TOBACCO TAX AMENDMENT ACT (CONTINUED)

CORPORATIONS TAX AMENDMENT ACT

ONTARIO LOAN ACT

PROVINCIAL LAND TAX AMENDMENT ACT

TOBACCO TAX AMENDMENT ACT

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The House resumed at 8 p.m.

TOBACCO TAX AMENDMENT ACT (CONTINUED)

Resuming the debate on the motion for second reading of Bill 112, An Act to amend the Tobacco Tax Act.

Mr. Nixon: Mr. Speaker, I hope you will permit me to issue a special welcome to the friends of the member for York North (Mr. Hodgson) who are sitting in the gallery. We can recognize them because they are the most opulent-looking people in the whole House.

We are talking about a matter of serious import having to do with the tremendous expansion and increase in the tobacco tax that the poor Minister of Revenue (Mr. Ashe) is forced to collect since his senior, the Treasurer (Mr. F. S. Miller), has decided in his budget that this shall be the taxation policy.

I sometimes despair at debating these bills in the presence of only the Minister of Revenue, since he really has nothing whatever to say about what the taxes will be or what their size will be. However, he is a very fine fellow indeed, and I do not want to take him to task for circumstances over which he has no control. After all, if he had had his way, he would be Treasurer by now and it would have been worth while arguing with him. Maybe next year; but it had better be soon, because time is running out for the members opposite.

The tobacco tax interests me particularly because, as I mentioned just before six o'clock, most of the flue-cured tobacco grown in Canada is grown within a 25-mile radius of the beautiful town of Delhi, which is in my constituency. As a matter of fact, tomorrow night the Premier (Mr. Davis) himself is going to be the guest speaker at the annual meeting of the Flue-Cured Tobacco Growers' Marketing Board of Ontario, which will be meeting at the auction arena in Tillsonburg, another tobacco centre.

Unfortunately, although I had accepted the invitation to attend and applaud along with the other faithful, the Premier has decreed that the House will sit tomorrow afternoon and evening, and naturally my first duty is to be here. So it is with great regret that I tell you, Mr. Speaker, that I may have to miss the opportunity to hear the Premier under those circumstances.

Frankly, it is going to be difficult for him to square with his audience, the tobacco farmers of this province, the increase in this tax of an additional $30 million. As a matter of fact, the increase is about 23 per cent over the expected revenue of a year ago. I ask members to compare that with the total commitment to the financing of agricultural programs, which this year shows a dramatic drop of five per cent from the money allocated to agriculture just a year ago. I will return to those figures in a moment.

I did want to say something about Delhi and the tobacco industry, which must use as its basic means of survival the revenue obtained from the sale of tobacco. Almost all the cigarettes sold in this part of the world are produced from the tobacco plants, the product of these farmers, who have shown a tremendous degree of efficiency as they expanded their ability to produce tobacco leaf of the highest world quality.

As a matter of fact, the member for Elgin (Mr. McNeil), who happens not to be here tonight, led a trade crusade to the Pacific Rim nations to assist the tobacco growers in selling their crop in the People's Republic of China. I am told by a recent visitor to the people's republic that he is referred to there as the vice-minister. I will let those people deal with that as they see fit.

We were glad to hear that sales have been growing on an export basis which are improving the market considerably. The average price is about $1.50 a pound, with some of the sale prices a bit better than that and some considerably worse, depending upon the status of the market on a day-to-day basis. Any of these sales are bound to be most welcome indeed.

When I was first elected to the House, tobacco was taxed along with the ordinary sales tax products. I think the sales tax began in 1961. Tobacco was taxed at three per cent at that point. I well remember the time when tobacco was separated from the ordinary sales tax and, when the sales tax jumped to five per cent, the tobacco tax went to six per cent.

I know the Minister of Agriculture and Food of the day was extremely concerned that we should not blight the sales of tobacco which were already showing a certain depression because of the medical information that smoking tobacco was not the greatest thing in the world for one's health. We have now seen this tax, which started at three per cent in 1961, increase to 40 per cent and, for cigars, to 45 per cent, which is really pushing it far beyond any limit of fairness and justice.

Obviously, tobacco sales demonstrate what we economists call price inelasticity. In other words, people are going to buy tobacco products no matter what the price is. They are somewhat similar to liquor, for example. Probably those are the only two taxable sales products or services that come under that category. There are probably certain other services the Minister of Revenue (Mr. Ashe) has not gotten around to yet, but I feel sure he is eyeing them with a certain gleam as he sees his revenues falling behind his expenditures so dramatically.

An hon. member: They talked it over this time, did they?

Mr. Nixon: Well, I am sure they did. Anyway, it is a serious matter, because obviously the payment of tobacco tax has nothing to do with ability to pay. It may well be that the acting government House leader (Mr. Gregory) is in a position to buy more expensive cigars than, let us say, an opposition member, or something like that; so in that instance the ability to pay does have some residual effect.

Essentially, though, the great mass of tobacco tax is paid by men and women of all incomes, many of them of lower incomes. We are squeezing extra revenue out of people who really should not have the responsibility to pay such a disproportionate share of our revenue.

The argument that it is a luxury and that nobody has to smoke is, in my view, irrelevant. I do not smoke myself, but those people who do have informed me on more than one occasion that it is a habit they enjoy and that they do not see why this government should apply inexorable pressure that drains their finances from other matters. The revenue from tobacco tax this year is expected to soar to $428 million. I ask the members to compare that with the amount of money spent on all the programs for agriculture, all those famous subsidies and all the handouts for which the city members are always criticizing the poor Provincial Secretary for Resources Development (Mr. Henderson) and the poor Minister of Agriculture and Food (Mr. Timbrell). They are paying the farmers out of all those hugely expensive programs, at least in those members' jaundiced eyes, which amount to only $284 million, substantially less than what we earn from the tobacco crop alone. It is only one of the many revenue-producing farm products we are so very proud to grow in such high quality and such good amounts in this province.

8:10 p.m.

I say again to the members that the tobacco tax is up 23 per cent while our agricultural expenditures, in these times of high inflation and of tremendous need in the farm economy, have dropped from $298 million a year ago to $284 million this year. That is a drop of five per cent. I want to recall to your mind, Mr. Speaker, that even at $284 million, a good deal of that money is lent to the farmers for tile drainage programs and they pay it back. In the case of crop insurance, the government of Canada pays a substantial percentage of the administrative costs and certain other costs. How much is that? The member for Huron-Middlesex (Mr. Riddell) tells me it is a lot.

There is never any reference on any of the forms for crop insurance -- which the tobacco farmers take out very carefully, since their crop is so susceptible to damage from the elements, parasites and moulds -- to the fact that the government of Canada took the initiative in crop insurance and still pays a substantial share of the underlying administrative costs. The members opposite are critical of the federal government at every chance they get, but they warrant the treatment they get in many respects, since they dismiss its contributions and involvement in so many of our provincial programs.

I should say in passing, in the unlikely event that some taxpayer reads my comments, 40 per cent of the revenue of the whole province is collected by the government of Canada and rebated to the province, no strings attached, to assist us in a variety of our programs. The government of Canada collects all our personal income tax and, in addition to that, it pays large percentages, at least a half and up to 80 per cent, of many of our other programs.

Forty per cent of our provincial budget is collected by the taxpayers in Ottawa and reverts to these spendthrifts at the provincial level, who take all the political credit they can for handing the money out, cheque by cheque, to their supporters and to those whom they think may be their supporters in the future. They do not have to pass out much money in North York, because that is where we get it all in the first instance.

I want to say something more about the situation in Delhi. The Premier no doubt will be driving through there in his limousine with a retinue of the Ontario Provincial Police, since his jet plane is not yet available to fly him into Woodstock so that he can drive down to Tillsonburg. He is still travelling by land. But, as he drives through Delhi, he will find that it really is a very prosperous part of the country.

I say to all the members here and to you, Mr. Speaker, that when the House does adjourn some time in the next few weeks, if they want to take their families through the most absolutely beautiful, lush, agricultural land anywhere in North America, they should just take a drive through Norfolk county, right up through Delhi, and see those perfect tobacco farms. There is absolutely nothing out of place. There has not been a weed growing in the tobacco country for 15 years, and that is a record. The rows are straight, the plants are uniform, the buildings are square and well-painted. It is certainly a sight to behold.

I come from the dairy country where the land is rolling, a little bit heavier. From my point of view, of course, that is the place to live. But if the members want to see something really special. they have to go down into the township of Delhi, formerly Windham, and through those areas where the very best, highest-quality tobacco grown in North America is produced.

Mr. Conway: There is a little place called Nixon in there, isn't there'?

Mr. Nixon : There is a village called Nixon. That is correct. I had the honour to open the extension to the school back in the days when those things were sometimes built. It is a beautiful town, and I recommend it to all the members who might be going through. The member for Renfrew North (Mr. Conway) threw me a little bit there.

The population of Delhi, and this is directly relevant to the tax itself, is less than 5,000 during most of the year. It has the normal businesses. the banks, the insurance agencies, the restaurants and so on. If the members read the article about the Delhi area in this month's Saturday Night, written by Wayne Grady. they will read one of the best pieces of writing about rural Ontario it has been my pleasure to examine in many years. It talks about this beautiful town, the famous Diplomat Hotel with all its facilities and services that are readily available on a year-round basis, and about the Golden Leaf Restaurant and Tavern with the back room where the Liberal Party meets from time to time. When we are not meeting there, the Tory party uses the telephone booth, I understand.

When the tobacco season opens up, we have many fine people coming in, largely from the province of Quebec. By coincidence, a good many young men and some young women come. Many of them hitchhike here for the high pay and interesting work associated with the tobacco crop.

We also have a program sponsored by the government of Canada, which often has been rather heavily criticized, for bringing in labourers from the Caribbean who come on a contract basis to work for specific farmers. They are extremely highly regarded workers. They come on contract and are well looked after. They are housed in carefully inspected facilities. They are well paid; at least they think so, and I think so. At the end of the season, they return to the Caribbean with a wad of money, and it contributes to their economy as well as assisting ours.

One may want to argue that this should not be permitted when we have such a high degree of unemployment in our own province, but we must remember that working in tobacco is definitely a skilled farm occupation. It is very highly paid. People can learn it, but it seems these people from the Caribbean have a special aptitude and commitment. I suppose "endurance" might be another word that could be used. This gives them a sort of popularity, which means there never have been enough of them on hand to assist in the harvest.

The population goes from less than 5,000 to more than 10,000. It makes for some very interesting sociological observations in the community.

The mayor is a good friend of the member for Oxford (Mr. Treleaven) and myself. Arne Sayeau has been the mayor for a number of years. I understand he will be running in the forthcoming election. I have not heard of anybody who has had the nerve to even think of contesting the office against him.

When one has such an influx for the tobacco harvest as they have in Delhi, one can understand that the chief magistrate has to have certain special qualities of personality and leadership, which I can assure members Mayor Sayeau has in ample amount. I believe he is one of only two mayors in the whole country who had to read the Riot Act under one circumstance that became a little iffy a few years ago. He would be quite up to that.

Of course, we have a regional police force that looks after things in that area as well. While I am dead against regionalization, and I believe the police force costs us too much, still I am here to say that they do quite a good job indeed. The Ontario Provincial Police also are on the scene from time to time.

I do not want to give the impression that sociological situations there require police supervision all the time, because it simply is not true. The people who go there in the summer are extremely interesting and hard-working. Most of them are very happy citizens, and when the tobacco harvest is completed they go back to La Belle Province with a bagful of money. There are other young people who are learning that this is an excellent experience in the summer. It is hard work, but it has what is called ample camaraderie and is highly paid.

Because of these costs, the additional $30 million extracted from the industry is going to make it increasingly difficult for the farmers to make ends meet. After all, the sale of tobacco is strictly limited under provincial law and is administered by the Flue-Cured Tobacco Growers' Marketing Board of Ontario. Many of the farmers own fairly large acreages, 200 or 300 acres of the soil which is designated fox sand, since it is 90 per cent sand and 10 per cent silt -- Mr. Speaker, I knew you would want to know that -- but they have a carefully enforced right, which is worth a lot of money, to grow only a specific poundage. They can grow all they want, and I guess they can smoke any extra themselves, but they cannot sell it because of the severe restrictions the legislature has laid down which control the market in a very strict way.

8:20 p.m.

On the acreage they do grow, with a normal crop they grow about 2,400 pounds to an acre and it sells for an average of $1.50 a pound. The members can do a little quick arithmetic. Some of the farmers gross about $3,500 per acre. Those members who are farmers who grow corn, beans and other crops can consider that spread, but their costs are in many instances well in excess of $2,000 an acre and the risks are enormous. If it is not hail, it is blue mould or some other problem. It takes the highest quality of management as well as the commitment of a tremendous amount of capital to make this crop a viable one in the Delhi area.

Forty years ago, when I was considerably younger than I am now, I used to travel down into the area with the former member, my father. As we went along those township roads -- I can well recall that none of the roads was paved, and the sand was blowing across them -- I can remember my dad saying at one time in despair that 90 per cent of the residents in the township of Windham were on what was then called relief. Those were really tough times. God forbid that we ever see them again.

Two miraculous things happened. There was the discovery by the Dominion Agricultural Experimental Farm that the fox sand was ideal for the growing of tobacco. One of the researchers went up and bought a farm for $20 an acre. I believe his people are still growing tobacco there.

The second thing was the initiative taken by the then Department of Lands and Forests through its chief forester, E. J. Zavitz, to begin reforestation in the area in an experimental but expanded way. It was not long before rows of white pine, white spruce and cedar were growing along the fields to hold the soil where it should be. That is one of the great and attractive features of the country as one goes up and down the various concession roads.

I see I have you entranced, Mr. Speaker.

All the roads now are paved. It is one of the richest municipal areas one would ever want to see anywhere. There is no such thing as a gravel or dirt road. The sand is not moving. The trees have grown up. Many of them are mature. They form a great sight, and between the rows of trees are these marvellous, well-kept fields of tobacco.

As the tobacco tax gets up to the 40 per cent level, I am concerned that it is going to put us back into a situation we have previously experienced. We are going to be subject to a good deal of cigarette smuggling. There are now a number of jurisdictions in Canada that have lower tobacco taxes than we have. I suppose the outstanding one is Alberta. It is a long haul to bring cigarettes to Ontario, but I understand that hauling the low-tax or no-tax cigarettes out of Alberta, right across the country and selling them on the black market in Ontario, is once again getting to be big business.

The disparity in tax is so great that the Minister of Revenue has been forced by the Treasurer to become an anti-smuggling agency. We realize as well that there are certain no-tax cigarettes available at Indian reservation communities in the province. There was some problem as some of these tax-free cigarettes were sold in Indian reserve stores and other facilities and then resold in the other communities at a reduced rate, which was really a bootleg sale.

I know the minister and his predecessor had some difficulties in this regard. So did the Indians, who feel they have the right to buy and sell tax free on their own reserve. Being very law-abiding citizens, most of them would not dream of selling or even offering a cigarette off the reserve on which full tax had not been paid. But, as in every other community, there are situations where some of these tax-free cigarettes have found their way into the normal market. I know the government has had a considerable amount of difficulty in bringing that under control. I am informed they have been reasonably successful in that regard without too heavy penalties having been paid by anybody.

The whole problem of smuggling is one that will make even the minister stop yawning when he finds that his revenues from the tobacco tax are considerably lower than anticipated. The government brought the smuggling problem on itself by its greedy approach to the tobacco tax. They slapped on a 40-per cent tax when it used to be taxed at the same level as everything else that was taxed at seven per cent.

The situation in the tobacco community is one of concern for the farm economy. Tobacco farmers have been spectacularly successful over many years, but the risks, the commitment of capital, the special expertise needed to grow the crop and the elaborate and costly marketing procedures all militate against the kind of profits one might normally think would be made. However, most of the tobacco farmers I talk to are making a reasonable profit, probably at the very top of the scale of any farmers in Ontario or anywhere else in the world among farmers who are growing a legal crop.

It will not be possible for me to support a tax of 40 per cent, which I feel is unjustified. If the government was at least moving towards using a major part of that money to support other agricultural programs it might have some justification, but because of the inadequate leadership of the Treasurer and the Minister of Agriculture and Food and the poor situation the Minister of Revenue finds himself in, where he simply applies other people's decisions, I for one cannot support this bill in principle.

Mr. Breaugh: Mr. Speaker, we will oppose this legislation to increase the tobacco tax.

One could go into a long dissertation about the problems in the farm community. The member for Brant-Oxford-Norfolk (Mr. Nixon) went through some that are undeniable. There is no question that a further taxation measure on a crop of this nature at a time when everyone in the farm community is facing severe economic problems will increase the problems those people have. As the minister knows, in our region as well we have a small number of farmers who grow tobacco and will be affected by this taxation measure.

I was a little taken aback by the glowing terms in which the previous speaker spoke of the farm workers who pick the tobacco crops. To balance that a little, I must say I am not aware of large incomes being earned. I am certainly aware that many of the immigrant workers who work in the tobacco fields are working under some duress and that their living accommodation is less than desirable and in some instances severely less than it should be.

It appears strange at a time of very high unemployment in the country that this program by the federal Liberal government of bringing in immigrant workers should continue. It is difficult to get people in this country to accept those kinds of working conditions; I grant that. But it seems strange that in the midst of high unemployment, the federal government still imports workers for this kind of project. It may well have a lot to do with the working conditions, the living conditions and the nature of the work. That kind of exploitation of immigrant workers may be something the federal government is prepared to do to other countries' workers but not to our own.

I think that argument ought to be made clear. It is strange indeed to see the government introduce a taxation measure that will have an impact on a portion of our farm economy. Many people may look at these things as part of the sin-tax concept, that it is okay to tax anything that might be construed by some as a sin, that there should never be anyone who is unwilling to do so and that there is no limit to it. I would put to the minister that I believe there is a limit and that this bill surpasses this limit by some measure.

8:30 p.m.

I think we should be clear that this is not a health measure on the part of the government. We are not talking about convincing the population that smoking is dangerous to their health; we are not talking about a program that would fund such a health program; we are not talking about a rehabilitation program for people, like me, who continue to smoke; we are not talking about anything good. What we are talking about is an attempt by the government of Ontario to increase its revenue, straight and simple.

It is interesting to note that the government of Ontario has discovered a wealth of revenue in all of this. It has made liquor, tobacco and the numbers racket prominent features of its sources of revenue. This has been a growing trend, and it continues unabated. In the other two areas of this kind of taxation it has become extremely sophisticated. This government is heavily involved in the numbers racket. It announced rather grandly again, this week, that it has yet another version of gambling for people to participate in.

For example, in the entire area of the sale of liquor it seems to have made some kind of technological breakthrough. It has found a way to increase taxation on the sale of liquor products in a wide variety of ways -- and, of course, it has a virtual monopoly on the sale of liquor -- and it has become extremely sophisticated. So this government is very heavily involved in the other two sin taxes of gambling and liquor, and it has made them a major portion of the revenue of Ontario.

It really leads one to question a government that has made those taxation measures in those forms such an integral part of its economy. I believe that, as with this tax, it is part of this government's move to see how many ways it can get money out of the taxpayers' pockets without their realizing that the government is doing it, and it seems to be getting more and more sophisticated as it goes through.

This particular tax is clearly a taxation measure, clearly an initiative on the part of the government to get money Out of taxpayers in Ontario. Yet, once again, we will see that it is not the government of Ontario that dips into your pocket for the cash; it will he somebody else. It will be the guy downstairs who runs the Canadian National Institute for the Blind smoke shop; it will be some corner store merchant who sells you that package of tobacco or that pack of cigarettes; and it will be that nice friendly person at the Becker's store or the Mac's Milk store or somebody other than a government agent who grabs the tax money, and, in turn, these people will have to remit it.

If you look at the wide variety of ways in which the province now has somebody else, someone not directly identified with the government collecting taxes for it, you really get some concept of how deeply ingrained this whole idea is in the government.

It is going to be more and more difficult to find somebody in our community who, at some time or other, does not function as a tax collector for the government. They do not do so willingly, and perhaps many of them do not do so knowingly, but they wind up performing the same function. I dare say that almost every member of this Legislature will at some point function as a tax collector. That is not our role in life, but if we go out and work in community social events; if we participate in barbecues, auction sales and things of that nature; if we serve time with service groups in our community, as most of us do, sooner or later we will all wind up taxing the people of Ontario and functioning as agents of the Ministry of Revenue. It is a strange phenomenon, one that has grown and developed, and this particular bill adds to it. This bill sees that they will grab even more tax money from the people of Ontario.

It uses a concept that the government is so fond of, which is that of a tax that is not seen by the people as a tax. It was Darcy McKeough who said it rather succinctly when he was talking about Ontario health insurance plan premiums. He admitted flat out that they were a tax, but he said they were the best kind of tax; they are in place, they are not called a tax and they are collected by somebody else.

Those may be the criteria that all these taxation measures are based on, and this tax, like many other attempts the government is using in its current budget process, fulfills those criteria: get a tax in place that people cannot see, get somebody else to collect it and use it as a source of revenue.

In a number of ways the impact on our community of the legislation before us tonight deserves to be rethought carefully by all members. Is this a desirable source of revenue? If it is, does it deserve such a high place as a revenue source for Ontario'?

I want to say a couple of words about the people who will actually pay the money. One of the objections I have is to the simple technique that is at work here. There really is only one fair way to get tax money out of people and that is to use a mechanism called an income tax.

It seems tome that, in this country, at the two ends of the system we have taxation processes at work which are fair, in that they can be seen. In the middle is the province of Ontario which uses every technique it can to camouflage its taxation approach. At the municipal level people can see the process. They get served with a tax notice and can see their municipal councils going through the budget process of making choices and establishing priorities. There we have a very open budgetary process.

At the federal level the process is no better than that used in this Legislature, but at least the taxation measures are more visible. You do get mail from Revenue Canada, a form which you have to fill out to declare your income and to figure out what your income tax is. Most people are aware that there is a taxation measure at work, "I am paying my taxes; I am doing my accounting for the year; I am seeing how much money I owe and declaring how much income I had." It is a very open and visible taxation measure.

In the middle of these two extremes is the province of Ontario, using techniques such as the one before us, trying to find as many people out there who can grab as much money off people without anybody knowing the Minister of Revenue (Mr. Ashe) for Ontario is at work. He is getting all kinds of people to collect taxes by these techniques.

I have some problem with that, but the single biggest problem I have is that the people of Ontario do not realize who is nailing them this time. The people of Ontario may well be blaming the person who sells them a package of cigarettes for grabbing more money, but that is not the case. It is the Minister of Revenue at work in his own sly, shy way, grabbing another little bit from the people of Ontario.

One of the severe problems I have is when you look at who will actually be hit hardest by this. There are very few people in our society who continue to smoke who would not say that it is a regular thing that they do. There are not that many people who smoke a cigarette or pipe or cigar once a week. For most of them, unfortunately, it is habitual; and for most of them as well, unfortunately, it is one of the few pleasures they have left in life.

This government has moved thoroughly across the board to grab people in as many ways as it can. Those individuals are left with one or two habits which provide some small measure of pleasure to them, and the government is going to get them again.

I cannot get away from the central theme that this government has hit upon a new notion in politics: taxing the poor. I do not understand that. I always thought the basic concept of taxation, when it was introduced as a temporary measure some time ago in various governments throughout the world, was to tax those who had an ability to pay. That was to be the prime criterion for it. This kind of legislation bears no relationship to ability to pay. The very poorest person, the person living on the poverty line, who still smokes, is going to pay the same amount of tax as the wealthiest person in the nation.

One can argue, and I suppose the minister in his own wonderful way probably will, that in some way, because they smoke quality cigars as opposed to not so expensive cigars, the rich will pay more. I am not convinced that is a reasonably valid way to proceed. The vast majority of people who smoke probably do so with some reluctance but it is now habitual and they are caught in a habit. Once again, disregarding totally their ability to pay, the government is going to get them on a regular basis. Once again, it is taxing something where probably the most impact will be on those people who have the least ability to pay.

It is an unfair way for the government to proceed with taxation. It violates the first principle of taxation that I would support, that one taxes those who have an ability to pay. That should be the first criterion. This bill makes no mention of that at all.

8:40 p.m.

This bill does very little for anybody. If one looks at the farm community, there is clearly a negative impact there. If one looks at the retailers who will collect this particular tax on tobacco, I am convinced it will have a negative impact there as well. If one looks at the consumer from that point of view, there is another negative impact at work.

The only positive impact of this particular piece of legislation is for the government. It perpetuates that tax technique which they have worked on for so long and which is now pervasive in our society.

The last thing this government wants to do is to identify itself as a taxing agent. The last thing this government wants to do is to move towards some kind of taxation measure which reflects an ability to pay. The last thing this government wants to do is to get identified as a tax collection agency. This government has gone to the other extreme and perfected the technique of getting the corner store retailer to be a fine collector of taxation moneys for Ontario.

That is not the reason somebody operates a corner variety store. Yet more and more they are driven into this syndrome of being tax collectors. They do not like it. There is some question in this act. There are mentions in here of the process of collecting this taxation money and sending it in to the government. Many small retailers feel that process itself is unfair, that they get hammered on that as well. They are tax collectors when they do not want to be and for many of them the conditions under which they collect that tax are unfair.

At some point this government has to rethink this process which it has under way. I recognize it allows them to camouflage their taxation techniques rather well. I realize it enables them to get, as involuntary tax collectors, a great range of people. When one goes to the corner confectionery store there is no sign saying, am here to collect taxes for the people of Ontario." Somewhere in there will be a vendor's permit, but most of the public will not notice that. They are making villains out of people who are now having unfortunate times in this economy.

This is probably the worst kind of taxation measure any government could perceive; most in the western world have decided to use it. I suppose the only defence I have ever heard, which takes something like a tobacco tax and promotes it as being a righteous thing to do, are those people who say, For something like smoking, which is not a good thing and we are all in agreement on that, what one ought to do is make that prohibitive so that people really should not do it."

But then most of the studies I have seen about increasing the government's revenue from the sale of booze, the numbers racket or the sale of tobacco, show there is very little impact on the public. There is no direct relationship between the price of the commodity we are talking about, in this case tobacco, and the number of people who continue to consume it. There seems to be no relationship at all.

What we are left with is a very clear taxation measure. This is not a health bill. This is a revenue bill. This measure is to get more money into the coffers of the province of Ontario. It is to elicit more funds from the taxpayers in Ontario.

I have no qualms with a government raising revenue. All I am saying is that in my view there is a clearly defined set of priorities and a clearly defined course. To be fair about it, the government of Ontario itself ought to be seen as, and in my view ought to be, the collection agency, not somebody else. They should be moving on measures which provide some fairness. To be straight about it, they at least ought to have the courage of their convictions to identify themselves as using a tax collection measure.

This caucus opposes this legislation. It opposes it because in general terms it is part of a budgetary strategy which we do not like, which we think misses the boat completely in today's economy.

We also oppose this technique because it is unfair to the people of Ontario. It puts an onus on people who do not want to be and are not in business to be tax collectors for the Minister of Revenue. It hits hardest the farm community, the retailer and the consumer. I do not want to get carried away with this argument, but I think there are people who view smoking as being the last little pleasure they have in the world. I suppose it is open to debate whether it is a pleasure or a health hazard, but they certainly see it as being just the former.

The minister has got them again. He has got the worst kind of people identified as a target for this tax, and he has the strongest impact there. I think at some point this government is going to regret its substantial commitment to this type of taxation. It is getting down to the bare bones in difficult economic times and going after those with the least ability to pay and consistently hitting them as hard as it hits the richest person in this province.

The bill in itself is unfair. The approach is regressive and the technique this government is developing and expanding into a number of areas is really tantamount to fraud. If the government wants to tax people, it ought to say it is taxing people. It ought to identify itself clearly as a taxing agency and base its taxation measures on an ability to pay. This bill meets none of these criteria.

The Acting Speaker (Mr. Cousens): I would ask the honourable members on my immediate left to reduce the level of their voice tones. It is a little bit loud. The member for Haldimand-Norfolk.

Mr. G. I. Miller: Mr. Speaker, it is a pleasure for me to rise and speak on behalf of some of my constituents and on behalf of the tobacco industry in Ontario, to take a strong stand and make some points as to why this is a regressive tax. My colleague the member for Brant-Oxford-Norfolk (Mr. Nixon) painted the picture of the tobacco country in a very splendid way. I would like to add to those comments and point out that tobacco has been the mainstay and has made that part of Ontario.

As a matter of fact, Canada is the fourth largest producer of flue-cured tobacco in the world, with 90 per cent of Canadian production grown in Ontario and 50 per cent of that production grown in Norfolk county. It has truly made an area of Ontario. Going back into my younger days, with the little municipalities such as Silver Hill, Jericho. Wyecomhe, Langton and Fairground, the land was of very little value and yielded very little production. People just existed off it. Within two generations it has become a most productive land dollarwise and has contributed to the economy of Ontario and Canada.

I think my colleague indicated the industry would generate an estimated $428 million this year. up from $345 million last year. I would like to make another point. The total income from taxes on tobacco products in Ontario in 1980-81 was $766.3 million or 1.2 per cent of the total provincial gross general budget. Those figures were obtained from provincial and municipal finances for 1981.

The total income for the Ottawa and Ontario governments is over $1.5 billion. This tax is not only generated from the tobacco industry itself, it is generated from other areas such as farm equipment, farm machinery and kilns. Much of that equipment is made in the local area. There is a foundry at Delhi. The new type of kiln used for curing is made in Tillsonburg and other areas of that part of Ontario. This indicates to the people of Ontario, particularly the urban people, that agriculture is really the engine that makes our economy work. When too much is taken away in tax, of course, it is going to go downhill.

I would like to make a comment on labour. The industry does employ a lot of labour. But because of the difficulty of getting young people of our own sufficiently skilled to work in that field, they have had to import outside labour.

8:50 p.m.

I would like to point out that the member for Oshawa (Mr. Breaugh) indicated that the accommodation is not good. I would suggest to him and anyone else in this Legislature that accommodation for summer employment is excellent. It is inspected on a yearly basis and has to meet a standard. From my experience and having had an opportunity to see housing in Toronto, I think it can compare favourably and has an outdoor atmosphere which I would highly recommend. Any young people or anyone looking for employment should go and try to compete for those jobs because the jobs are there. If those farmers knew that there was a source they could depend on, they would hire local help.

I would like to see this government, in view of the taxes they collect, encourage more employment at the local level. It is important that everyone has a job and shares in the economy. There is potential to fill those areas of employment. Only last Friday morning, I had the opportunity to go to Port Burwell, and on the way down I saw many farmers were cultivating their tobacco.

As was indicated before, the roads are straight and they have small tractors and there are two people riding on the back with equipment so that they can get close to the rows. They do two rows at a time and make sure that the weeds are all taken out and controlled. It is a very highly mechanized business but it still requires people to utilize the hoe. I saw several farmers tidying up the weeds that were left with young girls and boys doing the hoeing.

When this tax is compared to that in a province like Alberta, and one asks why there are suggestions for a black market, I think the reason is clearly indicated when one looks at the figures. Alberta collects 64 cents from a carton of 200 cigarettes; in Ontario we collect $3.74. If those cigarettes are brought back to Ontario that is an obvious profit of something like $3.10.

The point has been made, too, that we have all classes. I myself enjoy a pipe and I enjoy a cigar. The tax on cigars is 45 per cent, which incidentally is an ad valorem tax; every time the price goes up, the province shares in that revenue. The cheapest cigars of any quality are $2.50. Every time one pays that price the province of Ontario receives $1.10 to $1.15. I think there is a future market which could be developed. A good Canadian cigar at a reasonable price would move and give a lot more people employment at all levels.

I might add that there is no Canadian pipe tobacco, as far as I am aware, of the type I smoke that we have access to now. Going back a few years there was. Again, the Minister of Agriculture and Food (Mr. Timbrell) might move in and try to encourage more local products. Borkum Riff is the type that I smoke, which is Swedish tobacco. I suspect it is not grown there hut it comes back here and is widely used. I see other members of this Legislature, who smoke a pipe, using the same brand.

An hon member: What brand does the Premier (Mr. Davis) use?

Mr. G. I. Miller: I did have the opportunity of going back to the International Ploughing Match at Woodstock. I was running a little short one day and the Premier was there. I was able to sponge a pipeful from him. I think it was something of a similar brand. It probably was Borkum Riff, I am not sure.

There is another area of concern and an indication that we are hitting the little guy with the tax collecting aspect of it. Subsection 2(1) of the bill indicates that the payment for collection of that tax will increase from $1,000 to $2,000. For the little store operator, that really does not mean anything at all because one per cent on the dollar collected certainly is not going to add up to $1,000 over a year's sales. Therefore, it is really not going to help the little person. He is still going to be collecting more taxes on behalf of the province.

I would also like to point out that the Premier is going to Woodstock on Wednesday night. I intend to take part in the 25th anniversary of the tobacco board, which, incidentally, has done a tremendous job and has been a leader in the farm organization and marketing field on behalf of all marketing boards in Ontario and Canada and in making the agriculture industry what it is today. After 25 years of operations, I certainly would like to be there and support their expertise and what they have given to all the producers in that part of Ontario over those years.

I might point out that after the tornado disaster a couple of years ago, this government would not include tobacco in the farm assistance program. They did not consider it to be an agricultural product; consequently, many of those farmers were put in very dire straits when they had the excess rain and the crop damage. We put considerable pressure on the minority government of that time. It was interesting to note that when they came along with the farm assistance program the last time around, they included tobacco, which I think those farmers so readily deserve.

The tobacco industry itself generates several times more money than the total expenditure put into agriculture across Ontario. That indicates just what this government really thinks of agriculture and its ability to support the economy in this great province.

In summing up, I think that the 40 per cent tax on cigarettes and the 45 per cent tax on cigars is regressive. We are asking that little person who has so much difficulty making ends meet now, particularly with the job opportunities the way they are, to shell out more just to take care of a jet that this government has seen fit to buy, and an oil company that is not going to make even one more job in Ontario. If the government had held the line in those two areas, it would not have needed the increase. I think it is a regressive step; consequently, I certainly cannot support it, and I believe that my party is in the same position.

Mr. Riddell: I will speak very briefly, Mr. Speaker. I cannot talk about the tobacco acreage in my riding because I do not have any, but I can talk about the importance of the tobacco industry in this great province of ours.

As the member for Brant-Oxford-Norfolk (Mr. Nixon) indicated, this government is certainly preying on the inelastic demand for tobacco and alcohol. However, I am going to tell the minister that if he continues to make too much of this economic principle, if he continues to capitalize on this economic principle, then it is going to change just as sure as I am speaking here tonight. It will change to one of elasticity. If that happens, then the total economy is going to suffer. The tobacco industry contributes greatly, as one well knows, to the gross provincial product of this province, which is in the neighbourhood of $130 billion, if my memory serves me correctly.

The point I am trying to make is that we cannot overestimate the importance of the tobacco industry in Ontario. As the previous speakers have indicated, 90 per cent of the tobacco sold in Canada is grown in Ontario. We have already indicated it contributes greatly to the total provincial product. It is worth, at the farm gate, in the neighbourhood of $300 million, so it is an important source of revenue to the farmers in this province.

9 p.m.

It is interesting to note that $300 million is greater than the total provincial agricultural budget, which is in the neighbourhood of $284 million. That amounts to somewhere in the neighbourhood of one per cent of the total provincial budget including, as the member for Brant-Oxford-Norfolk alluded, the tile drainage loans that are paid back by the farmers. As far as we can estimate, the government is actually making money on this program because of the loans it has put out and the interest that is coming in from these loans. So it boils down to very little money, at this stage of the game, that the government is actually putting out on tile drainage loans. That is right, if the minister wants to do a little bit of figuring.

The agricultural budget also includes crop insurance, which is paid for by the federal government and, admittedly, administered by the provincial government. But it also includes the property tax rebate the farmer should not have been charged for in the first place. I am sure this is going to change in future years. One of these times we are going to see a budget come down changing the whole assessment of farm property and likely doing away with the property tax rebate.

If we take those three things into consideration, the agricultural budget amounts to about half of one per cent of the total provincial budget. But this government is collecting $428 million from the tobacco tax, which is $144 million more than the provincial budget for agriculture. If we take into consideration those items that are included in the provincial budget but are from sources other than provincial, it amounts to $288 million more. So we are really riding on the back of the tobacco industry in order to make this whole province go.

I think it was mentioned that the tobacco industry is very important to the whole area of employment. It might interest the members to note that in this province the direct jobs provided by the tobacco industry amount to 17,952. The indirect jobs amount to 6,700. If we combine the two, the tobacco industry provides, directly and indirectly, 24,652 jobs in Ontario. If we deal with the induced jobs, we add another 12.083. So all told the tobacco industry in this province provides 36,735 jobs.

If the inelastic demand ever changes to an elastic demand we can imagine how this is going to affect employment in this province. The last thing we want to do at this time is to discourage employment opportunities, but that is going to happen if we continue to prey on the economic principles we find within the tobacco industry. We had better take a very good look before we impose any more taxes on this very important industry.

Finally. I want to say we are going to see more smuggling of tobacco from other provinces, particularly Alberta. In Alberta. a carton of 200 cigarettes is now taxed at 64 cents compared to a carton of 200 cigarettes in Ontario, which is taxed at $3.74. With people more than ever looking for a way of making an income, when they see this differential between the provinces one cannot tell me we will not see far more smuggling of tobacco from one province to another. Ontario's black market in tobacco will certainly be stimulated by the provincial budget's added tax on tobacco. It is already obvious we are losing millions of dollars from the provincial Treasury because people have been, as the Minister of Revenue well knows, importing cigarettes from Alberta, where they attract a much smaller tax than in Ontario.

We could talk more about this great tobacco industry and the effect this tax will have on it, but I want to impress on the minister that we cannot keep raising revenues by charging a tax on one very important crop or industry in this province. We have marched along on the backs of the tobacco industry far too long. It is time we realized it is an important farm commodity and crop and an important industry. Let us not jeopardize that industry by continuing to charge a price on a product which consumers are eventually going to object to paying. With those remarks, I shall take my chair.

Hon. Mr. Ashe: Mr. Speaker, I will try to touch on a few points that were made. If there is one overriding difficulty, it seems to be the suggestion that the tax rate is too high, that this is not an appropriate place to raise revenue. I think that could be debated for some considerable time. It is safe to say that following this budget and others in past years, people in the marketplace are questioned by the press and others, and there are very few exceptions to the response: "That is the way it is. It is one of those things I do not need to have. I may enjoy it, as the case may be, but it is something I can do without if need be. So that is fair ball." So I do not think that argument has much validity at the consumer level.

In terms of the retailer level, I do not think there is any onerous task involved in selling the product, particularly since they are not the actual tax collectors unless they bought the cigarettes illegally and then it is their responsibility.

The smuggling question has been referred to, both off Indian reservations as well as from other provinces. Yes, that is a concern to us. It is a concern not only to this province but to every province in Canada with the exception of Alberta. I do not think it is relevant to compare the tax in that province with any other because we all know the source of the majority of its revenue in these times, which unfortunately most other provinces do not have in the same abundance, is oil and gas and related revenue.

It is only reasonable to point out that although we are far from being one of the lowest taxing authorities on tobacco products, we are not the highest. We have several provinces in the same area. Saskatchewan and Manitoba are about the same. Quebec is a penny higher. New Brunswick is virtually the same. The Northwest Territories and Yukon are about the same. In Newfoundland, by the time one adds a further sales tax at the retail level, they are about twice what we are. Granted, there are some that are a little lower, and it is acknowledged that Alberta is considerably lower.

9:10 p.m.

I think there is a false impression of the revenue increase that is directly related to the change in rate on cigarettes. The actual increase is only four percentage points, from 36 to 40 per cent, an 11 per cent increase, if one will. In the case of cut tobacco, it is an increase of 10 per cent from 30 to 40 per cent, a one-third increase.

When one relates those figures, they are not really relative to the retail sales tax per se. As we all know, the retail sales tax is on the retail selling price. In the case of the ad valorem tax on tobacco products, as on many others, it is the net retail price before tax on which the actual tax rate is put. If one relates that 40 per cent to the actual retail price, it is something less than 30 per cent and may be a little in perspective if one is comparing it with a retail sales tax level.

Again, if one looks at other provinces that have substantially higher retail sales tax percentages than we do, the comparison becomes even more relevant. This misunderstanding was exemplified by the member for Haldimand-Norfolk (Mr. G. I. Miller) who indicated that in his view a $2.50 cigar carried a $1.10 tax, if not more. In actual fact, the tax on that $2.50 cigar is 77 cents. Granted, that is a significant sum of money, but it is somewhat less than the $1.10 plus referred to by the member.

I may also point Out that a couple of references were made to the fact the tax right now is $3.74 a carton. It is $3.68. True, it might be $3.74 at some time in the not too distant future, but it is actually $3.68, just a penny less than in Quebec.

To put the whole issue into perspective, it is part of the Treasurer's budget of May 13. I think it is literally expected each year. It generates a reasonable sum of revenue. It is a significant part of the overall budgetary needs of the province, but I want to emphasize that the actual increase attributed to the rate changes in this budget accounts for $30 million, not the actual difference indicated in the budget document in the total overall anticipated increase in revenue from tobacco tax. The revenues from 198 1-82 were not on a full fiscal-year basis and of course the ad valorem rate itself has a growth rate built into it.

I do not think there were any other particular points made. The member for Oshawa (Mr. Breaugh) made reference to taxing the poor. I cannot relate to that at all. it is not exactly a necessity. He could use that argument for something like food and shelter, but I suggest that something like tobacco products and alcoholic products are considered at the very minimum something of a luxury item that is not a necessity to maintaining our way of life.

It may be an important relaxation for some, although not for me personally, but that is neither here nor there. I cannot buy his poor argument that it is taxing the poor and that the tax itself is not relevant to the ability to pay. I think this is a reasonable piece of legislation and a reasonable part of the fiscal responsibility of the province.

The Deputy Speaker: The Minister of Revenue has moved second reading of Bill 112, An Act to amend the Tobacco Tax Act.

All those in favour will please say "aye."

All those opposed will please say 'nay."

In my opinion the ayes have it.

Vote stacked.

CORPORATIONS TAX AMENDMENT ACT

Hon. Mr. Ashe moved second reading of Bill 114, An Act to amend the Corporations Tax Act.

Hon. Mr. Ashe: Mr. Speaker, this bill to amend the Corporations Tax Act includes significant changes affecting small businesses, as announced in the 1982 budget, as well as some administrative amendments.

A small business that earns an active business income will be exempt from the Ontario corporations income tax for two taxation years ending after May 13, 1982, and before May 14, 1984. The exemption will apply to the lesser of the Ontario taxable income and the taxable income that qualifies for the small business deduction under subsection 125(1) of the Income Tax Act of Canada. Without this amendment, the corporation would be liable to the Ontario tax at the rate of 10 per cent on such income. Moreover, the exemption will be based on the higher annual and total business limits of $200,000 and $1 million respectively, as announced in the federal budget of November 12, 1981.

A corporation that qualifies for the tax holiday will also be exempt from the payment of tax instalments in respect of the exempt income. Where such a corporation has already paid instalments for its first taxation year ending after May 13, 1982, and the total of these payments is higher than the revised tax liability as estimated by the corporation, it may apply for a refund of such excess amount even prior to the end of its taxation year. The bill authorizes the refund of such excess amount without having to wait for the tax return to be filed or the assessments to be raised.

A complementary amendment provides for the resumption of instalment payments after the end of the exemption period. Since the instalment for a taxation year may be based on the tax payable for up to two previous taxation years, it has been provided that, for the purpose of determining the amount of instalments payable for a taxation year ending after a tax exempt year, the previous year's taxes will be calculated on the basis that the exemption was not available for those years. This means the corporations will revert to the payment of instalments in the normal way after expiry of the tax-exempt period.

In addition to this very important budgetary item, the bill includes some administrative amendments. The first item relates to the payment of management fee, rent, royalty and other charges to non-residents. The present provision requires the inclusion in the income of the payer corporation of 5/14 of such amount paid to a non-resident person with whom it was not dealing at arm's length.

As an exception, this inclusion is not required if the non-resident person to whom the payment is made is taxable under the Ontario act. This part is now being modified to state that the exception will apply only if the non-resident recipient had included the amount received in its taxable income.

The other part of this amendment is intended to close a loophole whereby a corporation could avoid the 5/14 add-back by channelling the payment to the non-resident through another person resident in one of the other provinces. It has now been provided that such payments would also be subject to the income inclusion provision.

The second set of administrative amendments relates to the calculation of paid-up capital of banks and loan and trust companies. With respect to the banks, the bill introduces new terminologies in place of the old ones in order to bring them in line with the revised terminologies used in the Bank Act. The bill also provides that where a bank or trust corporation uses the equity basis of accounting for its investment in another corporation, the share of the earnings or losses of that other corporation will be excluded when computing the paid-up capital of the bank or the loan and trust company.

Finally, the bill brings in an additional option for calculating a corporation's tax instalments and clarifies the requirement relating to the due date of instalment payments where a corporation's year does not end on the last day of a month.

Mr. T. P. Reid: Mr. Speaker, you will be happy to know I have some extensive comments to make on this bill.

In essence, Bill 114 is an act to assist small business in the province. However, before I get into examining the contents of the bill, it is worth entering into the record how many small businesses are actually operating in this province. I go back to the comment I made earlier today and on other occasions that we really should have a compendium of information that would indicate how many small businesses are going to be affected; and I am going to touch on some other items that will indicate how poorly this budget has been drawn and how little information the Treasurer and, unfortunately, the Minister of Revenue, have to work with in bringing this kind of legislation before us.

9:20 p.m.

As with many of this government's inconsistencies, there seems to be a difference of opinion about how many incorporated, unincorporated and just plain small businesses exist in Ontario. The corporations tax branch of the Ministry of Revenue says there are 160,000 incorporated small businesses, of which 70.000 paid some form of income tax in 1980. the last available taxation year for which we have information.

The Minister of Industry and Trade (Mr. Walker) said in a speech to the annual meeting of the Ontario Chamber of Commerce in Hamilton on May 31, 1982, There are 240,000 small firms in Ontario." In this statistic I think the minister has tried to include both incorporated and unincorporated small businesses. However. two months earlier the same minister told those who attended the Canadian Chemical Producers' Association dinner, and I am sure they were quite happy to hear this, "We have more than 400,000 small firms doing business in Ontario."

This can lead to only two possible conclusions. The first is that there has been a larger number of bankruptcies in this province in that two-month period than Statistics Canada reports; the other, which is more likely and more realistic, is that the members on that side of the House really do not know how many small businesses exist, be they incorporated or unincorporated.

The point I make is an important one. Our small businesses are in trouble. They suffer from a dramatic cash-flow problem in a climate of investment that is extremely uncertain. If the government cannot even recognize how many small businesses are in trouble, how in heaven's name do they expect to help them? I guess that is why the Treasurer in his budget speech predicts that only 60,000 small businesses may gain some benefit from the provisions of this bill.

I also want to talk about the fact that there is no doubt small businesses are probably the only ones who have gained from the budget. Of course, the contradiction there is that they are also going to be faced with the expansion of the base of the retail sales tax and so on. But a two-year tax break has been granted the small business, a move that the government suggests will cost the revenues of the province some $250 million.

As you know, Mr. Speaker, the time provided in the bill is not necessarily one that fits the fiscal year of most incorporated businesses. I am told the fiscal year of most incorporated businesses runs from January 1 to December 31. It has been suggested to me, and I think it is something the government should look at, that the tax holiday, if we can call it that, should really have extended back to January I of this year to give those businesses the needed cash flow and the money they really require immediately.

The Deputy Speaker: I am having a difficult time between listening to your colleagues here on the ft and listening to you.

Mr. T. P. Reid: I must say I am having a little difficulty as well.

The Deputy Speaker: Show some respect for the only Liberal-Labour member in the Legislature, please.

Mr. T. P. Reid: Thank you, Mr. Speaker. I am sure it will last for all of 20 seconds.

On closer examination, this program may do nothing more than widen the gap between the successful small business and the sinking one. Since this act is geared towards eliminating income tax, it will not do a bit of good for the small businesses that need help the most, those in a loss position. It is too bad this move came too late for the record number of businesses in the province that have already failed this year and in recent years.

Unless the business is already making money and is therefore prospering somewhat in harsh economic times, this budgetary measure will not mean a thing. While 60,000 Ontario businesses may profit from this break, something like 90,000 will not. A further 10,000 make income from other means such as investments, and while they will not benefit from this move either, at least they are not suffering like the 90,000 who lose out from this budget.

I am afraid the only thing that might help the remaining businesses is interest rate relief, a program which we propose and a measure which the Tories refuse to implement in spite of the fact that as businessmen they must know it is the only effective means of dealing with this problem.

Before I discuss the technical aspects of Bill 114. I would like to direct some attention to an article in the Globe and Mail of May 31, 1982. The article is entitled. "Small business is kept waiting for assistance." and it blasts the federal government for taking its time in introducing policy changes to assist the small business community. It seems this government has tended to follow suit. Let me explain.

In the budget, and specifically in this bill. qualifying corporations have been allowed to apply for a refund of any instalment already paid with respect to the exemption period that is in excess of the amount of the revised tax for the year. The Treasurer has made reference to the fact that 30,000 small businesses could apply for refunds. As of several hours ago this afternoon. only 2,700 had made that application. Of those 2,700 firms, members may ask how many have received their refunds. The answer, as of this afternoon, is -- guess what, George? Guess how many? -- none, zero.

Hon. Mr. Ashe: If you had not talked for all those hours, we might have had this done.

Mr. T. P. Reid: Oh, come on. That is as silly a thing as the minister has said. Our small businesses have been kept waiting. At a time when small businesses in this province require investment finances in cash, this province is holding the cheques. Although I realize that about 1,600 cheques representing some $6.1 million will be in the mail by Thursday, for some that may already be too late.

As I said earlier, this bill represents the cornerstone of this government's budgetary legislation. Section I of the bill is more or less a technical housekeeping amendment. It closes a loophole of which presumably a number of corporations were taking advantage. The only difference between this and subsection 12(6) of the Corporations Tax Act, chapter 97 of the Revised Statutes of Ontario, 1980, is the addition of the phrase, "and that has included that amount in computing its taxable income earned in Canada."

In essence, this section allows royalty payments to be included as income earned by a corporation in Canada. I have spoken in the past of the contradictions of the budget and this is another example. On the one hand, the government closes a loophole to increase its revenue, while on the other hand it provides a two-year tax exemption for small businesses eligible for the deduction from tax under subsection 125(1) of the Income Tax Act (Canada). If the government is truly interested in or concerned with assisting small businesses of this province, why does the government wish to increase their taxable income?

I have stood in this House and made reference to the fact that this government is not willing to release the background studies which were supposedly conducted during the development of this budget. The answers I received on the Order Paper were the same, and I quote:

"In the interest of budget security, I feel it would be inappropriate to table background studies, calculations and memoranda that relate to the formation of budget policy."

If this were question period, I would ask the Treasurer or the Minister of Revenue how they arrived at this figure of $250 million. Does it include the number of small businesses which will defer making capital cost allowance claims until after the tax holiday? Does it include the number of small businesses which will delay payment of deductible business expenses during the period as a means of reducing taxable income in the post-exemption period? Does it include those small businesses which will shift additional income into the two-year period, a practice that would have the effect of increasing the company's income for the low-tax period?

9:30 p.m.

I do not know the answers to these questions, and from the Treasurer's answers I am sure he does not know either. We want to know what constitutes that $250-million decrease in revenues to the province and, presumably, the $250-million holiday to small business.

The declaration of a two-year tax holiday on the 10 per cent Ontario income tax for small incorporated businesses is expected to assist some 60,000 firms in Ontario. In effect, this means that such companies, those earning active business income of less than $200,000 in a single year up to a lifetime total of $1 million, now have to pay only 15 per cent federal income tax rather than the combined federal-provincial tax of 25 per cent.

Section 2(2) of Bill 114 increases the eligible active business income from $150,000 to $200,000 to keep it inline, as the minister indicated in his opening statement, with a change brought about by the federal government under section 125 of the federal Income Tax Act. The Ontario government could have increased the eligible income level to $250,000 or $300,000 if it was really keen on assisting our small business community.

In essence, Bill 114 provides a tax holiday for the 60,000 winners, to use the Treasurer's own words, while providing no assistance whatever to those businesses that are not making a profit and are on the verge of bankruptcy.

Is this government willing to take the risk of losing more than 100,000 small businesses in almost every sector of the economy and assisting only those that are currently making a profit? A lot of those probably will not be making much of a profit the way things are going.

The Treasurer's budget included the statement that this measure was being taken "in order to improve the confidence of small business people, to give them the incentive, desire and resources to weather the economic storm, to improve productivity through investment and, most important, to continue to preserve and create jobs."

Jobs and the maintenance of jobs are a main objective of this tax holiday. Even if the 60,000 businesses that may benefit from this tax change created jobs, the numbers created would not replace the jobs this government has lost by turning its back on those corporations that are not earning a profit at present.

When I assume, as the government does, that this will in turn create jobs in the private sector, both the government and I are on shaky ground. Let me bring to members' attention a survey conducted by the Canadian Federation of Independent Business, which represents some 64,000 small businesses. The federation's latest biannual business survey was conducted on May 31 of this year, 18 days after the budget, and still the majority of respondents expected to lay off more workers this year. Eighty per cent believe economic conditions this year will remain as bad or worsen, and 76 per cent report a reduction in profits as a result of high interest rates.

I suggest that the number of jobs created by this two-year tax holiday will not be substantial, since the crucial factor continues to be high interest rates. Bill 114 does nothing to attack the problem of high interest rates. Bill 114 does nothing to assist the 90,000 businesses that are not paying corporate income tax at present. Bill 114 does nothing to assist the 80,000 unincorporated small businesses in weathering the economic storm.

We in this party are not suggesting that everybody in business or otherwise should be bailed out of their problems, but we do feel that those who are suffering and can show that their problems are due solely or almost completely to the high level of interest rates in the province should be assisted.

We are also concerned that these figures may be based on economic information that at best is rather simplistic and vague. As I have already stated, we have been in touch with the people in Treasury and the people at Revenue. Those people presumably are the highly paid experts on the staff of the Minister of Revenue. The figure used as a basis for the budget was based on the total amount of corporate tax paid by small businesses in 1980, with an inflation adjustment of 10 per cent per year to put it in the right perspective. With that kind of unrealistic and simplistic reasoning, how does the Treasurer expect the general public to believe that he and his government are capable of properly managing the public purse?

As I have already indicated, there is going to be a lot of shifting around of income, a lot of putting off of some capital investments and a lot of fiddling to take advantage of this tax holiday. We will be interested in seeing what happens, because we find that this is one of the few measures in the budget that makes any attempt to help anybody. Almost every other single thing in the budget is punitive at a time when everybody from the individual at the lowest end of the economic order to the highest is suffering, being punished again by the Treasurer's budget through the sales tax and other things; but this is one small beacon of light in the whole budget.

We on this side are appalled at the unprofessionalism of the way the budget was put together, at the economic factors on which these figures in the budget have been produced and at the simplistic thinking on the complexities of the economic order in Ontario that they can pluck 60,000 out of the air and just take the $250 million, which was the corporate tax paid in 1980. simplistically add a factor of 10 per cent for inflation and figure that they are going to come to anything that is really going to be anywhere within the realm of economic reality.

Unfortunately, it is the best we have, and we will be supporting the bill, although we may have some further things to say about specific portions of it during clause-by-clause consideration.

Mr. Breaugh: Mr. Speaker, again we will oppose this legislation, though the temptation is there to take a rather superficial look at it and say, "Well, it is the only positive step," if one has a perspective on life that sees this kind of stuff as a positive step in a bad budget. It does not deserve the support of the opposition parties, and it does not deserve the support of the government either.

I want to spend some time responding to the Minister of Revenue, who is not listening -- but. then, even when he listens he never seems to hear -- because I think it is reasonable to say, as he just said on the bill, that he does not understand this budget from an ordinary human being's point of view. It is a sad admission on the part of the Minister of Revenue that he does not understand an ordinary person's viewpoint on his budget.

It is quite another matter to have him say: I understand that the poor. the small business people and the small industries in our community have a lot of problems these days. We understand what those problems are, but we had to make some difficult choices. We had to establish some priorities; we had to choose some things we would do." By its very nature. putting together a budget means that one does choose some things over others. But it is a sad admission to hear the government minister responsible admit that he does not understand and, more than that, that he does not care that he does not understand and, even more than that, that he is not prepared to listen or to try to understand.

The minister is saying essentially that he does not give two hoots for the people his taxation measures affect; he is not even interested in listening to the arguments; he is beside himself.

Is it any small wonder, then, that Queen's Park Crescent every once in a while gets filled with people, as it did in response to this budget by the people who run little coffee trucks, and that they are mad as hell because the minister does not understand what he is doing and does not even care? That is a cold and callous admission on the part of the government.

9:40 p.m.

I understand that for somebody like the Minister of Revenue it probably is an attractive piece of business to sit around in a large office and listen to well-informed and eloquent staff people provide him with advice. It probably is seen as his duty, whether he likes it or not or whether he agrees with it or not, to carry out taxation measures announced on budget night by the Treasurer.

I know the Minister of Revenue reasonably well. I would say he has a devotion to the Tory party which is somewhat akin to a puppy dog to its master: he would do it right, wrong or whatever. He would see that as his duty. He is a lemming in that respect. He goes over the cliff, no questions asked. That is what he was told to do and over he goes.

I have no real regrets that this is his personal attitude towards things, hut it is sad to see a minister of the crown, in the course of discussing legislation such as we are tonight, frankly say: "1 do not care. I do not understand the arguments from the opposition side. I am not worried about that, and I am not even going to respond to it." That is a sad admission.

One of the things a government is supposed to do is to make the hard choices that have to be made. It is also a government's responsibility to understand the impact of those choices on everybody in this society. Here we are in the middle of a budgetary process when all sides admit there are hard times. Things are not easy. We are discussing the bill which identifies the group that gets the goody this time around the block. On face value, and perhaps the colleagues to my right did it this way, they identified who got the goody and attempted to get on side with the giving of the goody this trip around the block.

One thing I find the people of Ontario are beginning to understand is that this government has a repertoire of stunts it uses with amazing regularity, and particularly budgetary stunts. The essence of this bill is this year's expression of that stunt. It is simply that somehow they have learned that one can take money from the people of Ontario regularly in a wide variety of ways. They do that consistently, day by day, through a thousand and one different sources in a thousand and one different ways, in big ways and small ways.

On the other side of the coin, they give back some money. At the beginning of that process, they are careful to camouflage who is taking the cookies out of the jar; they want somebody else to do that. At the end of the process, they want to identify carefully who is giving back the three crumbs this week. There then will be a great announcement by the Treasurer, as there was in the instance of this legislation, that he is giving somebody a tax holiday. I noticed the Minister of Revenue used that term again tonight.

Under what lottery system did this group get identified as the group that has the tax holiday this year? They have almost convinced a number of people that somehow it is fair, decent, reasonable and honourable to take $20 from one if at some point they give back $2. That is the technique at work with this piece of legislation: to take as much as one can, as often as one can, as regularly as one can and not get caught doing it; then every once in a while to give back a nickel, a dime, send a cheque or make some grand announcement. It does not matter that they get the money, or that it is fair, or that they really do not know who they are helping or why or how. It is a lottery system. Every once in a while somebody wins.

It is the same basic principle the government uses in its lotteries. It does that as well. It advertises widely and well. It gets as many people as it can to sell the tickets. The fact that maybe one person in two or three million wins something once in a while is beside the point. That is essentially what this is. This is a crap game with small business: some will win, most will lose.

While they are at it, while they are giving this tax holiday to small businesses, what else are they doing? What are the other factors at work there? I have had the opportunity to talk to a number of people who are running small businesses these days, and they are looking at the budget that is currently before the House and saying: "I don't care what kind of tax holiday is here; they are driving me out of business. They are making me a tax agent more than anything else. They are putting tax measures in place which will drive my business down. And if my business is marginal anyway, I will not be around to have a tax holiday; I will be long gone, and so will my attempts to keep my business in operation and my family revenue in shape." So this tax holiday in many cases will not be one that will do a great deal for anybody.

I want to point out that I thought we had heard the Treasurer say that he cared a great deal about small business. I thought I also heard the Minister of Revenue and several other ministers say that the Tories in Ontario care about small business. Mr. Speaker, take a look over there and see how many care about small business. One can see five Tories in this House tonight while we are conducting the debate on this bill. If they care, they sure as hell do not show it by their attendance in this Legislature. If they care a great deal, I would tend now to ask you, Mr. Speaker, to look about and see if you can find a quorum in this House. I am not sure you can, can you?

The Deputy Speaker: We will find out in a minute.

The Deputy Speaker ordered the bells to be rung.

9:51 p.m.

Mr. Speaker: We have a quorum.

Mr. Breaugh: Mr. Speaker, I must say I am a little disappointed that it was necessary to point out to the chair that there were not very many government members in here this evening. I had thought an agreement had been struck and some importance was being given to the Legislature itself, that there was some sense of urgency and we wanted to move through these bills.

Quite frankly, on this side, particularly in my own caucus tonight, I have attempted to keep the debate pertinent and not long. During the course of the day I have attempted to make sure our members who wanted to speak to bills had an opportunity to do so, but that we did not carry the debate on at great length. We asked members to get up and make their points as succinctly as they could, and to proceed with the legislation.

I thought that during the course of this evening, for example, we covered about as much legislation as we did in many weeks at the beginning of this session. I thought that was a reasonable way for us to proceed, but part of the reasonableness was that the government members ought to be in this chamber. There is a responsibility on their part as well to be present for debate.

Hon. Mr. Leluk: Your members ought to be in this chamber for debates. There have been evenings when only two of your members have been present in the House.

Mr. Breaugh: I hear the Minister of Correctional Services objecting to having to be in the Legislature. I think that is strange.

Mr. Speaker: Order. These are very interesting observations, but I ask the member to direct his attention to the bill.

Hon. Mr. Gregory: Stop being a jerk and get on with it.

Mr. Breaugh: I am sorry, Mr. Speaker, but when I hear the government House leader say that obeying the standing orders of the House and paying some attention to the legislative matters that are before the House somehow can be construed as making one a jerk, I cannot resist saying that I think that is a bit much.

I understand that maybe you, Mr. Speaker, cannot hear him from the chair up there but, oddly enough. his voice seems to carry to this side of the House rather well. I take some exception to that. If we want to get into a debate at that level I am prepared to do so. I have a vocabulary that can match that of the government House leader at any level he cares to debate. If that is his version of parliamentary discussion, we can have that, no problem.

Mr. Cooke: What does he care about the bill? He was not here.

Mr. Martel: He is not prepared to withdraw his remark, though.

Mr. Speaker: Order.

Mr. Breaugh: Mr. Speaker, I am prepared to

continue with the debate, but I am having a difficult time deciding whether I prefer to have no Tories in here, when it strikes me they are not following their parliamentary obligations, or to have this crowd in here discussing among themselves.

Hon. Mr. Grossman: Or no leaders.

Mr. Breaugh: If the Minister of Health wants a debate, all he has to do is stand up and the Speaker will recognize him.

Interjections.

Mr. Speaker: Order. Now back to the bill.

Mr. Martel: Aren't you going to make him withdraw the word "jerk"?

Mr. Cassidy: Just because they have to come in and do their jobs for a change.

Mr. Speaker: Order. The member for Oshawa will continue on Bill 114.

Mr. Breaugh: I am concerned that this type of legislation, this approach to a taxation measure, has a bizarre twist to it. That this is the government's response to the needs of people who run a small business is a concept that runs contrary to anyone else's clear identification of their needs. It is fairly clear that one of the ruinations of people who are trying to operate our smaller businesses is the same one that is having a massive effect on our larger businesses as well. It is an across-the-board problem with the economic times we are in. People do not have purchasing power and have to take a consumer's point of view in buying articles and financing them at high interest rates, not the point of view of small businesses.

Mr. Speaker: Will the honourable members please curtail their private conversations? Would the member for St. Catharines (Mr. Bradley) please resume his seat, and would the member for Grey (Mr. McKessock) and all the other honourable members please resume their places? The member for Oshawa has the floor.

Mr. Breaugh: The bill does not talk about or deal with the problems of people running a small business. The basic problem of someone running a small business, such as keeping inventory on the shelves, is not resolved by this. The fact that people are buying less is not resolved by this. The fact they are having difficulty with their carrying costs and just staying in operation is not resolved by this legislation. This legislation is a bit of a cookie that is given to a select few; a tax holiday with lots of conditions attached is offered to them. It does not address itself to most of the people in my community or the community of anyone who would think of himself as being --

Interjections.

Mr. Speaker: Order. Proceed, please.

Mr. Breaugh: I want to proceed, and I would like to have a debate on this bill this evening. I thought we were being lectured at some length for holding up legislation and not dealing with it. We are here tonight to deal with it, and it is difficult, without being too sensitive about the matter, to talk to the Minister of Revenue (Mr. Ashe), who likes to whisper in the ear of the Treasurer (Mr. F. S. Miller) while these bills are being debated. It is difficult on this side of the House to give serious attention to legislation if the ministers who are taking the legislation through the House do not care to give it that kind of attention.

This bill is illusory because it offers to the public at large the concept that somehow somebody is winning in this process, that somehow there will be a tax holiday provided to certain citizens. Then one looks at the fine print of the bill and asks: "Will that do something for people who run the store in my plaza? Will it do something for the small industries in my community and in other communities?"

The facts are that it probably will not. The government is now laying down the conditions under which this legislation will become effective. For many of those people, all they have offered to them is another expenditure in that they have to become incorporated. They may not want to do that; they may not have done it until now because it appeared not to be necessary. But to qualify for the exemptions that are provided for under this legislation, that is a requirement. That is an immediate and additional front-end cost to their business. The last thing they need now is some additional costs. Yet, to qualify under this proposal, they will have to meet that cost.

I want to talk briefly about some of the information which was given to the members. The standing orders of the House require that a compendium be provided with the bill. In this case we are given explanatory notes, one document which is part of what will be printed in the bill, and a book entitled Ontario Corporation and Income Tax Legislation, 1982. That is the sum total of the background information provided to opposition critics, which is supposed to give us all the reasons that are there.

10 p.m.

On another piece of legislation this afternoon, the Treasurer said: "You can read the budget. It is somewhere in there." I think that is a long way from what this House had in mind when it said they are to put together a compendium of relevant information and present it with the legislation.

The purpose of the exercise was to try to get this Legislature to deal with pieces of legislation. All parties would not have equal footing on it. We acknowledge the government is not going to publish, put on the table and give to the opposition members a top-secret document showing its innermost plans, thoughts and desires.

Mr. Wrye: Like a Goldfarb poll.

Mr. Breaugh: Yes, like a Goldfarb poll. On this bill, I think it is reasonable that the government, opposition critics and the public at large ought to have the same set of numbers about how many people will benefit by this legislation. It is asking a great deal to expect opposition members, the public and anybody else, for that matter, to accept one minister's word as to how many people will be affected by it.

There is an obligation on the part of the government to fulfil the requirement of the standing orders which says we are to be given some background information. I do not think any of us expect all that information flow is going to happen. We probably do not want it, but there are relevant pieces of information that could have been provided with this legislation and other bills we have looked at that would have been useful to opposition parties, to the Legislature as a whole and to the world, for that matter, to establish the framework in which legislation like this was put together.

For example, how did the government identify the group which will be assisted by this? What are the criteria that are put together there? How come this group is worthy of a tax holiday? To show the problem we have with this, the minister and the Treasurer are not providing a tax holiday for all small businesses in Ontario. We should be clear about that. They have set their criteria, made their choices and established their priorities.

In trying to deal with this legislation, it would be useful to have the priorities that were established. How is it that this target group is going to do more good than another target group? In going through the sorting process of who will get this kind of tax holiday, how is it that they arrived at the definitions provided in this legislation? I do not understand why that would be seen as a threat to the government.

In the process of looking at this bill, it is important to look at two or three really important criteria. One is, does this legislation move to assist, in large measure, groups in our society which now need assistance? Many of us would argue that the corporation world, large and small, needs assistance, but a priority would be ordinary citizens who may well have deserved a tax holiday more than any other identifiable group in our society.

It is difficult for me to rationalize why charitable groups and groups that put on dinners and functions of that nature are now seen to be a suitable target to collect a retail sales tax from, and why it is that lower-cost meals have to be taxed and it is essential that government does that as a priority. In the middle of all these hard times in economic terms, in the middle of all this great requirement for cash on the part of the Ontario government, one group, not small business as an entity but one identifiable group within the small business world, gets a tax holiday.

It is hard for me to judge. Frankly, it is not possible for me to judge whether they have identified the right group, the wrong group, whether that is fair or unfair, and whether it is going to do what the Treasurer wants it to do, because I have no idea on what basis that legislation was put together.

I have pieces of paper that I suppose the Speaker would rule fulfil the requirement for a compendium of background information. I can hold the document in my hand, but by no stretch of the imagination does it lay out for me as an opposition critic, or for anyone else who might be interested in qualifying for this legislation or examining its effectiveness now or at a later date, the criteria upon which this legislation is established.

I suppose it is strange to be opposing a tax holiday for anybody. If we were Liberals in this caucus, we would take the point of view that as long as somebody is getting a break somewhere, we should not question whether that person is actually getting something that is going to do him any real good in the long run; we should be satisfied that all around us is misery, but that is okay, because somebody has a tax holiday going for him.

I am not prepared to accept that. I think there is an obligation on the part of the government to provide coherent policies in the budgetary process to correct the things that are wrong in our economy.

This is a nice thing for some people, but it does not address the real needs of small business or of anybody else. A taxation process that is based on the simple principle that one can take money regularly and consistently from the public and from the business community, small and large, and that every once in a while it is good enough to give them a little cookie, a goody of some sort, good enough to give somebody somewhere at some time a tax holiday and that is sufficient in terms of providing legislation and a budget, I think is quite wrong.

It would be about as wrong, and it is based on exactly the same principle, if the government of Ontario got into a new lottery business and said that instead of Lottario, Super Loto, new Chevs and cars to give away, somehow we would devise a lottery system in this province whereby one can pay $5 as a tax measure and somebody out of the eight million people in this province will win a tax holiday. That is essentially what this legislation proposes. By a lottery system, it is the turn of the people identified in this bill, supposedly some 60,000 small businesses, to win. I would not mind so much if there were a clear winner to this proposition, but there is not.

These people are going to be hurt by other measures the Treasurer proposed in his budget, specifically the extension of the retail sales tax. In many ways, they will be victims and winners at the same time. Those who survive the process may well come out of this on balance with something that will be to their credit and will do them some good. However, I suspect on balance the opposite will be true and nobody will win. There will be no winners out of this proposition.

This bill does not do what it purports to do. It does not provide much of anything to small business in this province. It is true there will be some identifiable winners. Those lucky people will probably get from the Minister of Revenue, and I suspect from the Treasurer, something that clearly identifies that the Tories in Ontario are doing something. Never mind what, never mind whether it works, they are at least alive and well and mailing out cheques or refunds or statements to somebody somewhere.

Conversely, the tobacco tax bill was a clear move to go underground and camouflage who is taxing whom in that situation. I suspect the mole will come out of the ground on this particular bill. There will be a great movement afoot to identify that the Tories in Ontario are giving the public back some of the money they took away in previous times, at least to some. It would not surprise me to see a major advertising campaign around this concept.

I pray small business people will not be subjected to the same kind of misery as our senior citizens were with the senior citizens' property tax grant. They deserve better than that. I would not wish that program on them. Unfortunately, this one will be administered by the people who brought us the Pearl Harbour of tax exemptions for senior citizens, so there is not much chance that it will be a very effective ministry all of a sudden.

I regret that the bill does not do what it states it will try to do. I regret that it will not do very much for our economy. I regret that it will not do much for small businesses that are hurting. I regret that it will not address itself to the problems of the economy or small business, or the consumer, or anybody else.

This bill, of all the bills we have discussed tonight, is a very political bill. This is one which is clearly designed to make the Big Blue Machine look good, at least temporarily, in Ontario. We cannot and we will not support legislation such as this.

10:10 p.m.

Mr. Roy: Mr. Speaker, I would like to make a few comments about Bill 114. Prior to doing so, I must say I have tried, especially since 1981, to concentrate on the fact that my colleagues to the left are not the enemy; the enemies across the way. But there are times when the convolutions from that side just become so overwhelming that I have some difficulty in restraining myself from making a few brief comments about the last member who spoke about Bill 113.

First, I listened to the comments from the member for the New Democratic Party, and as I understand it they are going to vote against a bill which will impose a tax on large corporations. They are voting against this. Bill 114 is going to give an exemption to small businesses and they are going to vote against that as well, so I have some difficulty following the principle of the party.

Why would they not want to take money away from TransCanada PipeLines and people like that? Why would the party on the left not want to give some sort of a break to small businesses in Ontario? I have some difficulty. It is as convoluted as the critic himself who at one point thought it was too quiet and called for a quorum, filled the House up, and then complained there was too much noise. There is some confusion. I suppose it is normal at this time on Tuesday night to have that sort of problem.

As my colleague the critic of our party said so succinctly and so well in his comments at the opening of this bill, our concern is that the bill does not go far enough. Although I am pleased to see that the Treasurer is here this evening, I was somewhat disappointed in his response to a question concerning aid to small business this afternoon. The question was if he really wanted to help small business, why did he not proceed to give relief by way of some exemption or assistance as far as the interest rate is concerned?

As my colleague for Rainy River has said, in the present legislation there will be some 90,000 incorporated small businesses which will not get any assistance from this legislation because they will not be paying any corporate tax, so the suggestion made by my colleague was that the aid should have come by way of interest rate reduction or some type of rebate on the question of interest rates, rather than on the corporate tax which they will not be paying so it will not be helping them.

On that point alone, we feel the bill does not go far enough. This is not idle speculation. One reads in the financial pages every day about small corporations whose debt load is much too high because of interest rates. Just this morning I was reading in the financial pages of the Globe and Mail that a few years ago the usual debt load of a corporation was about 25 per cent of its revenue. In most corporations it has now reached a point over 70 per cent.

There will be 90,000 incorporated small businesses that will not be getting any assistance from this legislation because they will not be paying any corporate tax. The other point is this, and we raised it again this afternoon, that some 80,000 unincorporated small businesses will not be getting any assistance because they happen to be unincorporated. In all the communities out there, there are a lot of people in business who have not incorporated. Today, more and more small businesses are not incorporated because there is no financial benefit to doing so. One of the incentives --

Mr. Speaker: It being 10:15 p.m., I have to call the honourable member to order.

Mr. Roy: Why?

Mr. Speaker: Your time has expired.

Mr. Roy: Mr. Speaker, I was just going to say something, that even the Attorney General (Mr. McMurtry) was --

Mr. Speaker: Order. Would you adjourn the debate, please?

Interjections.

Mr. Roy: Mr. Speaker, if that is the agreement, that is the agreement.

Mr. Speaker: So I am told.

An hon. member: He said to adjourn the debate.

Mr. Roy: Yes, but it is only 10:15 p.m. What is the --

An hon. member: Yes, but we have to vote.

Mr. Roy: Mr. Speaker, I will move the adjournment of the debate.

Mr. Nixon: Mr. Speaker, you are entirely correct. The agreement does not necessarily control your actions, but it is true there is an agreement among the House leaders of the three parties that the bills would come to a vote tonight. If the House leader of the government would like to proceed with the minister's response, I am sure my colleague would not stand in tile way of that.

Hon. Mr. Gregory: If the honourable member who moved adjournment of the debate would perhaps sit down and allow the minister to complete his remarks, that would be in line with the agreement.

Mr. Martel: Mr. Speaker, that is not what was agreed to. We agreed to vote on those bills on which second reading has been completed. At no time did we agree we would terminate the debate on this particular bill. In fact, if one looks at the orders for tomorrow, we have indicated that if we do not finish the Revenue bills we will go back to those tomorrow. We can spend until 10:30 p.m. arguing the pros and cons of it, but we will not make any progress. We agreed to vote on those bills which we had concluded at this time. I think this is the last one. We have agreed to go back to it tomorrow and finish it up, give third reading tonight to one bill and, in addition to that, do the clause-by- clause study tomorrow in committee. I would hope we would be prepared to do that.

Hon. Mr. Gregory: If the House leader of the third party has additional speakers, perhaps he has a valid point.

Interjection.

Hon. Mr. Gregory: You do have -- suddenly, out of the blue? Good.

Mr. Martel: I want to indicate we have a number of speakers. The member for Oshawa was the first speaker from this party on that particular piece of legislation.

Hon. Mr. Gregory: He has already spoken.

Mr. Martel: He has spoken. but we have a couple of other speakers. We said we would take the normal course to debate the bills, but if he thinks we are going to short-circuit to the point where we get one speaker on a bill, there is something totally wrong.

On motion by Mr. Roy, the debate was adjourned.

10:25 p.m.

ONTARIO LOAN ACT

Mr. Speaker: Mr. F. S. Miller has moved second reading of Bill 111, An Act to authorize the Raising of Money on the Credit of the Consolidated Revenue Fund.

The House divided on Hon. F. S. Miller's motion, which was agreed to on the following vote:

Ayes

Andrewes, Ashe, Baetz, Barlow, Bennett, Bernier, Birch, Brandt, Cousens, Cureatz, Dean, Drea, Eaton, Elgie, Eves, Fish, Gillies, Gordon, Gregory, Grossman, Harris, Havrot, Henderson, Hennessy, Hodgson, Johnson, J. M., Jones, Kells, Kennedy, Kerr, Kolyn. Lane, Leluk, MacQuarrie, McCaffrey, McCague, McLean, McMurtry. McNeil, Miller, F. S., Mitchell;

Norton, Piché, Pollock, Pope, Ramsay, Robinson, Rotenberg, Runciman, Scrivener, Sheppard, Shymko, Snow, Stephenson, B. M., Sterling, Stevenson, K. R., Taylor, G. W., Taylor, J. A., Timbrell, Treleaven, Villeneuve, Walker, Watson, Welch, Williams, Wiseman, Yakabuski.

Nays

Boudria, Bradley, Breaugh, Breithaupt, Bryden, Cassidy, Charlton, Conway, Cooke, Cunningham, Di Santo, Eakins, Edighoffer, Elston, Epp, Foulds, Grande, Haggerty, Johnston, R. F., Kerrio, Laughren, Mackenzie, Martel, McKessock, Miller, G. I., Newman, Nixon, Reed, J. A., Reid, T. P., Renwick, Riddell,Roy, Ruston, Samis, Stokes, Swart, Sweeney, Van Home, Wildman, Worton, Wrye.

Ayes 67; nays 41.

Third reading also agreed to on motion.

PROVINCIAL LAND TAX AMENDMENT ACT

Mr. Speaker: Mr. Ashe has moved second reading of Bill 113, An Act to amend the Provincial Land Tax Act.

The House divided on Hon. Mr. Ashe's motion, which was agreed to on the following vote:

Ayes

Andrewes, Ashe, Baetz, Barlow, Bennett, Bernier, Birch, Boudria, Bradley, Brandt, Breithaupt, Conway. Cousens, Cunningham, Cureatz, Dean, Drea, Eakins, Eaton, Edighoffer, Elgie, Elston, Epp, Eves, Fish, Gillies, Gordon, Gregory, Grossman;

Haggerty, Harris, Havrot, Henderson, Hennessy, Hodgson, Johnson, J. M., Jones, Kells, Kennedy, Kerr, Kerrio, Kolyn, Lane, Leluk, MacQuarrie, McCaffrey, McCague, McKessock, McLean, McMurtry, McNeil, Miller, F. S., Miller, G. I., Mitchell;

Newman, Nixon, Norton, Piché, Pollock, Pope, Ramsay, Reed, J. A., Reid, T. P., Riddell, Robinson, Rotenberg, Roy, Runciman, Ruston, Scrivener, Sheppard, Shymko, Snow, Stephenson, B. M., Sterling, Stevenson, K. R., Sweeney;

Taylor, G. W., Taylor, J. A., Timbrell, Treleaven, Van Home, Villeneuve, Walker, Watson, Welch, Williams, Wiseman, Worton, Wrye, Yakabuski.

Nays

Breaugh, Bryden, Cassidy, Charlton, Cooke, Di Santo, Foulds, Grande, Johnston, R. F., Laughren, Mackenzie, Martel, Renwick, Samis, Stokes, Swart, Wildman.

Ayes 91; nays 17.

Ordered for committee of the whole House.

TOBACCO TAX AMENDMENT ACT

Mr. Speaker: Mr. Ashe has moved second reading of Bill 112, An Act to amend the Tobacco Tax Act.

The House divided on Hon. Mr. Ashe's motion, which was agreed to on the following

vote:

Ayes

Andrewes, Ashe, Baetz, Barlow, Bennett, Bernier, Birch, Brandt, Cousens, Cureatz, Dean, Drea, Eaton, Elgie, Eves, Fish, Gillies, Gordon, Gregory, Grossman, Harris, Havrot, Henderson, Hennessy, Hodgson,Johnson, J. M., Jones, Kells, Kennedy, Kerr, Kolyn, Lane, Leluk, MacQuarrie, McCaffrey, McCague, McLean, McMurtry, McNeil, Miller, F. S., Mitchell;

Norton, Piché, Pollock, Pope, Ramsay, Robinson, Rotenberg, Runciman, Scrivener, Sheppard, Shymko, Snow, Stephenson, B. M., Sterling, Stevenson, K. R., Taylor, G. W., Taylor, J. A., Timbrell, Treleaven, Villeneuve, Walker, Watson, Welch, Williams, Wiseman, Yakabuski.

Nays

Boudna, Bradley, Breaugh, Breithaupt, Bryden, Cassidy, Chariton, Conway, Cooke, Cunningham,Di Santo, Eakins, Edighoffer, Elston, Epp, Foulds, Grande, Haggerty, Johnston, R. F., Kerrio, Laughren, Mackenzie, Martel, McKessock, Miller, G. I., Newman, Nixon, Reed, J. A., Reid, T. P., Renwick, Riddell, Roy, Ruston, Samis, Stokes, Swart, Sweeney, Van Home, Wildman, Worton, Wrye.

Ayes 67; nays 41.

10:40 p.m.

Mr. Speaker: Mr. Ashe moves third reading of Bill 112, An Act to amend the Tobacco Tax Act.

Mr. Martel: I want it to go to committee.

An hon. member: Carried.

Mr. Speaker: All those in favour of third reading of Bill 112 will please say "aye." All those opposed will please say "nay." In my opinion the ayes have it.

Mr. Martel: I said "committee." The Speaker is out of order. Send it to committee.

Mr. Foulds: Mr. Speaker, one of our members requested that the bill go to committee. The rules of the House do not allow it to go to third reading if one member requests it to go to committee.

An hon. member: Nobody stood up.

Mr. Foulds: The members do not have to stand up for it to go to committee.

Mr. Speaker: Order.

Mr. Nixon: On a point of order, if I may, Mr. Speaker: Perhaps the member would withdraw the motion for third reading and we can deal with this when we return to this matter tomorrow, the next day or sometime. It is actually after the adjournment time, so why does he not just withdraw it?

Hon. Mr. Gregory: Mr. Speaker, I voiced across the room and visited the House leader for the Liberal Party and the House leader for the New Democratic Party and asked them if they had any objection to third reading on this particular bill. They both said: "No, go to third reading. That is fine." What has happened?

Mr. Martel: Mr. Speaker, on a point of order:

The House leader asked for third reading of only one bill this evening.

An hon. member: That was Bill 111.

Mr. Martel: He should not tell the House that. He came over to this side of the House and asked us for approval to move to third reading on only one bill and that was Bill 111.

Hon. Mr. Gregory: I asked for third reading of the Tobacco Tax Amendment Act. Even the member for Sudbury East could not make that mistake.

Hon. Mr. Ashe: Mr. Speaker, so we will not upset anybody, I would be happy to withdraw the motion for third reading and it can be brought back in tomorrow at the request of the House.

Mr. Speaker: Is that agreed to?

An hon. member: No.

Mr. Speaker: Order. Mr. Ashe has withdrawn his motion for third reading. Can we have an indication of the disposal of the bill? Will it be committee of the whole House?

An hon. member: No.

Hon. Mr. Ashe: Mr. Speaker, we should just leave it on the Order Paper for third reading at another session.

Mr. Speaker: Thank you. Mr. Ashe has withdrawn the motion for third reading.

Mr. Martel: Then it is going back to committee.

Some hon. members: No. Mr. Martel: Oh, yes it is.

Mr. Speaker: Order.

Mr. Martel: It has to go to committee. If you want to stay all night, Mr. Speaker, I am prepared, but it has to go to committee.

Mr. Speaker: Order.

Hon. Mr. Henderson: You're all alone, Elie

Mr. Martel: It only takes one. It can go to committee. If you want to make a mess out of it, fine.

Mr. Speaker: Order. If the bill --

Mr. Martel: No bells at all.

Mr. Speaker: I did not say "bells." I said if the bill is not ordered for third reading then it must go to committee.

Mr. Martel: Right.

Hon. Mr. Ashe: Committee of the whole House, Mr. Speaker.

Ordered for committee of the whole House.

The House adjourned at 10:45 p.m.