislation the announcement made by the Treasurer (Mr. White) in his budget which extends the value of an estate to $150,000 below which succession duties are not charged.
I recall one of the Treasurer’s predecessors indicating the province was going to go out of the succession duty business entirely and become one of those havens, like Alberta and Nassau, to which well-to-do Canadians could congregate in their latter years without the problem of having the state step in to remove any portion of their assets upon their demise. In other words, giving them the freedom to take it with them, if they could design some means to do that.
I recall the statement being made that we were going to reduce succession duties in this province to zero; yet this policy still has not come into effect.
Frankly, I support the principle of maintaining succession duties. And I must admit to you, sir, a certain distinct problem in my own mind: I suppose we can all think of instances when people who had a great influence on us in earlier years, expressed opinions. I can recall sitting around our breakfast table at home in St. George, reading the Globe and Mail, when the estate of the late Harry Oakes was probated. You may recall, sir, that Harry Oakes was a multi-millionaire who had done extremely well out of the resources of this province. He had moved to Nassau for tax reasons -- also I understand the climate is quite pleasant down there -- and he had moved most of his assets with him. Though we shouldn’t forget the fact that he had left certain emoluments to this province, like the Harry Oakes garden in Niagara Falls and certain other things, he really took most of his assets with him. But some of them were not transportable, and upon his, what you would call I suppose untimely death -- which was never solved -- the Province of Ontario saw fit to tax $8 million in succession duties on his estate. I remember expressing to my father, the former member for Brant, some surprise at the size of that tax bite, and my sainted father saying: “You shouldn’t be so worried; it should be ten times that big.”
I’ve always felt, sort of as the aftermath of his opinion, that succession duties have been historically a basic and important means to redistribute wealth; wealth that was garnered by hard work, perspicacity, intelligence and undoubtedly good luck. The succeeding generations, while they have always had access, normally, during the lifetime of the patron of the family, to good education and certain other assets, I have always felt should not be so unduly favoured as to be able to take the estate without decrease by succession duties.
On the other hand, as we say, it is apparent that values of dollars change and the increase of the $100,000 basic minimum to $150,000 may not be an unduly large increase. The increase for the reductions due to dependents of about 50 per cent, as announced, seems to be quite well received, particularly in the agricultural communities of Brant and Durham.
Hon. E. A. Winkler (Chairman, Management Board of Cabinet): I am waiting for the member to tell us if he is for or against it.
Mr. J. A. Renwick (Riverdale): We will let the minister know after we speak.
Mr. R. F. Nixon: I can tell you, Mr. Speaker, that I am glad the government has renounced, at least for the time being, its policy of attempting to become a third-rate tax haven of the type that would attract the multi-millionaires of this part of the hemisphere to retirement here. I don’t think really we could do it. Our climate is better than Alberta’s but not as good as Nassau’s.
Hon. Mr. Winkler: We are just after the tax; that is all.
Mr. R. F. Nixon: I would say that after baring my soul to you, Mr. Speaker, and I know you are terribly interested in this, and indicating that my heart is in the right Liberal place, I can’t find it to oppose the basic principle of the bill. It maintains succession duties as they should be maintained. It expands the basis so that a larger proportion of the estate can be transferred tax free. And $150,000 is still a substantial estate. Maybe the House leader still finds himself to be in a taxable situation if he were to pass on unexpectedly.
Hon. Mr. Winkler: No, I’m not. We are going to get the member for Grey-Bruce on it.
Mr. E. Sargent (Grey-Bruce): The government won’t get me.
Mr. R. F. Nixon: I feel in principle we will be constrained to support the government in this regard.
I would be interested, however, if the Minister of Revenue (Mr. Meen) would indicate the policies of the government in regard to the statement of the former Treasurer that the government believed that succession duties were no longer a revenue producing tax of significance and that the policy was to move out of this field entirely. I would hope that we are not going to move out of it, but it could be that the minister would be in a position to give us some indication of what the future might hold in this regard.
I suppose it would also be possible for the minister to tell us how many estates of over $150,000 his statisticians would indicate he would have to deal with in the year that lies ahead. In the accumulation of wealth in this province, the most favoured of all others, I would suppose there would still be an indication of substantial revenue associated with this.
The changes in the statutes of Canada with the imposition of a capital gains tax have to some extent made estate taxes, if not succession duties, a bit redundant since the revenues on capital gains are gathered and collected on the basis of these estates deemed to be eligible for capital gains impositions at the federal level. We share in that to some extent or we are associated with it. It could be that the minister can give us some predictions as to the revenue potential of this tax field with this change in the basic rate.
Mr. Speaker: The hon. member for Lakeshore.
Mr. P. D. Lawlor (Lakeshore): Mr. Speaker, we most certainly will oppose this legislation as we do with all the erosion and undermining of the succession duty base that has taken place in this country generally and in this House over the past three or four years. Despite a certain amount of breast-pounding and lip service to the principle, it is gradually disappearing from view. Despite what Carter had to say in his elaborate report, the federal government saw fit, under pressure from the government of Alberta which was a spreading cancer in this country, to withdraw from the field entirely. Any suggestion that this government ought to do so too would be a final piece of dispelling inequity with respect to the whole tax structure and tax mix that would be hardly palatable to any fair-minded citizen in this country. To that extent, the Leader of the Opposition finds some degree of the palatable in the legislation.
But look what is happening. Last year it was infinite interspousal transfers. And Mr. Speaker, tonight I am not going to speak as I did on that occasion and on previous occasions at considerable length in terms of analysis of the purpose, meaning, definition and various intricacies of the clauses connected with succession duty. I’ve done that, and done it time after time, and I am heartily sick of the process. It is all on the record. I would refer the hon. minister and you, Mr. Speaker, to the somewhat lengthy remarks beginning at 4152 of Hansard of Oct. 11, 1973, and going on page after page thereafter.
Mr. R. F. Nixon: Nobody ever reads that.
Mr. Lawlor: And I had very much promoted the fact --
Mr. I. Deans (Wentworth): Why doesn’t the member read it into the record?
Mr. Lawlor: I just might do that little trick because so little cognizance was taken of what was said in that particular discourse. And let me tell you, that was a blazing good speech. When I read that over the weekend I said --
Mr. V. M. Singer (Downsview): Well re-read it again.
Mr. Lawlor: I said: “What remarkable powers this young man has.” I was speaking about some alter ego out there, some poltergeist phenomenon known as Lawlor number two.
Mr. R. F. Nixon: Sounds fairly schizophrenic,
Mr. Singer: What ever happened to Lawlor number one?
Mr. Lawlor: But it would be, it would be balm of Gilead to members’ hankering after support of the government powers to take a look at those few pages.
Mr. Singer: Read it to us again.
Mr. Lawlor: By George, I think it will.
“Mr. Speaker, we think the ministry is making a very grave mistake indeed in its infinite interspousal transfers. The central issue in the legislation will move us to vote against” --
Mr. R. F. Nixon: That’s what this bill does?
Mr. Sargent: That’s three times.
Mr. Lawlor: Well, I won’t give the members the satisfaction; it is too much. Why, I’m not here to cater to the whims of the Liberal Party.
Mr. R. F. Nixon: Good.
Mr. Lawlor: I won’t subject myself to that particular regimen this evening. Let me simply say that what the legislation seeks to effect, as was set out on page 33 of the budget, is a basic exemption being increased from $100,000 to $150,000, that’s the first instance. And I don’t think that is justified on this occasion, despite the inflationary spiral.
Mr. R. F. Nixon: Has the member checked this with his leader? The egg farmers aren’t going to like this.
Mr. Lawlor: If there is one form of taxation in this country that has validity, that really goes to equity, that one form of taxation is death tax, where money passes from one generation to another. The next generation didn’t earn it. You know our moral and other arguments that we have used in this House before, Mr. Speaker. It’s a windfall. And the more money involved, the more the windfall amounts to, the greater the winnowing out of the possibility of them developing on their own hook, of being of value to themselves. In terms of the social weal, it is requisite even in a capitalist country and province that there will be from time to time some kind of dispersal of cumulative concentrations of wealth so that the great families of this country do not go on as some kind of bourgeois hierarchy coming out of the nobility of the middle ages.
Self-imposed and official nobility in a democracy; that’s the way it is accomplished. That’s what happened in this province. While these great families are not as conspicuous because they are shrewd and they hide, as in the United States and in certain continental countries, while it is slightly more difficult to place your finger on who they are, just read the Directory of Directors. See who are prominent in appointments in the Financial Post. See where the roots fall.
There has been recently a book, I forget the name of the author, published in this country designating the 80 major families. Why do they remain major? Is it due to any inherent merit or worth of their own? No; it’s by handing down money from generation to generation in accumulating pools. And that runs directly against and conflicts with any social benison or any social good, and against the deepest feelings of a social spark. There would be the nub of the dispersal of wealth. That’s where we would put our finger in starting the new generation fresh. Each to fend for himself and each to make his own way in this world.
Mr. R. F. Nixon: This bill enables them to be passed on -- farms that is.
Mr. Lawlor: And not to have the visitations from above and beyond. But this is totally in harmony with Tory thinking. To keep that type of class structure, to perpetuate the existing family thing.
Mr. R. F. Nixon: It’s not nice to fool Mother Nature.
Mr. Lawlor: And these fellows over here find a great deal of accommodation with that particular kind of feeling. The Leader of the Opposition runs directly against his sainted father this evening. One moment ago he was talking of “10 times as much.” Where is the 10 times at this moment?
Mr. R. F. Nixon: Harry Oakes wasn’t a farmer.
Mr. Lawlor: Father isn’t blessing him from a distance. I can tell him that.
Mir. R. F. Nixon: This bill deals with farm transfers. The member should have read it before he made any comments.
Mr. Lawlor: No. This section on farm transfers, I am not on this occasion taking any issue with.
Interjections by hon. members.
Mr. Lawlor: What I am taking issue with is the basic principle.
Mr. R. F. Nixon: That is what this bill deals with. The member’s leader (Mr. Lewis) may have to come and set him straight.
An hon. member: Put that on the record.
Mr. Lawlor: I am pleased to have it on the record:
Dear Farmers of Ontario, I for one am not taking any issue tonight with your position with respect to succession duties and farming assets. God bless you.
Interjections by hon. members.
Mr. R. F. Nixon: Shame. We will have to send out many thousands of copies of the member’s speech.
Mr. Lawlor: What is concerned here is the appendage: A 50 per cent increase in that particular area, from $2,000 to $3,000 for each full year a child is under the age of 26 years. With respect to the next subsection -- which one couldn’t figure out unless one had a directory to take one through the contours of the legislation -- subsection 7 is an increase to $6,000 from $4,000 for each full year an orphan is under 26 years of age; and the next section has to do with invalids --
Mr. R. F. Nixon: Section 2 deals with farming assets.
Mr. Lawlor: -- and benefits that are flowing from that particular source. Where we find it questionable is the increase of 50 per cent, from $100,000 to $150,000 in this particular regard as we see a further giveaway.
Mr. R. F. Nixon: The member wants to break up the family farm, I understand.
Mr. Lawlor: I think what the government should do particularly is reverse its thinking --
Mr. R. F. Nixon: Why should he want to do that?
Mr. Lawlor: -- on what was a far more iniquitous situation than tonight, the position of last year on interspousal transfers.
Mr. R. F. Nixon: Ah no; the member should read these bills. The farmers aren’t going to like him.
Hon. A. K. Meen (Minister of Revenue): There are not many farmers in Lakeshore.
Mr. Lawlor: Come back into this House and bring us legislation with some teeth --
An hon. member: I know that he read it over supper.
Mr. Lawlor: Chatterbox!
And come back into this House in the near future with legislation that will stimulate the taxpayers. As we’ve pointed out time and again, what is not paid in succession duties to the province is paid by other people in income tax or in a vast variety of other taxes.
Where is it easier to extract the money? Where does the least weight fall? Where are they who have not deserved or made any contributions towards it in this particular field? As I’ve said many times, if I had one tax that I would keep in possession to the neglect or abnegation of all the rest, it would be succession duties. That would effect a just society and a fair distribution of advantages in the society, instead of the perpetuation of privilege and inequality such as is written into your legislation as things presently stand.
It’s pure class legislation, we take great issue with it, and we would ask you to stop bringing in succession duty bills, session after session of this particular ilk.
Mr. Speaker: The hon. member for Waterloo North.
Mr. E. R. Good (Waterloo North): Mr. Speaker, I’d like to say a word on this bill. I personally feel that the principle reflected here is a matter of keeping up with inflation, which makes it necessary to allow tax-free transfers of estates up to $150,000. Certainly with the inflated price of homes today -- reaching $50,000, $60,000, $70,000, $80,000 in certain parts of the province -- it’s conceivable that starting estates tax at $100,000 could very well be a hardship, especially in the type of will that would attract tax at the time of death of the breadwinning spouse.
I think that to attract tax at a lower rate than is set forth in the bill could, under certain circumstances, create a certain amount of hardship.
There is one thing, Mr. Speaker; I think the --
Mr. Deans: For whom?
Mr. R. F. Nixon: For the farmers.
Mr. Good: -- New Democratic Party forget that it is no longer possible to accumulate wealth in Canada that has not already attracted a considerable amount of tax.
Mr. Renwick: Come, come.
Mr. Good: Yes, there used to be a day when you could make money without attracting tax. There was a day when the worst kind of money you could get was the money that you earned by your work, it was taxed the most. But that day is already gone.
Mr. Renwick: The member knows very well that’s not true.
Mr. M. Cassidy (Ottawa Centre): The member wants it back, eh?
Mr. Good: Now tax has already been paid on any money that forms part of the estate of any person. And I think that --
Mr. Lawlor: What nonsense! Purblinded, befogged.
Mr. Good: I personally feel --
Mr. Lawlor: Why doesn’t he --
Mr. Good: I personally feel, Mr. Speaker, that this is a reasonable compromise --
Interjections by hon. members.
Mr. Speaker: Order.
Mr. Lawlor: -- go to heaven?
Mr. Speaker: Order, please. Order.
An hon. member: The member for Lakeshore had his say.
Mr. Sargent: The member for Lakeshore made his speech. He made his speech.
Mr. Good: The member made his speech. He made his pointless arguments.
Interjections by hon. members.
Mr. Speaker: Order.
Mr. Good: The member for Lakeshore made it perfectly clear again that he doesn’t think much of his wife because he doesn’t want interspousal transfers tax-free. He wants her to have to live on --
Mr. Lawlor: Not infinite transfers.
Mr. Good: -- what is left, and he wouldn’t permit interspousal transfers without tax.
Mr. Speaker: Order.
Mr. Sargent: Shame.
Mr. Good: He reinforced his position in that regard; now we feel differently about it.
Mr. Lawlor: I will give the member $100,000 if he --
Mr. Good: We feel that the family is a family unit and there should be interspousal transfers without tax.
Now getting back to the other arguments I was making, Mr. Speaker --
Mr. Sargent: Having said that.
Mr. Good: -- that with the land speculation tax, with the capital gains tax, with the increase in income tax over the past 10 or 15 years, we find that any little bit of savings the average man does get is only after he has already paid considerable tax on that money.
Mr. Deans: How about his insurance policy?
Mr. R. F. Nixon: Farmed his land for 50 years.
Mr. Good: In this day and age, Mr. Speaker --
Mr. Deans: How about his insurance policy?
Mr. Good: -- you know as well as I do that the average blue collar worker, sitting in a nice home with his cottage at the lake, a boat and a trailer --
Mr. Deans: Where is the average blue collar worker?
Mr. R. F. Nixon: The fireman, too.
Mr. Good: -- which every working man has -- okay, including the firemen if the hon. member for Wentworth wants to know -- it takes no time at all --
Mr. Sargent: And the station wagon and the moving office.
Mr. Good: -- before he, of course, would have the taxable --
Interjections by hon. members.
Mr. Speaker: Order, please.
Mr. Good: I don’t want to be controversial, Mr. Speaker, but it’s just a matter of differences of philosophy. I happen to agree that this bill does reach a reasonable compromise when we’re talking about the inflated values of all possessions that people are now possessed with.
Mr. Sargent: And the members of Parliament’s salaries too.
Mr. Good: The increase in allowances for dependent children, I think, is just another way of reflecting the inflated costs of everything these days. Certainly no one is here to argue there should not be allowances made for dependent children before the government dips in and puts its taxing hand on the estate. My goodness, how far --
Mr. R. F. Nixon: The cold, dead hand.
Mr. Good: -- do these people on the left want to go? The amendment here regarding the farming community is --
Mr. Lawlor: Don’t distort it.
Mr. Good: -- certainly well accepted by this party.
Mr. R. F. Nixon: As a matter of fact, it’s called the Gaunt amendment.
Mr. Good: The hon. member for Huron-Bruce brought this very forcibly to the attention of the minister last year.
Mr. R. F. Nixon: It was supported by the NDP then.
Mr. Deans: It is still supported by the NDP.
Mr. Good: Farming assets, which are dealt as tax free if the farm continues to be farmed, must also include liens and mortgage and paper which is held by the deceased person, having previously sold his farm to a member of his family. On that part certainly, Mr. Speaker, it’s incomprehensible that the NDP would vote against this bill, other than they have a hangup on this particular type of tax.
Mr. R. F. Nixon: In caucus they didn’t read it.
Mr. Good: I believe that succession duties do form and do have a place in our society. It’s amazing when one does hear the statistics on how few estates in the Province of Ontario do attract tax. As I understand, it’s fewer than one per cent, and most of the major income, which I think was some $89 million the year before last --
Mr. Lawlor: According to the member’s speech it ought to be 10 per cent.
Mr. Sargent: Listen, this speech isn’t a rerun like the one by the member for Lakeshore.
Mr. Lawlor: It only takes a few moments to accumulate $15,000.
Mr. Good: -- was attracted from one or two estates. Mr. Speaker, what the NDP fails to realize is we’re not talking here about multi-million dollar estates; we’re talking of estates between $100,000 and $150,000. If they’re too obtuse to understand that that amount represents perhaps three-quarters of them in that party --
Mr. Deans: Typical Liberal; nowhere in the ball park.
Mr. Good: -- it’s hard to understand why they would oppose this reasonable exemption.
Mr. Speaker: Does any other member wish to participate? The hon. member for Riverdale.
Mr. Renwick: Mr. Speaker, I think it is always difficult to get the key figure which will reflect the tax implications of the tax policies of the government at Ottawa and of this government. I think the one which has always appealed to me is the percentage of taxes and the level of income which relates to that percentage of tax which is paid under the major taxing statute of Canada, namely the Income Tax Act of Canada.
The latest statistics which are apparently available and have only been available recently, show that 85 per cent of the revenue collected by the government of Canada under the Income Tax Act of Canada with respect to the taxation of individuals comes from persons who earn gross incomes of $15,000 or less.
Mr. R. F. Nixon: There are a lot more of them.
Mr. Renwick: I think one must always recognize that when one is talking about the taxation of wealth, whether it is by way of a capital gains tax, a Succession Duty Act or a similar statute, one must recognize that you are only referring to a limited number of people in the Province of Ontario, and wealthy people.
It is all very well for the member for Waterloo North to use the disguise of inflation as a reason for supporting the increase in the exemptions of non-dutiable estates from $100,000 to $150,000. It is interesting to note that the member for Waterloo North apparently has no conception of the number of dollars he is talking about. He is indicating perhaps, and the Liberal Party is indicating, that this taxation statute -- the Succession Duty Act -- was going to strip some estate of all its assets. The actual number of dollars taken by succession duty in the Province of Ontario over the history of the Succession Duty Act has been negligible with respect to its impact upon the translation of wealth from one generation to the next.
I want to leave that topic and come back to the other principle of the bill with respect to the extension of the definition of farming assets to include two very specific extensions of the definition so that the system will work. It was poorly thought out when the minister introduced these amendments a year ago. The member for Huron-Bruce and this party supported the definition of farming assets. We support -- and I give credit to the member for Huron-Bruce --
Mr. R. F. Nixon: Very properly so, but why oppose him now?
Mr. Renwick: I am not opposing him now.
Mr. R. F. Nixon: The member said he was.
Mr. Renwick: The member for Huron-Bruce knows very well we’re not opposing him now. There are two principles in the bill. If the minister insists on introducing them we are quite capable of making the distinction on the bill. The fact is that when the member for Huron-Bruce raised these questions at that time --
Mr. R. F. Nixon: The member wouldn’t call that back-tracking, would he?
Mr. Renwick: -- this party supported the extension of the definition, because without it it was not going to permit the kind of remedial situation with respect to the family farm that we are interested in.
Mr. Lawlor: Is the member still confused on principles? Doesn’t he ever get anything straight? Is he so damn --
Mr. Speaker: Order.
Mr. Lawlor: The record will save him.
Mr. Renwick: Mr. Speaker, the record for all of those people in the Province of Ontario who undoubtedly read Hansard every night at bedtime will show perfectly clearly that so far as section 2 of the bill is concerned, with the extension of the definition of farming assets to include the specifics set out in the explanatory note in the bill, this party has no quarrel. But the principle of the bill --
Mr. Lawlor: Right.
Mr. Renwick: -- not the ancillary principle, the principle of the bill -- the Minister of Revenue laughs. The Minister of Revenue has no conception and no knowledge of what the Succession Duty Act is about. He seems to think there is some excuse for the policy of his government, and there is none. I would suggest that when he has time in his ministry from the minutia of the details of the administration of the taxing statutes of this province, he take a look at the number of dollars under the Succession Duty Act of the Province of Ontario that the Wright estate has paid to the government. Let’s not fool around about it. The Succession Duty Act of the Province of Ontario, as administered by Liberal governments and Conservative governments, has never for one moment made any significant impact upon the translation of wealth from one generation to the next.
Mr. R. F. Nixon: Took $8 million from Harry Oakes.
Mr. Renwick: Harry Oakes left the country, but Wright stayed; and the minister knows very clearly that they have not collected tax from the Wright estate for many years.
Mr. R. F. Nixon: Is that William H. Wright?
Mr. Renwick: Yes, William H. Wright.
Mr. R. F. Nixon: They tore down his building.
Mr. Renwick: They tore down his building all right and he -- whatever McCullagh’s name was --
Mr. R. F. Nixon: George.
Mr. Renwick: George -- has gone to his reward. Perhaps the minister would look at the tax that was collected on the estate of Mr. George McCullagh under the Succession Duty Act of the province.
Mr. R. F. Nixon: He was one swell farmer, George.
Mr. Renwick: Right.
Mr. R. F. Nixon: Was his estate over $100,000?
Mr. Renwick: I can well understand why the leader of the official opposition in the province is concerned. Because, of course, it was under the Hepburn government that the first real effort was made to tax wealth passing from one generation to the other. His father was a member of that government.
Some hon. members: Shame, shame.
Mr. Renwick: His father’s tradition was a legitimate one. Somehow or other he took the wrong turn in the road.
Mr. R. F. Nixon: Be careful now. Isn’t the member speaking against the amendment to rationalize farm income?
Mr. Renwick: But the leader of the official opposition cannot call in aid his father’s taxing philosophy to justify the position which he, as leader of his party, is taking at the present time.
Mr. Sargent: Why is the member against the farmers?
Mr. Lawlor: The Leader of the Opposition is getting slightly embarrassed.
Mr. Renwick: Let’s talk about the number of dollars we’re concerned with.
Mr. R. F. Nixon: Tell us about the real principle here.
Mr. Renwick: Some years ago the exempt estate was at $50,000. At that time, a $150,000 estate paid, when the property passed to three adult children, $8,250 in tax and the net non-taxable part of that estate was $141,750. I say to anybody, is that not a fair level of taxation, to take $8,250 out of a $150,000 estate and to leave $141,750 for division among three adult children?
Mr. Deans: Absolutely.
Mr. Renwick: Or in the case of the same $150,000 estate going to one adult child, there was a tax of $10,500; to leave for one adult child $139,500.
Hon. J. T. Clement (Minister of Consumer and Commercial Relations): Is that provincial only?
Mr. Renwick: This is provincial only.
Mr. R. F. Nixon: There was a certain additional imposition.
Mr. Renwick: There were no additional impositions. We’re talking about the Succession Duty Act and the number of dollars extracted by this government on the passage of wealth from one generation to the next.
Then a few years ago the government altered that policy and they made the exempt level $100,000. In that case, with the $150,000 passing to three adult children, the tax was $16,500, for a net estate of $133,500 to be divided among those three adult children. Or if the estate all went to one adult child, we were talking about a tax of $23,250 and the one adult child received $126,750.
At the level at which we are now moving we have that same estate, $151,000, passing to three adult children and the tax payable, by reason of the notch provisions, is $500. So there will be $150,500 available.
Mr. Deans: We’re worse off than we used to be.
Mr. Renwick: And if that same estate was passing to one adult child, at $151,000, again the tax would be $500 and the one child would take $150,500.
The net effect of the imposition of the succession duty in the Province of Ontario is not to deplete the assets of any estate. The member for Waterloo North knows full well that there has not been an estate in the Province of Ontario under administration for any period of time where the value of that estate has not increased substantially. And that is in terms of daily dollars that are used for the valuation of that estate; in terms of the return which that estate obtains for that money; and in terms of the use that was made by the persons who inherited that money.
I can always tell when the Minister of Revenue is upset about an ideological argument, because he sighs, visibly and invisibly.
Mr. Good: The member for Riverdale wants to be careful.
Mr. Renwick: Now the minister is tapping his desk, now he is tapping his desk.
I want the minister to say to the House, in the absence of the Treasurer -- who conferred the so-called benefits in his budget -- exactly the number of dollars that he intends to lose from the revenues of the Province of Ontario; and to cite one single instance in which the beneficiary of any estate is other than benefitted, as distinct from suffering hardship, from the change which the minister has made.
There was no hardship at $100,000. This government is engaged in a planned method of preserving the protection of capital that passes from one generation to the other. This government is concerned only in an ever smaller number of people controlling the wealth of the Province of Ontario. This bill is one major aspect of that philosophical difference that distinguishes this party from the Tory party.
An hon. member: And the Liberal Party.
Mr. Renwick: And distinguishes this party from the Liberal Party, despite its ambivalence on the problem that’s before the House tonight.
Mr. R. F. Nixon: What about the NDP’s concern for the family farm?
Mr. Good: The member for Riverdale doesn’t know what he is talking about.
Mr. Lawlor: The family farm is only one section of the bill, for heaven’s sake.
Mr. Deans: One tiny section. We will pass that section.
Mr. Renwick: Mr. Speaker, if one looks at the history of the Succession Duty Act in the Province of Ontario, from the time it was passed in 1893 until the present day, it has had no significant impact whatsoever upon the inherited wealth of those who receive wealth from one generation to the next generation.
Mr. Lawlor: And which it was originally designed to have.
Mr. Renwick: The number of dollars which it took for the Province of Ontario from the accumulated assets of wealth -- not earned by any one individual but earned because of the operations throughout the economy of all of the people who contribute day in and day out to the life of the province -- on that accumulation of wealth the tax which was taken by the Province of Ontario has been negligible. And the Minister of Revenue knows it.
Mr. Lawlor: The Smith report said so, and the minister affirmed it.
Mr. Renwick: You know, when it really comes down to whether or not the Tory government, as it likes occasionally to think, may have a sprinkling of red Tories, when the chips are right down they are all brass. Every Tory is brass. Every Tory is to the right and there is no red Tory. There isn’t a red Tory philosophy in the government of the Province of Ontario. There are certain members who occasionally have minor twinges of social conscience about what they are doing about the financial and economic affairs --
Mr. Cassidy: There are damn few --
Mr. Renwick: -- of the Province of Ontario.
Mr. Lawlor: There isn’t one of them.
Mr. Renwick: -- and then they don’t know how to deal with it.
Mr. R. F. Nixon: Like the member for Wellington-Dufferin (Mr. Root) and --
Mr. Renwick: Like my friend across the road. If the story is true today that the Department of National Revenue has now specifically ruled that the land speculation tax is not a deductible item for the purpose of the federal Income Tax Act or the capital gains tax, then the same kind of inability and ineptitude displayed by this minister during the course of that bill is evident in the bill which is presented to us tonight.
Mr. R. F. Nixon: Yes, the Minister of Revenue and the Treasurer.
Mr. Renwick: We in this party oppose the extension and increase of the exemptions under the Succession Duty Act of estates from $100,000 to $150,000. We will vote against it and we will divide the House on it --
Mr. R. F. Nixon: If the member can get five members in.
Mr. Renwick: Assuming always, of course, that we have five members in the House -- as we always do if one will notice.
Mr. R. F. Nixon: No, the member doesn’t. As a matter of fact, he wasn’t here to help his members this afternoon. We were settling the tooth bill.
Mr. Renwick: That’s right.
Mr. R. F. Nixon: We dealt with the tooth matter.
Mr. Renwick: That’s right. I just learned to pronounce that word and I have now forgotten it -- a dentulous arch.
Mr. R. F. Nixon: No; edentulous.
Mr. Renwick: Edentulous then.
Mr. R. F. Nixon: An indentured denture is something else.
Mr. Renwick: Oh I see; thank you.
But I do hope that the Minister of Revenue will take the trouble to take the House into his confidence and to tell us tonight about what he thinks about succession duties. Or are we simply always to be given these year by year extensions of the exemption, until the Succession Duty Act disappears into the realm of the irrelevant in the province in order that this government can follow the same strange line that the government of the Province of Alberta has taken?
We in this party believe there is no justification for the inherited transfer of wealth from one generation to the next without a substantial contribution being made to the revenues of the Province of Ontario. When we are the government, in 1975 or thereafter, we will see to it --
An hon. member: And thereafter.
Mr. R. F. Nixon: It’s too bad the member is not going to make it back into the Legislature.
Mr. Renwick: -- that this kind of tax will for once play the role which it must play in any government which has any sense of social conscience and the impact the taxes of this province bear on those persons least able to bear them. This is why this government is a government of privilege. Every time, when the chips are down, it stands for the privileged groups. It stands where it always stood as the inheritor of the tradition of the Family Compact. They occasionally pay some kind of passing lip service to the democratic process, but not very often as the commission --
Mr. R. F. Nixon: Once every four years.
Mr. Renwick: -- on the distribution of the electoral seats has indicated. They always conserve their position to support the privileged, elitist groups in the province.
This party will have no part of it. I expect the minister to put on the record tonight, by way of schedule or by standing down the bill until he has the schedule, the exact impact of this tax on the revenues of the Province of Ontario, the exact impact it will have upon the estates which are inherited as a result of this extension of the exemption.
Mr. R. F. Nixon: This bill is attempting to keep together the family farm.
Mr. Lawlor: The Leader of the Opposition is really more worried about the Family Compact than the family farm.
Mr. R. F. Nixon: Yes, that was thrown in quite lately.
Mr. Renwick: Mr. Speaker, I hope the minister is as restless and irritable and upset as he gives every evidence of being. I’ve known him for some time. As a matter of fact I showed him a cartoon this afternoon which exemplifies his attitude toward the House in all matters.
Mr. Cassidy: Yes it does.
Mr. Renwick: There was a certain element of humour in it, but not much. I’m simply saying to this minister that he does not deserve to be the Minister of Revenue because he’s got no concern for the places from which he should derive the revenues of the province. He allows himself to be used as the patsy for the Treasurer of the Province of Ontario.
When there’s any handout bill around, the Treasurer is always here. When the taxing bills are in, he always allows the Minister of Revenue to pilot them through the House, because the Treasurer doesn’t understand them and the Minister of Revenue doesn’t understand them and the Minister of Revenue’s advisers don’t understand them. Therefore we’re back again to the piecemeal amendment of the taxing statutes of the province; when endless numbers of dollars were spent by the Smith commission on the taxes of the Province of Ontario and endless numbers of dollars were spent on the Carter commission and this government has learned nothing from them.
Mr. Lawlor: The Minister of Revenue hasn’t even revised the Act. It’s the worst Act on our books.
Mr. Renwick: He doesn’t even understand the statutes. He doesn’t understand what it’s about. He’s done nothing to improve it.
Mr. Cassidy: That’s right.
Mr. Lawlor: He sits around and twiddles his thumbs.
Mr. Renwick: He’s done nothing to make it an effective taxing statute. He should start all over again. He should start as if he was back where he was in 1893 --
Mr. Deans: Or quit.
Mr. Renwick: -- and actually do something that’s of real significance on the taxation of corporate and private wealth in the Province of Ontario. That’s what he should be about. This fooling around, bringing in every year this kind of a bill and ducking the argument about the justification for it is something that we in this party can’t tolerate. We will divide the House on section 1 of the bill, which is the principal purpose of the bill.
Mr. R. F. Nixon: Oh come on. The member can’t divide it on section 1.
Mr. Renwick: So far as the farming assets are concerned, and as the record will show --
Mr. R. F. Nixon: The member for Riverdale is voting against the farmers. Why doesn’t he make that clear?
Mr. Renwick: -- there is no way in which the member for Brant (Mr. R. F. Nixon) can escape the fact that the principle of the bill has nothing to do with the ancillary extension of the definition of farming assets.
Mr. R. F. Nixon: That’s the main section.
Mr. Renwick: So let’s not get carried away with this kind of Liberal ambivalence.
Mr. H. Worton (Wellington South): One has to get carried away before one can take advantage of it.
Mr. R. F. Nixon: The farmers aren’t going to like this.
Mr. Renwick: Let’s be very clear. We will also put the bill into committee and we will see where our friends on the right stand on section 1 of the bill.
Mr. Good: We have told the member where we stand.
Mr. Renwick: Then we will see where they stand. They can’t play hot and cold on an issue such as this. Either they have got some ideological understanding of the Succession Duty Act --
Mr. Cassidy: None at all.
Mr. Renwick: -- or they haven’t.
Mr. R. F. Nixon: The member has 20 minutes. We suggest he is going to go ahead, so don’t sit down.
Mr. Renwick: All right. Mr. Speaker, if there is one thing that doesn’t condition the number of minutes that I spend on my feet, it is the wishes of the Leader of the Opposition.
Mr. Speaker: Are there any other members who wish to participate in this debate?
The hon. member for Ottawa Centre.
Mr. Cassidy: Mr. Speaker, I only want to speak for a minute about this, too.
An hon. member: Oh go on!
Mr. Cassidy: I came into this Legislature 2 1/2 years ago and I have seen the steady dismantling of the Succession Duty Act. This minister, under orders from the Treasurer and with the approval, apparently, of the government, is carrying the process still further with the amendments that we had before us today. And frankly, I don’t understand what it is about the Conservatives that they have so much reverence for the dead, because it is the dead who are the only people who are getting tax concessions from this government.
Interjection by an hon. member.
Mr. Cassidy: The government may defend them on the basis of inflation. That may be the case. But I want to ask what about the people who live in the province. How about the citizens of the province who are having to pay an increased sales tax of two per cent -- from five per cent to seven per cent? They got no concessions from this particular government because of inflation.
Mr. Lawlor: Let the dead bury the dead. What about the living for a while?
Mr. Cassidy: What about the people in the province who are tenants, who are homeowners, and who this year are having to pay an extra property tax of anywhere from $30 to $60, in addition to all the other costs that they must pay? They are getting no concessions from this government, unless they die.
Mr. S. Lewis (Scarborough West): Just the dead. Let this Act be interred with their bones.
Mr. Cassidy: Maybe it reflects a certain wish -- a moribund death wish on the part of the Conservative Party. Maybe it reflects sort of an old political practice, which was more prevalent in Quebec than in Ontario, where the gravestones commonly voted for the Union Nationale. Maybe the minister is hoping that the gravestones in this province will keep the Tories in power long after the population of the province has gotten fed up with this particular party.
I am afraid that as far as I am concerned it is well said that property is a form of theft and large amounts of property passing between generations continue and perpetuate a class system --
Interjection by an hon. member.
Mr. Cassidy: -- to continue the inequalities of our system. And they are endorsed and supported by this government and by this particular form of legislation.
The exemptions permit an income of about $15,000 a year at current interest rates. If one wants to look at the kind of tax that will be levied on typical larger estates of people in the middle and upper middle classes, you can easily see that the tax rates being charged are nothing but a pin prick.
At $200,000, and assuming that the estate passes to one beneficiary and assuming it is preferred, because most estates are these days, the tax will be all of 18 per cent between the tax on the estate and the tax on the beneficiary. That 18 per cent is less than the income for two years. One assumes that no matter what a ne’er-do-well the beneficiary happens to be, that he or she can maintain himself for that period of two years. At that point they have their capital intact and they can continue to live on it quite blithely for the rest of their lives -- and live the kind of life which is simply not available to most people earning the kind of wages and salaries that are available in this province.
At $500,000 -- half a million dollars -- an estate yields an income of around $50,000 a year. The tax totals 25 per cent. At current rates of interest, the tax would be paid off by the earnings on the estate within the period of 2 1/2 years, and after that the money will be passed on intact.
What kind of redistribution of wealth or power is entailed in this particular form of legislation?
For a $1 million estate it is a 32 per cent tax, which would be worked off in three years with the income from the estate.
Hon. Mr. Meen: It is gross before taxes.
Mr. Cassidy: This would mean that the person who wanted to pass on the estate would have had to make sure that a few gifts were passed on, as they can be, tax free -- almost tax free under the Gift Tax Act -- in order that the beneficiary could survive the $100,000 a year tax free.
I just don’t believe that the government can so constantly take the weight of taxation off this particular source when it has been loading it onto other sectors. We simply find it intolerable, inequitable, unfair and the symptom of a class-ridden government that deserves to be kicked out of office. We will oppose the bill.
Mr. Speaker: Are there any other members who wish to enter the debate?
Mr. Worton: Mr. Speaker, I would like to add a word of praise to the minister in the amendment that has been made in this bill in relation to the family farm. As it was last year we did not include the promissory note or mortgage. I think this amendment has certainly made it so that the farm can now pass from father to son without the father having to pass away while the son is working alongside.
I think it is a good amendment and I want to add my support to it.
Mr. Speaker: The hon. member for Huron-Bruce.
Mr. M. Gaunt (Huron-Bruce): Mr. Speaker, I just want to say a word about the farm amendment, and more particularly section 2. This is something with which I fully concur. I congratulate the minister for bringing in this amendment. I think it makes good sense.
We debated this point at length last year and we just couldn’t convince the parliamentary assistant at that time to include it in the bill. I think there was some indication from the ministry at that time that it was going to be a complicated thing and it was going to be a very difficult thing to police. But here this year we have it. I am sure that common sense prevailed over there during the course of the year. We have the amendment we discussed last year.
Mr. R. F. Nixon: The farmers have the member for Huron-Bruce to thank, in spite of the best efforts of the NDP.
Mr. Gaunt: I want to say to the minister that in my view the food production unit of the family farm is the most efficient. This bill assists the transfer of family farms from father to son, and I fully support it.
Mr. Speaker: The hon. member for Sudbury.
Mr. M. C. Germa (Sudbury): Mr. Speaker, sitting here listening to the debate going on, it seems to me that the Liberal Party is looking for a tree to hide behind in order to support the first principle in the bill, that it is a bill to --
Mr. R. F. Nixon: Try to make a justification.
Mr. Good: Every worker in the mine would support that first principle.
Mr. Germa: Every worker in the mine would not support this bill, Mr. Speaker, because he would derive no benefit from it. That is one of the trees which the Liberal Party is trying to hide behind, that the average bluecollar worker is going to reap some benefit from this bill. Let me assure you, Mr. Speaker, there is no benefit in this bill for any bluecollar worker in the Province of Ontario. About the only thing the son of a bluecollar worker will inherit from his father is his hard hat, his dirty lunch pail and probably his burial expenses.
Mr. Lawlor: There are hardly any yachts at all.
Mr. Germa: There are no summer camps, there are no boats and there is no home on a city lot.
Mr. R. F. Nixon: Things have changed since the member got here.
Mr. Germa: Things haven’t changed in the last three years, Mr. Speaker. I know exactly what I inherited from my father as a miner, so I am not speaking without some knowledge of the topic. I know thousands of other people in the same predicament I am in.
Interjections by hon. members.
Mr. Germa: It matters not how hard the bluecollar worker works. He cannot amass a property to this extent. This is why I say the Liberals are the culprits in this House in that they are ashamed to stand up and say that they are going to protect wealth by voting for this bill. They are hiding behind the farm barn and they are hiding behind the bluecollar worker in order to try to protect their very vulnerable position.
I also take exception to a statement by the member of my party from Riverdale --
Mr. R. F. Nixon: He was trying to save the member’s bacon.
Mr. Germa: I take objection to only one statement in a very good presentation from the member for Riverdale, when he implied that the minister piloting this bill didn’t understand the bill. This minister understands perfectly well what he is doing. He knows he is protecting wealth. He is one of the fat cat coupon clippers in the province. These are the kind of people that this bill is protecting.
Mr. Good: Where is the member for Sudbury East (Mr. Martel) with his $80,000 house?
Mr. R. F. Nixon: Where is the NDP leader with his $150,000 home?
Mr. Germa: And that’s exactly what this bill is all about. It’s not very often that a bill comes in which expresses the difference between the two sides of the House as clearly as this bill does. This is class legislation -- and I know what class I belong to; and I know what fat cat class that those people across the House belong to.
For that reason, Mr. Speaker, I had to get it on the record that I am violently opposed to this legislation. I have never been as opposed to any legislation more than I am to this. This is the rankest piece of legislation I’ve ever seen brought forward by this minister.
Mr. Speaker: Does any other member wish to enter the debate? If not, the hon. minister.
An hon. member: Fat cat.
Hon. Mr. Meen: Thank you, Mr. Speaker. I will keep my observations brief, because I think we have covered in fair detail the two principles involved in the bill. By his reference to his late father, the Leader of the Opposition brought back to mind the thought widely held -- and I share it -- that probably a succession duty, when fairly applied in the larger estates, is one of the fairest ways in which to raise money for the general benefit of the province.
Mr. Deans: What does the minister mean by two principles?
Hon. Mr. Meen: I can recall my father saying that years ago. And I suppose in those days the estates that attracted succession duty would have been --
Mr. Deans: What did he say about lip service?
Hon. Mr. Meen: -- anything, I guess, over about $10,000 to $15,000. But with the escalation, of course, in the cost of living and the devaluation that has gone along with that in the buying power of the dollar, the allowances today at even the $100,000 figure tend to approach confiscatory levels. Certainly I am pleased with the unqualified support by the official opposition to this bill. We think it is reasonable. The increase from $100,000 to $150,000 --
Mr. Lawlor: We thought the minister might have anticipated that.
Hon. Mr. Meen: -- does not significantly reduce the provincial revenues in this field. The revenues anticipated from this field this year are of the order of $75 million.
Mr. Renwick: Ridiculous -- just ridiculous.
Hon. Mr. Meen: The amount relinquished by the adjustment upwardly by 50 per cent from $100,000 to $150,000, is all of some $6 million or so. We have in the province today --
Mr. Lawlor: The government should get $200 million a year from succession duties.
Hon. Mr. Meen: -- some 40,000 estates which go through my ministry annually in the form of applications for releases. With the present $100,000 exemption level some 37,500 estates escape any liability for tax. The tax on those estates would be very small in any event. By the increase from $100,000 to $150,000, we reduce from some 2,500 to about 1,800 estates that are therefore subject to careful scrutiny and subject to assessments for duty. So out of 40,000 estates, some 1,800 pay this $75 million which we --
Mr. Lawlor: Is the minister switching the tax off to the land speculation tax?
Hon. Mr. Meen: -- expect to collect this year. I think it is practical to increase from time to time the basic minimum below which the estates are free of tax. It speeds the issue of releases and it does not significantly reduce the provincial revenues. It most certainly helps the younger people when they are in receipt of moneys in the estates of their parents; moneys on which tax has already been paid, perhaps a number of times over. In the accumulation of these estates the taxpayer will have paid other taxes, such as income taxes, all the way through the whole piece. And so it is appropriate that only in the very sizable estates should this province apply a substantial amount of tax.
Mr. Lawlor: That’s not what the Smith report said. They make a contribution --
Hon. Mr. Meen: I was asked by the hon. members opposite, Mr. Speaker, to tell them the government’s position on the succession duty field at present --
Mr. Lawlor: On that basis you shouldn’t be supporting succession duties at all. Why do you contradict yourself?
Hon. Mr. Meen: -- and they reminded me that the province had originally indicated that we would be stepping out of the succession duty field gradually. My colleague, the Treasurer, said in the budget statement of April 9, at page 12, and I quote:
“Let me reiterate the government’s policy on succession duties. We intend to continue to tax large accumulations of wealth while at the same time ensuring that the tax does not bear on citizens of average means. Accordingly, I would like to take further steps to ensure that inflation does not drive people of moderate means into this tax.”
I say to the hon. members opposite, that’s precisely what this bill seeks to achieve. We do not want to significantly reduce the revenues in this province. We do wish to continue to tax the large estates. We do not wish to tax the small estates. To this extent then, the increase to $150,000 for the exemption is a very appropriate increase.
I might just mention what I and my colleagues refer to as the Gaunt amendment. The hon. member for Huron-Bruce brought this to the attention of my predecessor last year. If memory serves me, he proposed an amendment to the bill at that time, which was declined by the parliamentary assistant to my predecessor, who had the carriage of the bill in the House, and, I think, properly.
He said at that time, and we all said in the course of the discussion, that the principle of that amendment had some merit, and I think hon. members here tonight who have had a chance to carefully look at that section -- and I wonder if all of them have having listened to this debate -- would agree. But he pointed out that it was complicated, it might entail a number of related amendments to other sections, and that we would look at it and see what we could do.
Tonight the members have the chance, as they have had since I introduced the bill, to see the extent of the complications, but also the practical resolution of the problem. All members in this House should thank the member for Huron-Bruce for having brought this to our attention. It is indeed a good amendment, as he and his colleagues have said. I must confess I find it surprising that the members for the NDP don’t see fit to support this bill in principle --
Mr. R. F. Nixon: It is surprising. One would almost think they hadn’t read the section.
Hon. Mr. Meen: It could be that they haven’t read the section. I do wonder.
Mr. Deans: We would support section 2 if that was the --
Hon. Mr. Meen: In any event, Mr. Speaker --
Mr. Speaker: Order, please.
Hon. Mr. Meen: The two principles in this bill are completely maintainable. I would suggest that the NDP members should join with the members of the official opposition in supporting the principles of this bill.
Interjections by hon. members.
Mr. Speaker: The motion is for second reading of Bill 80.
The House divided on the motion for second reading of Bill 80, which was approved on the following vote:
Ayes |
Nays |
Allan Auld Beckett Bennett Brunelle Campbell Carruthers Clement Downer Eaton Edighoffer Ewen Gaunt Gilbertson Good Haggerty Hamilton Handleman Havrot Henderson Hodgson (Victoria-Haliburton) Hodgson (York North) Jessiman Kennedy Lane Maeck Meen Morningstar Morrow Newman (Windsor-Walkerville) Nixon (Dovercourt) Nixon (Brant) Nuttall Parrott Reid Reilly Rhodes Riddell Root Rowe Scrivener Singer Smith (Simcoe East) Smith (Hamilton Mountain) Spence Turner Villeneuve Walker Wardle Wells Winkler Wiseman Worton -- 53. |
Bounsall Burr Cassidy Deans Germa Lawlor Lewis Martel Renwick Stokes -- 10. |
Clerk of the House: Mr. Speaker, the “ayes” are 53, the “nays” 10.
Motion agreed to; second reading of the bill.
Mr. Speaker: Shall the bill be ordered for third reading?
Committee of the whole House.
Clerk of the House: The second order, House in committee of the whole.
SUCCESSION DUTY ACT
House in committee on Bill 80, An Act to amend the Succession Duty Act.
Mr. Chairman: The hon. member for Lakeshore. What part of the bill do you want to discuss?
Mr. P. D. Lawlor (Lakeshore): I wanted, Mr. Chairman, to move immediately that section 1, subsections 1, 2, 3, 4, and 5 all be deleted from this legislation.
An hon. member: Can you tell us why?
An hon. member: Let’s call it.
Mr. V. M. Singer (Downsview): You can’t do it all at once.
An hon. member: Call the vote.
Mr. Chairman: Do you call that an amendment? They’d like to have a copy.
Mr. Lawlor: Yes.
Mr. I. Deans (Wentworth): We don’t have to; you just call the vote and we’ll say no.
Mr. Lawlor: We’ll let it go at that, yes.
An hon. member: You don’t know what you are talking about.
Mr. Chairman: I don’t need any coaching from the member for Wentworth.
Mr. Deans: You obviously do. Just ask us to vote and we’ll tell you we won’t.
Mr. Chairman: Mr. Lawlor moves --
Mr. J. A. Renwick (Riverdale): No, he has withdrawn --
Mr. R. F. Nixon (Leader of the Opposition): Oh, has he withdrawn that?
Hon. E. A. Winkler (Chairman, Management Board of Cabinet): You are not serious, Pat, tell us.
Mr. Lawlor: I was moving with respect to the first five subsections, that they all be knocked out, every one of them. Delete the whole section as far as I’m concerned.
Mr. Chairman: I know the member for Lakeshore’s intentions are good, but would he please give that to the chairman in writing?
Mr. Singer: Yes, as the rules require.
An hon. member: That’s the kind of a guy I am.
Hon. A. K. Meen (Ministry of Revenue): Why don’t we just accept it orally?
Mr. Singer: In the meantime we can get a new Land Speculation Tax Act in.
Hon. Mr. Winkler: What for?
Mr. Singer: To correct the problems that you have with it.
Interjections by hon. members.
Mr. Chairman: This is pretty well out of order, I would say.
Hon. Mr. Winkler: The problem is being corrected, don’t worry.
Mr. Singer: Even praying won’t do you any good now.
Mr. Chairman: Mr. Lawlor moves that section 1, subsections 1, 2, 3, 4 and 5 be deleted from the bill.
All those in favour of Mr. Lawlor’s amendment please say “aye.”
Those opposed will please say “nay.”
In my opinion the “nays” have it.
Do you want to stack the vote?
Some hon. members: No.
The committee divided on Mr. Lawlor’s amendment which was negatived on the following vote:
Clerk of the House: Mr. Chairman, the “ayes” are 10, the “nays” 35.
Mr. Chairman: I declare the amendment lost and that section 1, subsections 1, 2, 3, 4 and 5 carry.
Mr. Lawlor: Mr. Chairman, I just wanted some question with respect to subsection 2.
Mr. Chairman: No, no, you are out of order. It’s been carried.
Interjections by hon. members.
Mr. Chairman: Section 2?
Mr. Lawlor: Yes.
Mr. Chairman: Anybody want to speak on anything before section 2?
Section 1 agreed to.
On section 2:
Mr. Chairman: Okay, you are in order to speak on section 2.
Mr. Lawlor: What is the justification for the retroactive feature written into tax legislation? As you well know, retroactivity is an unpalatable principle in any type of legislation, but in the particular case --
Mr. R. F. Nixon: Murray Gaunt will explain it.
Mr. Singer: Permit Murray Gaunt to --
Mr. Lawlor: I don’t extend gratuities to Murray Gaunt or anybody else. He may have his own pipedreams with the Gaunts --
Interjections by hon. members.
Mr. Lawlor: If you understand --
Interjections by hon. members.
Mr. Chairman: Order, order, order. The member for Lakeshore has the floor.
Mr. R. F. Nixon: Put the horns on, Pat.
Mr. Lawlor: I am interested in your justification for the retroactivity.
Hon. Mr. Meen: I am pleased to give it. My predecessor told the hon. member when the amendments to this Act were being debated a year ago, that we would seriously consider the proposition he made. At that time the amendments which were being debated, were retroactive to April 13, 1973, and of course if that amendment as proposed by the hon. member for Huron-Bruce had been in acceptable form -- it is no fault of his that it wasn’t; it’s a complicated thing but it wasn’t acceptable -- it would have related to April 13, 1973. Of course, it is therefore appropriate that when we are able to put together a section which adopts the principle, we should likewise make it retroactive to April 13, 1973.
Mr. Lawlor: I suppose you have brought in some revenues in this particular regard. What disposition of these revenues do you make? Have you a calculation of the amounts?
Hon. Mr. Meen: I do not have a figure for the amount which would be rebateable, Mr. Chairman. I am sure there is some and we would have a record of it and those moneys will be rebated as soon as the Act is law.
Section 2 agreed to.
Sections 3 and 4 agreed to.
Bill 80 reported.
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 one bill without amendment and asks for leave to sit again.
Report agreed to.
THIRD READING
The following bill was given third reading upon motion:
Bill 80, An Act to amend the Succession Duty Act.
ASSESSMENT ACT
Hon. Mr. Meen moves second reading of Bill 87, An Act to amend the Assessment Act.
Mr. Speaker: The hon. member for Waterloo North.
Mr. E. R. Good (Waterloo North): We have before us, Mr. Speaker, another series of amendments to the Assessment Act. All these amendments are necessary because of the problems which have arisen ever since the province took over the assessment function in Ontario.
Mr. R. F. Nixon (Leader of the Opposition): What a mess that’s in.
Mr. Good: As you know, Mr. Speaker, some time ago the announcement was made that the market value assessment would be delayed until 1975 for application of taxes in 1976 so this is a delay of two years. You will recall it was originally supposed to be earlier than that when market value would be brought in across the province. As I understand it, the work has been completed but is already so far out of date that it must be revised and revisions made before the assessment will bear no relationship not only to market values but to any degree of equity across the Province of Ontario.
Mr. R. F. Nixon: They will never bring that up to date.
Mr. Good: Already market value has been introduced in selected areas around the province such as the counties of Grey and Bruce -- pardon me, Bruce was first in 1973. In this year, 1974, market value assessment was introduced in the county of Grey and the district of Muskoka as well as, I believe, the western portion of the Parry Sound district along Georgian Bay. This market value which was brought in, through my experience of analysing some of the assessments, is already out of date and it has been shown already that these market values represent only a fraction of the true market value on these properties. So we see, Mr. Speaker, that market value assessment is nothing more or less than trying to keep the assessment function up to what is market value for those particular properties.
We’ve shown before in this House that the equity in assessment rests in having the same types of property assessed at the same value, and it really doesn’t matter whether they are assessed at market value or a fraction of market value. As I said in this House a few weeks ago, assessment for market value has been completed in my own area, but it represents only about 55 per cent to 60 per cent of the actual sale prices of properties in the Kitchener-Waterloo area.
Some of the changes in this bill should be referred to, Mr. Speaker. These amendments have to be made to make this assessment function work in the intervening years. The key principle is that the freeze on assessment as it now stands, and as it has stood ever since the assessment function was taken over in 1971, will continue until 1975 for 1976 assessment. So in all those municipalities, except the ones I mentioned a few minutes ago, the assessment as it related years ago will continue to exist. This authority was given previously for a certain length of time; now, of course, it has to be extended.
Coupled with this freeze, we find that assessment notices have not been issued for the last three years; I believe it is that long since assessment notices have been issued. The amendments in this bill now will require that assessment notices be returned for 1974 and 1975 right through until the new assessment takes place. So people will be getting new assessment notices and, even though the freeze on assessment will continue, they will be getting notices.
That means the procedure for appealing an assessment notice will be invoked in the same way as it was before it was decided not to send out notices. At present, I believe one can appeal assessment at any time on the basis of the old notice, which was received a few years ago. But when the assessment notices start to be sent out again on an annual basis, even though they are on frozen assessment, then the appeal procedure will have to be gone through in order to appeal the assessment.
This appeal procedure meant formerly that 14 days after receipt of the assessment notice, one had to notify the district assessment commissioner of the appeal of the assessment. And we’ve talked about this before, Mr. Speaker. People in Grey county, for instance, are confused as to why they have to appeal their assessment to somebody living in Newmarket. And people in Waterloo don’t know why they have to appeal their assessment to somebody living in Cayuga. It just doesn’t seem to make any sense. But that’s the way this assessment procedure works.
Mr. R. F. Nixon: They’ll never bring that up to date.
Mr. Good: It would make more sense if they could even send their appeals to the district assessment office, which at least is in the area where the people live. But it is most confusing to people when they see on their assessment notice that if they wish to appeal, they have to appeal it to a commissioner in some far-away place that many people have never even heard of.
This period of 14 days now is extended to 21, and I am in accord with that amendment, because I think the 14-day period certainly doesn’t give one very long to go to a regional assessment office. It wasn’t so bad previously when the assessment was done by the municipalities. You could go to your local assessment office, have a look at the appraisal sheets, talk to the assessor, find out how he figured out your assessment, the various factors that were applied to your particular case, and get your information and make the decision within two weeks. But when the assessment officers are now reduced in number so that there is only one in a region and district offices are being closed -- I believe just recently the district office in Stratford was closed and people in that area now have to go to Goderich to get any information if they want to find out how their assessment had actually been done, if they wanted to decide whether or not to appeal it -- certainly the 21 days is not any longer than is necessary for one to make a decision.
Also, an amendment here extends the 14 days to 21 days in which one could appeal the findings of an assessment review court to the county court judge, so I think in that particular instance these amendments are good.
Another amendment in this bill, Mr. Speaker, deals with the fact that mining buildings on the surface of mining properties can now be assessed and therefore taxed, and they will no longer be exempt.
Another amendment which I am glad to see here deals with the ability of municipalities to assess and revalue development land. The bill and the amendments that were put through at the time when the assessment was frozen -- I don’t know if it was by intention or inadvertently -- did not permit municipalities to upgrade the assessment on land that was neither farmland nor the registered plan of a subdivision. If there was development land in between there was no authority for that to be reassessed and the municipality to receive its proper taxes. Some municipalities, I believe, did go to court and win decisions on it, but it meant they had to go to that trouble and expense to get an increase in assessment on that development land. With these amendments, that will no longer be necessary.
There are probably some other amendments that would bear mentioning, Mr. Speaker, but the main thing I want to say is simply this; this whole assessment thing has been taken over by the province since 1970 or 1971 -- I am sorry, I just don’t remember what year it was, but this has been going on now for four years and we are going to have another two years of it; that will be six years -- and the province is no closer now to getting any equity in assessment than the municipalities were back in 1970. Many municipalities, while they weren’t assessing at market value, did have a fair and equitable comparison with various types of properties; and those municipalities that weren’t doing a proper job could have upgraded their assessment with a little financial help from this government.
It is unfortunate that we had to quadruple the cost of assessment across this province and we still haven’t arrived at this Utopia that we heard about back in 1970, that market value assessment would be the answer to all the inequities that existed, not only for the homeowner but for the municipalities in the levying of their taxation and for the municipalities which were called upon to make levies to higher levels of government within regions and within counties. This was all supposed to have been looked after so neatly and so nicely by market value assessment, but no one contemplated the problems that would arise by inflation and what has happened to market values in the various municipalities across the country.
I say, Mr. Speaker, there is no easy solution to getting equity in assessment on a provincial basis. I think equity within the taxing boundaries of any municipality can be more easily obtained at the local level, and I hope that when the province finally fights its way through this maze of legislation and market value assessment, it will once again see the error of its ways and turn the assessment function back to the municipality, especially on the regional basis, where it can be done as long as it is done in a manner which is equitable for those people within the region. It doesn’t necessarily have to bear a relationship to market value, because we have shown time and time again that while market value may be a good way of assessing residential property it doesn’t work with commercial property --
Mr. M. Cassidy (Ottawa Centre): That’s right.
Mr. Good: -- it doesn’t work with industrial property. I think that with the whole assessment function, the government is getting deeper and deeper into more problems which still won’t be solved until you get this thing back on a smaller basis.
Mr. Cassidy: Mr. Speaker, I just want to congratulate the government.
Interjections by hon. members.
Mr. Cassidy: Oh, no; they are all very much on schedule. I want to tell you about it.
Back in 1971 when the government decided to put the original assessment freeze on they -- wonder of wonders -- passed the bill on July 23, which was five days before the end of that particular session. I have no doubt that the bill was introduced two or three days beforehand in the government’s usual style.
Now here we are four years later. The government has taken four years of worrying over the question of market value assessment. It sees something it perceives as a hot potato. It wants delay after delay after delay. But nevertheless, it finds it very expeditious to introduce a bill on a Friday and to have it debated the following Monday, only hours after it is printed and in the hands of members of the Legislature.
If you want to go back to the beginning, Mr. Speaker, the government originally began market value assessment and intended that it be applied on a county by county or area by area basis. But the flak was too strong and these valiant defenders of the right put their tails between their legs and decided upon a freeze.
They froze the inequities that existed in the property tax assessment that then prevailed across the province. And they froze them for four years. Now we find that the whole administrative monolith that has been created in the field of assessment tax is simply in a state of collapse. It can’t cope. It isn’t coping.
The results that it has produced are apparently deemed to be inadequate. Nothing has come out. God knows what they have been doing for the last four years. There has been virtually no opportunity for public review or evaluation of the quality of work that has been done by these people who were being paid by the Province of Ontario. It says something about the philosophy of administration of a Conservative government.
I look at the Chairman of the Management Board (Mr. Winkler) when I say this, Mr. Speaker. I have been around this place long enough to be accused of socialist centralism and that kind of thing, plus other sins that socialists are accused of. But I can tell you, Mr. Speaker, that the practitioners of that kind of centralism are in the government of Ontario right at this time. One of the best examples is the way in which they have mauled and mishandled the whole assessment review process, the whole market value assessment process.
We would have sought a way to keep the administration of assessment decentralized, to keep it at the regional government level, to keep it at the county government level; but to ensure that it operated according to common standards. That is not beyond anybody’s wit, except the wit of this minister, of this department and of this government. All they could think of was that if they were going to have a --
Mr. R. F. Ruston (Essex-Kent): Policy.
Mr. Cassidy: I don’t know if they have a policy. If they were going to have a common market value assessment across the province, then they had to have one team, one brigade of assessors going across the province and marching to a common drum under one general, now currently the Minister of Revenue (Mr. Meen).
As far as we are concerned, the drum could have been beaten from Queen’s Park. In other words, the policy about assessment could have been made from Queen’s Park. There could have been periodic evaluation of the work of the assessors in each particular region. If need be, the management assistance and the assistance of some assessors could have been brought into different regions where they were in trouble and needled to speed up their work. All of that is fine. But the basic administration could and should have been left at the local level.
One of the reasons the whole thing became provincial, Mr. Speaker, was simply that the government of the province was seeking ways to reduce municipal spending burdens and happened to seize upon assessment as one of the things they could take over.
Mr. Speaker: Perhaps if the hon. member has more remarks he would move adjournment of the debate.
Mr. Cassidy: I will move adjournment, Mr. Speaker. I want to comment on the basic principle of the bill, which is to further defer the application of market value assessment, and raise a number of questions about that particular proposal which is being put forward by the government.
Mr. Cassidy moves adjournment of the debate.
Motion agreed to.
Hon. E. A. Winkler (Chairman, Management Board of Cabinet): Yes, Mr. Speaker; before I move the adjournment of the House, tomorrow we will proceed with the further consideration of this bill, Bill 87; then we shall move on to Bills 91, 92, 93, 96 and then 95.
Hon. Mr. Winkler moves the adjournment of the House.
Motion agreed to.
The House adjourned at 10:30 o’clock, p.m.