Imagens das páginas
PDF
ePub

The CHAIRMAN: A lease for the mere purpose of escaping taxation would not stand? Mr. FULLERTON: So the Judge held, but where a man provides in his lease that he can terminate it at any time he is in a different position.

The CHAIRMAN: He shows his bona fides in 1 tting it at a nominal sum.

Mr. FULLERTON: He could not get any more for it as vacant land, but he is holding it for sale purpose.

Mr DICKSON: Just one point as to lands adjoining schools. The case of St. Andrews College is mentioned, twelve acres being called an extensive piece of land. Well, twelve acres is about as small as it can be. You cannot have good athletic grounds with less. Mr. JUSTICE MACMAHON: In England, the schools on the border of towns and villages have 100 and 200 acres.

Mr. HOUSTON And Upper Canada College will soon have too little.

Mr. DICKSON: Ob, yes.

Mr. WILKIE: Do you recommend taking out the whole of sub-section 2 of section 39? Mr. FULLERTON: Yes that was what Mr. Mac Kelcan pointed out, and I agree with him.

The CHAIRMAN: If no one else desires to address the Commission on the subject of exemption, then that subject will be closed and the Commission will adjourn: The Commission adjourned at 3 30 p m. till 10 30 to-morrow.

TENTH DAY, FRIDAY, NOVEMBER 23RD, 1900.

Present: The same Commissioners.

The CHAIRMAN: We are now preparad to hear anyone who desires to say anything on the subject of assessment of personal property including income.

Mr. MACKELCAN: Following out the principle-if there can be a principle in the subject of taxation-that we put before the Commission at the commencement of the inquiry, that all property which receives benefit from the municipal expenditure should bear its fair share of municipal taxation, I think there is a good deal of personal property which now does not so contribute, but which ought to contribute. Amongst the exemptions there is one relating to household effects, etc., s.s. 28.

The CHAIRMAN: Your proposition is that not only the personal property which is now assessed continue to be assessed but that some property which is exempt should be covered?

Mr. MACKELCAN: Yes, I have already spoken at length with regard to the assessment of the property of merchants which is held for the purpose of profit and which derives large benefits from municipal expenditures. One speaker who was before the Commission referred also to large quantities of valuable personal property not used for business purposes which are equally benefited with property such as merchants' stocks, by municipal expenditure and which escape taxation. Now, I think it is only right that there should be an exemption from taxation of household furniture and property of that description to the same extent as income is exempted, namely, $700. An exemption of $700 from taxation of household furniture would cover the household effects of the average citizen, the ordinary working man, mechanic and employee, but there is no reason why the wealthy should escape taxation on valuable property all of which is receiving benefit of fire and police protection and all other general benefits from municipal expenditure; and they escape the state tax for school purposes which falls so heavily on real estate and other classes of property which are taxed. If that state tax is on principle to be paid by everybody who is a member of the community and gets the general benefit of the education of the people, and which should be contributed according to the means of each inhabitant, there is no reason why the owners of large amounts of valuable personal property of this character should not be assessed for it just the same as a poor man is assessed for his house and lot while well able to contribute. It is a tax that would be but little felt so far as the means of those who would be called upon to pay it are co: cerned; it would not be a hardship upon them. Of course all wealthy people dislike parting with money, we know that. Probably they are more loth to pay their fair share of municipal

taxation than the poor man is as a rule. Judging from what we have heard before this Commission it would seem that the more wealth a man has the less willing is he to pay any taxes at all if he can get rid of it, but I don't think that is a principle that the Commission will be guided by in settling upon taxation that will distribute the burden as far as possible among all classes of the community and distribute it according to the ability of those who are taxed to pay what may be assessed against it. Under those circamstances it seems to me that personal property of the character that I have spoken of ought to bear its fair share of taxation for municipal purposes.

The CHAIRMAN: Did I understand you to say there should be an exemption of personalty to the same extent as there is of income ?

Mr. MACKELCAN: It seems to me that would be fair and reasonable. That would prevent this being oppressive to the poor man, and give the man who lives in luxury an opportunity to contribute a fair share towards municipal expenditures.

The CHAIRMAN: Then did you say that there should be a distinction between school taxes and other municipal taxes?

Mr. MACKELCAN: No; in Hamilton the school tax is one-third of the entire levy, and as I say that is a Provincial tax, practically a special tax for education, and by exempting property of the description that I have just alluded to from the payment of that tax a larger proportion of it is thrown upon the owner of the house and lot and owner of real estate, and I do not see why this wealth in the form that it exists in the hands of these people should not contribute towards that tax as well as other municipal taxes. It is tangible property which receives practical benefit in the way of fire and water protection and police protection and the other various improvements for which municipal expendi. tures are made. In connection with that subject I would refer to the exemptions in the country of all horses, cattle, sheep and swine, etc. (8 s. 16). Now that exemption seems reasonable and proper enough, for this reason, that the object is to spread the taxation as equally as possible amongst all the property owners of a municipality, and as the land is taxed by the acre and there is about the same average quantity of stock to the acre upon each farm, it would answer all purposes simply to tax the land and let the personal property, which is of the same average throughout the township, go untaxed. It does not in any way affect the general incidence of equal imposition of the taxes that the personal property throughout the township should escape taxation in that way; so that the retaining of that exemption would not in any way affect the justice of what I have just been bringing to the attention of the Commission. In connection with the assessment of personal property I would call attention.to an inconsistency between subsec. 23 of sec. 7 and the provisions of sec. 38. This 3 s. 23, it seems to me, ought to be repealed, because it has led to a good deal of misconception, and in one case in which it was very fully discussed its meaning was said to be very obscure. (Reads the conflicting sections.)

The CHAIRMAN: What particular part of sec. 38 do you say is inconsistent ?

Mr. MACKELCAN: Well, this savs all personal property which is owned out of this Province shall be exempt, then sec. 38 says all personal property within the Province the owner of which is not resident within the Province shall be assessed like the personal property of residents. You see that property will be owned out of the Province.

The CHAIRMAN: But subsec. 23 says, "All personal property owned out of the Province except as hereinafter provided."

If it 13 pro

Mr. MACKELCAN: That means provided in this sub-section, I suppose. vided otherwise in a later section it would be better to expange that altogether. Mr. Justice MACMAHON: Sec. 38, 8.8 2 says: (Section read).

The CHAIRMAN: Does not subsec. 23 mean a person residing in the municipality

when he is the owner of personal property in another country?

Mr. MACKELCAN: Then that is inconsistent with sec. 35. (Reads). Now when we assess a man on his income, a resident in the municipality, he makes a return on his income, we don't inquire from what source that income is derived; we assess him on his income as a resident of the munici, ality erjoying that income.

The CHAIRMAN: But these sections are not applicable to income. These three clauses you are referring to are not cases of income at all, are they?

Mr. MACKEICAN: Income is personal property and comes under that designation. The CHAIRMAN: It is dealt with separately, isn't it?

Mr. MACKELCAN: Subsec. 26 of sec. 7 and sec. 35 apply solely to income.

T

C

The CHAIRMAN: They are dealt with separately.

Mr. MACKELCAN: (Reads subsec. 26)

Mr. JUSTICE MACMAHON: They both relate to income and nothing else.

Mr. MACKELCAN: The view we take of it is this: a man's income is his income at the place where he receives it, and wherever he lives his personal property, which consists of income, is taxable against him for municipal purposes no matter from what source that income is derived. It may have come from China, Japan, any foreign portion of the globe, but it is what comes in to him at the place where he lives and it is taxable, it seems to me, as such and is intended to be taxable as such; bat this subsec. 23 that I referred to only creates difficulty and I think is not in accord with the other provisions of the Act, and I think it would be desirable to have it expunged.

The CHAIRMAN: We see what you are suggesting in reference to these clauses,

Mr. MACKELCAN: Income is usually derived from sources outside the Province. Take for instance a manufacturer's agent whose principals live in Glasgow and who is paid by a salary, he has a residence we will say in Toronto, but he travels all over the Province, does not earn that salary in any particular municipality; if he has no domicile it is difficult to know where to assess him, but if he has a domicile he should be assessable there for his income although he derives it from across the ocean.

The CHAIRMAN: It is a salary which is being paid by his masters !

Mr. MACKELCAN: Yes, and he receives it here. It may go out from there, but it is income here; here is where he gets it and here is where he ought to be taxed for it. The CHAIRMAN: Certainly. Would there be any doubt about that case?

Mr. MACKELCAN: Well, it has been held in cases that all personal property owned out of the Province-I am sorry that I have not a reference of the case

66

The CHAIRMAN: Surely this case you referred to now would not have reference to that, because it has been invoked in regard to bank dividends where the headquarters of a bank are in Montreal and the person owning the stock lives here. He says, Oh, that stock is owned by me out of the Province, that is in the Montreal register." If it is taxed in Montreal why should he be taxed again here?

Mr. MACKELCAN: We know that he is receiving quite a benefit here, and he is driving on our streets.

The CHAIRMAN: If he has paid taxes on it in Montreal, ought he not deduct that from his taxable income here?

Mr. MACKELCAN: I think not. If he lived in Montreal it is all right.

The CHAIRMAN: He should be taxed twice?

Mr. MACKELCAN: Yes, taxed in one jurisdiction

Mr. WILKIE: At the same time you tax a man who does not live here and does not enjoy those privileges under sec. 381

Mr. MACKELCAN: Oh, that is tangible property; that would not be income; income would not be taxed in that way; that would be visible tangible property. We had an instance the other day in Hamilton of a merchant who was assessed for a stock of goods and who appealed against the assessment, and said, "Oh, I don't own those goods, they belong to a Glasgow firm, I made an assignment to them, and although I am carrying on business here that property with which I am carrying on business does not belong to me, The CHAIRMAN: Why didn't you assess the Glasgow firm ?

Mr. MACKELCAN: Well, we are entitled to assess him as agent in charge of it under the statute.

The CHAIRMAN: He was in possession.

Mr. MACKELCAN: He claimed that was property owned out of the Province. They put a double construction on it.

The CHAIRMAN: That is not the meaning of the section. That is a case of property owned out of the Province.

Mr. MACKELCAN: I think not, but both constructions have been invoked.

Mr. Justice MACMAHON: It is property owned in the Province by somebody residing out of the Province, and it is taxable here.

Mr., MACKELCAN: When the property then comes into the Province

The CHAIRMAN: All personal property situated in the Province ought to be taxed. Mr. MACKELCAN: Yes, and it seems to me when income comes to a man in the Province who resides here, spends it here, enjoys life here, and has the benefit of all the

municipal improvements here, then he is on the same footing as the man whose income comes to him from a source that is provincial. Now, I may say there was a case in which a distinction was drawn between the dividends from a chartered bank of the Dominion which had a stock register in Toronto and a stock register in Montreal, and it was contended that the income received from the stock that was registered in Toronto was assessable here, but the income derived from the stock that was registered in Montreal was not assessable here although both dividends came at the same time to the same person and upon one bulk of stock, which happened by accident to be distributed between two different registers; he received that income here and spent it here and it was his income in this Province wherever it came from, and so I think he was assessable here for it. Whatever tax any money may have had to pay in a foreign country, an outside jurisdiction that it came from, does not concern us at all when it comes here.

The CHAIRMAN: We must not forget that we are one of a number of confederated Provinces. Would you have a man taxed in Montreal for his dividend and then taxed here in Toronto for the same dividend?

Mr. MACKELCAN: Well, our Provinces are entirely independent of each other. The CHAIRMAN: That is conceded, but otherwise we are confederated. Could there be any sort of justice in that?

Mr. MACKELCAN: Assume this was a bank in New York, from which he got his dividends?

The CHAIRMAN: Well, you might think it well to spoil the Egyptians, to tax a man here even though he had to be taxed again in New York.

Mr. MACKELCAN; For instance a man owns a large amount of stock and bonds in American railroads and he lives here and receives a large income which he spends here. Are we to separate that portion of his income which comes across the border from that which comes from within the Province ?

Mr. WILKIE: Sec. 35 makes no distinction; that is very specific.

Mr. MACKELCAN: I quite agree.

Mr. WILKIE: Subsec. 23 has no reference whatever to income. The only reference to income there is the exemption under subsec. 26, and sec. 35 embraces income from whatever source.

Mr. MACKELCAN: That is my reason for asking that subsec. 23 should be expunged. Personal property out of the Province owned by someone here never comes in reach of our assessors, but income that comes to a resident here comes into this Province to the recipient, and when he gets it as a portion of his income, then as Mr. Wilkie has very properly put it, it seems to me it becomes liable to taxation under sec. 35 of the Assessment Act, and I am only asking to have an apparent incongruity removed by expunging subsec. 23. Now I will read a few lines on the subject of duplicate taxation from Cooley on taxation: "It has been remarked on a preceding page that, when personal property is taxed, duplicate taxation is sometimes imposed. By this was meant that such property sometimes, after being subjected to one levy for the support of government for the current year, is by change of circumstances subjected to taxation a second time for the support of government during the same period. Such a case might possibly occur in consequence of the removal of the property, after the listing in one jurisdiction, into another where the time of listing was later. A system of indirect taxes, combined with a system of general taxation by value, must often have the effect to duplicate the burden upon some species of property or upon some persons, and the taxation of stockholders in a corporation, and also of the corporation itself, must sometimes produce a like result. There is also sometimes what seems to be double taxation of the same property to two individuals; as where the purchaser of property on credit is taxed on its full value, while the seller is to be taxed the same amount on the debt. How this would operate may be readily perceived by supposing the extreme case, that all the property in a town is sold on credit, in which case, if the property is taxed on the purchases, and the debts to sellers, it is manifest that the town taxes twice as much wealth as lies within its borders.

Now, whether there is injustice in that taxation in every instance in which it can be shown that an individual who has been directly taxed his due proportion is also compelled indirectly to contribute, is a question we have no occusion to discuss. It is sufficient for our purposes to show that the decisions are nearly, if not quite, unanimous in holding

that taxation is not invalid because of any such unequal results. It cannot be too distinctly borne in mind that any possible system of tax legislation must inevitably produce unequal and urjust results in individual instances; and if inequality in result must defeat the general law, then taxation becomes impossible, and governments must fall back upon arbitrary exactions. But no such impracticable principle is recognized in revenue laws. While equality and justice are constan ly to be aimed at, impossibilities are not demanded. Tax legislation must be practical. It is one of the reasons for levying indirect taxes, and other taxes than those on property by value, that they are supposed to diminish the inequalities that would exist if a single species of taxation only were to be levied. The legislature must judge of the general result, and when the law has apportioned the tax, individual hardships must be regarded as among the inconveniences which are incident to regular government. The same necessity that justifies any taxation will justify and sustain any reasonable provisions for giving it effecr. The necessity of the state and of reasonable provisions for the security of the individual must be equally considered; the state is no more to be deprived of its revenue, because of individual hardship, resulting from general rules, than is the individual to be stripped of his property without law, because in its necessity the state finds it more convenient to take it thus than by regular proceedings. The incidental hardship or inconvenience must be submitted to in either case.

[ocr errors]

These general views have often been declared by able jurists. Property," it is said in one case, "is liable in many cases to be taxed twice, when it would appear difficult or unsafe to make provision by law to prevent. Thus, stock in trade may be taxed to the owner, while he may be indebted for it to many persons, who may be taxed for those debts or the money loaned to purchase it. Real estate may be taxed to a mortgagor in possession while the mortgagee is taxed for the money secured by the mortgage. perfect are all human institutions that perfect quality in the imposition of burdens is not to be expected. These provisions for valuation are not considered to be in conflict with the general purpose to have all property subjected to taxation once, and only once at the same time." "The power to tax twice," it is said in another case, "is as ample as to tax once." (p. 219).

So im

That difficulty to some extent arises in the next branch of the subject upon which I propose to say a few words, and that is the taxation of companies that loan money. I will first refer to life insurance companies. As some members of the Commision are well aware, a large question of this kind arose in the case of the Canada Life Assurance 05. It was taxed in the city of Hamilton under the then existing law for its entire income derived from investments. The income from mortgags, bank dividends and de entures amounted to something over $800,000. In the case of Kingston vз Cana la Life (1) it has been held that the income of a company should be taxed entirely at the head office-it was not distributable amongst the municipalities in which the company carried on its business, and so the taxation proposed by the city of Kingston was declared to be illegal and void. Following up that decision the city of Hamilton assessed the Canada Lite at its head office for all this revenue, and that taxation was sustained by the Court of Appeal. The Government then stepped in and passed this law, the Revenue Act of 1899, 62 Vict. ch. 8, secs. 7, 8, 9. The result of that was that the Canada Life Assurance Co. 18 now taxed at its head office which has now been removed to Toronto, upon investments to the extent of $100,000, that is the mortgage securities within that municipality. It is assessed for so much of its income as is derived from the municipality in which the head office is situated. Now the income derived from these investments in other municipa ities is not declared to be exempt. It is taxable in Toronto at its head office for so much of the income as is locally derived here, and the premiums not being taxable, that means the income derived from local inv stments We take the view that the local investments in other municipalities would be a fair interpretation of this and become 48 es be there. They are not declared to be exempt, but they are declared to be not assessable at the head office. I hink therefore they should be assessed locally in the municipality where these securities are allocated-mortgages, investments of a permanent charater which pertain to that locality-and we would like to have that Act made clear. We have made such an assessment upon the company in Hamilton, asse-sing them for $40,00 of inc ne derived from local mortgages, as these are not declared to be exempt,

(a) 19 Ont. 453.

« AnteriorContinuar »