PROVINCE OF BRITISH COLUMBIA · 2013. 8. 22. · referred to amount to $7,806,lGG.76, making the grand total of all assets $199,5:56,043.98, which, compared with the total of $195,267,357.34

PROVINCE OF BRITISH COLUMBIA

BUDGET SPEECH DELIVERED BY THE

HONOURABLE JOHN HART Minister of [i'inance

IN THE

LEGISLATIVE ASSEMBLY

WEDNESDAY, FEBRUARY 27th, 1935

VICTORIA, B.C.: Printed by CHARLES F. BANFIELD, Printer to the King's

Most lllxcellent Majesty. 1935.

BUDGET SPEECH :Mn. SPIMKER:

I move, seconded by the Ilonourable the Premier, "That Mr. Speaker do now leave the chair, that Snpply be granted to His :Majesty."

This resolution gives me the opportunity of discussing the financial affairs of the Province of British Columbia and the estimates of revenue and expenditure for the fiscal year ending :March 31st, 1936.

Before entering on this task I wish to express my regret at the loss this Ilonse has suffered by the death of J)fr. IL C. E. Anderson, the late member for North Vancouver. I only became acquainted ·with Mr. Anderson at the last Session of this House, dming which I admired his ability and sincerity.

I wish also to take this opportunity to congratulate the honourable the lady member for North Vancouver on her election. I \Vas irnpressed by the i11anne1· iu \vhlch she delivered her maiden speech in this Ilouse, and I have no doubt that she will prove an acquisition to the debating strength of the Opposition.

BALANCE-SIIEET AS AT J)fARCH 31sT, 1934.

Assets.-Under this heading, the first item deals with invest-ments on account of sinking funds for the redemption of P1·9-vincial stocks and debentures at maturity; this item, which represents actnal cost of investments and cash in banks, amounts to $28,003,157.36 and is $1,421,916.46 greater than that recorded in the preceding year.

Immediately following are items relating to buildings, fur-nishings, highways, briclges, wharves, ferries and ferry-land-ings, the aggregate value of which is $93,495,922.20, or $353,394.26 less than in the previous year; the reduction is attributable mainly to allowances for depreciation.

Grouped under the heading of "Projects, J_,oans and Ad-vances," are assets valued at $68,285,725.23; the increase of $2,318,639.18 is due principally to the increased book vrtlue of recoverable advances to the P.G.E. Railway.

Under the heading of "Cash" there will be noted that cash in banks was $1,522,688.20 greater, and that advances to

2

4 PROVINCE OF BRITISH COLUMBIA.

Government Agents and Collectors were $661,324.54 less than in the preceding year; thus, taking into account the reduction of $6,874.72 in the cash on hand in the Treasury, it is found that the cash asset of $1,963,082.43 shows an improvement of $854,488.94 net.

Other assets detailed in the Balance-sheet and not previously referred to amount to $7,806,lGG.76, making the grand total of all assets $199,5:56,043.98, which, compared with the total of $195,267,357.34 for the previous year, shows that assets increased by $4,288,686.fi4 during the twelve months' interim.

LiabiUtie8.-0n this side of the Balance-sheet, first to be found are the funded debt, temporary loans, and the mortgage on the British Columbia House, London, amounting in all to $141,866,767.21; all other liabilities aggregate $34,834,763.78 and bring the total of all direct liabilities to $176,701,530.99.

Snrpl'n8 A88Ct8 over LiabilUies.--The surplus of $26,231,834.05 shown as at March 31st, 1933, has decreased by $8,397,321.06 during the twelve months ended on :March 31st, 1934, and now amounts to $22,854,512.99. The following statement illustrates clearly the reason for such a decrease:-

Decreases-Miscellaneous ........................................................................... . Discount on debentures sold during year ........................ .. Decrease in accounts receivable ........................................ .. By depreciation, reserve for depreciation, losses, and

$5,082.66 311),818.75

81,575.71

contingencies ........................................................................ 1,016,746.85 Amount spent from borrowings on unemployment relief 3,625,854,77

$5,049,078.74 Increases-

Surplus current revenue over current ex-penditures ...................................................... $445,623.86

Interest earnings of sinking fund .............. 1,197,864.46 Miscellaneous .................................................... 8,269.36

1,651, 757.68

Decrease in surplus assets ..... , ...................................... $3,397,321.06 -----

Oont-ingent LiabUUies.-No change has taken place ·with respect to contingent liabilities, which, in the aggregate, amount to $68,137,857.23, and which are largely on account of guarantees given to railways. Of the total sum, $40,157,523.90 represents the guarantee on account of the Canadian Northern

BUDGET SPEECH, 1935. 5

Pacific Railway; as this railway has been taken over and is now operated by the Dominion Government, it is understood that no call will be made upon the Province to meet either the principal or interest in this connection. 'l'he Pacific Great Eastern R.::iilwny guarantee of $20,160,000 is now recog-nized as a direct liability of the Province. A guarantee of $6,733,333.33 has been given on account of the Vancouver and Districts Joint Sewerage and Drainage Board; $1,000,000 on account of the Agricultural Credit Commission; and $87,000 for the ·west Nicomen Dy king District.

REVENUE AND EXPENDITURE, 1933-34.

Reuenne.-Actual collections amounting to $20,208,859.75 compared with the estimated revenue of $20,497,591.46 show a net falling-off in receipts of $\288,731.71.

Analysis reveals the following heads as being short of the anticipated amounts: Land Registry fees, $28,533.48; motor-vehicle licences, etc., $245,182.95; amusements tax, $14,437.17; income tax, $1D3,795.42; land taxes, $118,318.75; poll tax, $19,235; probate fees, $30,179.49; rural districts school taxes, $49,902.25; succession duties, $482,3G0.58; timber licences, $558,940.23; timber royalties, $173, 768.69; timber-sales, $123,564.81; and miscellaneous (net), $79,717. 72; the forego-ing, in the aggregate, amount to $2,117,926.G4 and are offset in part by collections which exceerled the respective estimates by $1,829,194.83, and comprise such heads as: Companies Branch, $59,917.85; liquor profits, $314,324.64; gasoline tax, $55,234.46; interest, $22,600.62; fuel-oil tax (not anticipated, but accruing on account of the Court's declaration that the Act was intrn vires of the Province), $543,312.88; mineral tax, $94,949.78; free miners' certificates, $77,838.60; general min-ing receipts, $100,214.24; refunds of expenditures charged to loans, $64,081.99; and refunds of advances charged to income, $496,719.77; this last item refers to the repayment by munici-palities of a portion of the advances made to them by the Province in connection with the financing of their unemploy-ment relief costs.

Emvenclihwe.-The main estimates provided for the expen-diture of $22,729,593.77, hut the actual outlays amounted to $20,582,836.58, leaving unexpended appropriations totalling $2,146, 757.19.

PROVINCE OF BRITISH COLUMBIA.

It will be seen that the unexpended app1·opriations include such items as: Public debt, $119,486.4 7; administration of justice, $28,802.05; conveying children to schools, $15,114.73; advances to rural schools, $40,541.94; share of motor-vehicle licences to municipalities, $15,4 7 4.67; interest on Superannua-tion Fund, $32,132.72; old-age pensions, $32,271.93; mainte-nance of Doukhobor children, $29,523.22; roads, bridges, ferries, and wharves, $24,756.65; Public v'forks, administra-tion, $19,G54.5G; sinking funds (excepting appropriations for

· inscribed and registered stocks in London), $2,197 ,568. 75. On the other hand, there was spent in excess of the estimated sums $408,570.50, which includes: Grants to exhibitions, $18,832.50; seed-grain advances, $14,517.26; County Gaols, $15,959; salary grants in aid of teachers in municipalities antl i·ural school distri

BUDGE'l' SPEECH, 1935. 7

and for unemployment relief, $2,900,000; there also must be added $373,97G.83, the revenue deficit in the income account for the fiscal year 1933-34, bringing the total of the gross debt as at November 1st, 1934, to $169,902,872.37. The increase in the gross debt is, therefore, $2,904,27G.83, due to the borrow-ings for unemployment relief amounting to $2,900,000 and the revenue deficits of $373,97G.83, these borrowings being offset by debt-redemption payments aggregating $3G9,700.

The gross debt of the Province, as at November 1st, 1934, is composed of:-

Inscribed stock and debentures .......................................... $126,811,236.00 'l'reamu·y bills ........................................................................ .. B.0. House mortgage ............................................................. .

Add to this the balance of the deficits up to March 31st, 1934, still requiring to be funded, amounting to .......................... $4,067,370.16

and the P.G.E. Rly. guarantee, which is now treated as a direct obligation .......... 20,160,000.00

18, 7[)5,141.21 109,125.00

$145,675,502.21

24,227,370.16

Gross debt at the aforesaid date ............................ $169,902,872.37

SINKING FUNDS.

The value of sinking fund investments on November 1st, 1934, was computed at $31,951,832.83; this shows an increase of $1,771,G83.G3 over the value reported for a like elate in 1933. The valuation of the funds is made by taking at par all invest-ments in British Columbia direct obligations and P.G.E. Rail-way guaranteed stock and bonds, by applying the market value on the Grand Trunk Railway perpetual stock, and by taking the market value (if not exceeding par) of all other securities; to such values are added the amount of cash in the banks and accrued interest.

Sinking fund investments are mainly represented by Domin-ion guaranteed securities, Provincial direct obligations, and Provincial guaranteed obligations, the exceptions being $77,7GO of Grand Trunk not guaranteed 4% bonds clue on April 1st, 1955; $72,900 of Canada Atlantic Railway not guaranteed 4% bonds clue ,January 1st, 1955; $111,933.33 of Canadian North-ern Ontario Railway not guaranteed 4% perpetual debenture

8 PROVINCE OF BRITISH COLUl\IBIA.

stock; and $50,000 District of Burnaby 4V2 % bonds due June 30th, 1938.

It must be borne in mind that on November 1st, 193±, sinking fund appropriations were short to the extent of $5,'144,4 75.50, and that, excepting instalments in connection with the in-scribed and registered stocks in London, no provision will be made this year for that account. This shortage, however, is more than covered by the realizable value of assets created by the revenue-producing debt of the Province.

NET DEBT.

The amount of the net debt of the Province is determined by deducting from the gross debt the value of the sinking funds. In lllJ' last Budget aclflress the net debt of the Province as at November 1st, 1933, was quoted at $136,818,446.34. During the ensuing year the gross debt was increased by $2,904,276.83; as this sum, however, is subject to offset by the increased value of sinking funds during a like period, the Lalam:e uf $1,132,593.20, therefore, represents the amount which was added to the net debt in the interim and brings its total on November 1st, 1934, to $137,951,039.54. The reason for not taking into account the revenue-producing debt, when determining the amount of the net clebt, is that the $17,484,826.85 now outstanding and unpaid, borrowed to create such revenue-producing debt, is now subject to revaluation, clue to the cloubUnl recovery value of some of the loans it enabled.

CO:i\IPTROLI,ER-G ENERAL'S REPORT.

The Comptroller-General's report for the nine months ended December 31st, 1934, is of particular interest, in that an analysis of the revenue discloses a most gratifying increase in the volume of collections during this period as compared with a like period in the preceding year.

'l'he revenue estimate for the current year has been placed at $19,492,791.4(); of this amount there was collected cluring the first nine rnon th s $15,335,071. 71, leaving a balance of $4,157,719.75. Considering that collections during January, February, and March, 1934, amounted to $5,927,738.74, and that monthly, since then, they have been on an average greater by $180,000 than the previous year, it is safe to assume that in connection with bridges, and that the Province was relieved


during the last three months of the current year there will be collected at least $6,397,000, which, together with the incre.asecl subsidy of $750,000 from the Dominion, will make the total collections for the current year approximately $22,482,750, ancl it is on this basis that the next year's estimate of revenue has been computed.

For the information of honourable members, I will now detail the increases in revenue collections under Current Account during the nine months ended December 31st, 1934. Co1lection8 were generally greater than in 1933, but more par-ticularly under the following heads: " Game Act," $13,645.64; liq nor profifa, $27,722.23; "Motor-vehicle Act,'' $97,269.58; amusements tax, $13,414.01; gasoline tax, $160,578.68; income tax, $34,31 G,23; interest, $45,214.67; wild land, coal and tim-ber lands, $46,862.67; mineral tax, $120,646.4 7; rural districts school taxes, $32,365.88; succession duties, $4 77,973.35; fisheries, $12,206; land-sales, $18,623.31; timber licences, $262,765.45; timber royalties, $136,323.31; timber-sales, $41,063.68; water rentals, $50,686.20; mining receipts, general, $23,147.11; miscellaneous (net), $19,318.96; or an aggregate increase of $1,634,144.43.

Total expenditures during the current year were estimated at $21,609,637.40; the total outlay for the nine months is reported as $14,168,203.58; this amount, however, is hardly a fair criterion of the trend of disbursements as it deals with those expenditures actually recorded in the Comptroller-General's books and does not include a large number of un-posted or unpaid accounts. It is, however, fair to say that, taking into account the supplementary estimates for 1934-35, and conversely the savings being effected in certain appropria-tions, disbursements will approximate the amount originally estimated.

UNE:M:PLOY:lHENT R.ELIEF.

Bxcepting the relief cost of single homeless fit men providecl for directly by the Dominion, the total expenditure for unem-ployment relief within the Province up to December was $34,828,248.13; of this amount, $16,513,772.47 represents the total outlay by the Province and comprises $15,463,455.4 7, being the Provincial share, and $1,050,317 being repayable advances to municipalities. The Dominion's share was

10 PROVINCE 01


$1,835,000 means an added approximate burden on the Prov-ince of $1,006,000 and on the municipalities of $329,000 per annum.

Dul'ing the year ended December 31st, 1934, there was spent in British Columbia $8,683,641.10 for the relief of unemploy-ment, made up as follows:-

Dominion expenditure ................................................................ $2,690,174.72 Provincial expenditure .............................................................. 4,276,428.34 Municipal contribution .............................................................. 1,106,038.04

$8,072,641.10 Provincial public works programme from special horrowing 611,000.00

$8,683,641.10

The following table will show the comparative number of individuals on unemployment relief during the months of' De-cember, 1933 and 1934, respectively, together with the relative cost:--

Heads of families ...... .. Dependents .................. .. Single persons ............ ..

Dec., 1933.

22,006 61,977 18,o±O

102,023

Cost of foregoing .......... $669,751.99

Single fit men in J

12 PROVINCE OF BRI'l'ISH COLUMBIA.

a result of borrowings, $16,559,521.04; also adYances from the Consolidated Reyenue Fund on account of maintenance and operation, $2,598,958.09; interest on guaranteed stock and bonds, $14,fi91,Hi3.92; discounts incurred in the sale of de-bentmes, $:JGS,fi10.fi7; and finally, $15,4G5,987.43, being interest on sundry loans and advances.

In addition to the aforesaid indebtedness of $49,874,241.17 hy the company to the Government, there is the guarantee hy the Province of $20,160,000 of the company's stock and bonds. It will he seen, therefore, that the total liability of the Pacific Great Eastern Railway to the Government of Britif;h Columbia is $70,034,241.17.

Attention is r1ircctcd to the fact that this railway was built in anticipation of having it become n lmrnch line of the Grand 'l'runk Pacific Railway Company, with which company the Pacific Great Eastern Railway promoten; entered into an agreement to the effect that all p~u;senger, freight, express, and mail traffic originating in the line or branch lines of the Grand Trunk Pacific Railway destined to Vaurnuver should be routed over the Pacific Great l


It will be of interest to honourable members to know that, excepting the interest payn1ent clue to the Province on account of loans and advances, the P.G.E. Railway Co. has had an operating surplus of $73,201.34 in 1933, and of $124,645.72 in 1934; that these surpluses were utilized fOl' capital expendi-tures in connection with bridges, and that the Province was relieved to that extent from making further loans to the company.

ESTii\IA'rES OF REVENUE AND EXPENDITURE FOR 1935-36.

I come now to the consideration of the estimates of revenue and expenditure for the fiscal year ending March 31st, 1936.

Hereune.-'rhe total revenue estimated to accrue from all sources for that period is $22,493,891.46, and is $3,001,100 g1·enter than the anticipated :unonnt for the yenr just closing; the estimate has been based mainly upon actual collections made during the current fiscal year, and comparison shmvs that the increase will he contributed by the following sources: Liquor pniiits, $1i:lil,OOO; " Motor-vehicle Act," $287,000; Do-minion snbsidier-;, $7il0,000; gasoline tax, $32:l,OOO; fuel-oil tax, $100,000; income tax, $47G,OOO; interest, $70,000; land taxes, $130,000; mineral tax, $170,000; rural district school taxes, $60,000; grazing fe0s, $25,000; timber royalties and sales, $75,000; free miners' certificates, $25,000; general min-ing receipts, $110,000; Capital Account, $30,000; and miscel-laneom; (net), $84,100. On the other hand, a decrease in estimated revenue of $300,000 occurs under the head Of " Tim-l·e1· licences" on account of a number of such licences having been a11mved to lapse.

B.1·11c11dih1 re.-The amount of estimated expenditure calls for a1ipropriations aggregating $22,384,303.28; comparison with the Estimates brought down last Session and amounting to $21Ji09,G37.40 shows an increase of $774,665.88, clue mainly to increased app1•opriations for: Live Stock Branch, $9,658.08; Provineial Police, $63,294.40; cmrespondence courses, $5,389.60; inspection of schools, $11,906; educational grants, salaries, $118,000; school buildings, $13,000; Government Agents and AssessOl's, $31,986.08; advances to rural school districts, $19,000; share of motor-vehicle licences to municipalities,

14 PROVINCE OF BHITISH COLUMBIA.

$20,000; Labour Department, administration, $20,G28.35; old-age pensions, ~Gl,745.23; Lands Department, salarieR $25,325.49, expenses $10,000, and miscellaneous votes $11,900; Home for the Aged, $3:5,000; health-preventive services, etc., $100,000; sinking funds ·on account of inscribed and registered stocks in London, $224,052; and miscellaneous (net), $1,780.65.

Snrplus.-il"s I have just stated, the revenue for 1935-36 is anticipated at $22,493,891.46.

Estimates of expenditure prodde for appropriations on Current Account of $20,890,GOl.28. 'rhis sum, together with the $907,200 for interest on the P.G.E. Railway guarantee and $7?i0 required for the soldier settlement houses in South Van-couver, gives a total of $21,798,5:51.28, which compriHes all contemplated expenditures excepting debt redemption, and leaves an excess of revenue over orcUnary expenditure of $G95,340.18; this excess will not only provide sinking funds of $224,0ii2 in connection with the imwriber1 and registered stocln; in London, the redemption of debentures to the extent of $352,000, and the instalment of $9,700 on the Britif.ih Columbia II01rne in London, but will nlHo enable a surplus of $109,588.18 over all expenditure to be a chm·ge on our Income Account.

ESTIMATE OF INCO:i\IJD ACCOUNT OPERATIONS FOR

THRBJE YEARS ENDING MARCH 31sT, 193G.

It is now my desfre to present an interesting picture arising from the operations connected with our Income Account dnriIIJ?; the three consecutive years ending March 31st, 193G. It will be obsened from the stntt>mcnt which immediately follows that our revenue over this period will not only be sufficient to provide for all ordinary requirements, but will also permit us to reduce our debt by three yearly appropria-tions of $fi83,732 each, or by a total of $1,7ii7,3ii6, and still leave a revenue surplus of $1:59,!)Go.:33 over all.

Revenuc-

Reyenue collected during 1933-34 ·····-······························ $20,208,Sr.9.7."i Anticipated collections during 1934-3[) .......................... 22,482.7:JO.OO Estimates for 1935-36 .......................................................... 22,493,891.46

Oa1'riell fOl'Wffl'd .................................................... $6fi,18G,G01.21

BUDGET RPEE()H, 1935. 15

B1·011ght forwarcl .................................................. $GG,18G,G01.21

Exvendit·nre-

All expenditure excepting debt-redemption provisions-Public Accounts, Hl33-3·! .................... $19,!l!l7,084.58 Fiscal year 1934-3G, after allowing

for supplementary estimates, special warrants, and miex11ended appro-priations ................................................ 21,472,644.00

i\Iain lCstima te:s for HJ3G-36 . 21,7!l8,GG1.28

$63,268,27!l.86 Deht retlemption during E'aeh of the

aforesaid three yean;-Sinking funds .............. $224,0G2.00 Serial instalments ...... 352,000.00 Instalment on B.C.

Honse mortgage ..... . 9,700.00

$'585,752.00 x 3=$1,757,2G6.00 6G,025,G35.86

$1G!l,96G.35

R.I~FUNDTNG.

Since the lmit Session of this Hou8e and during one of the conference8 at Ottawa, the opportunity was taken to discuss with the Prime .i\Iinister of the Dominion a refunding scheme for thi8 Prnvince.

The question of such a scheme has lleen foremost in our minds these past twelve months, and preparations have been made to enable us to take advantage of the money market at the earliest opportune time. The credit of this Province has imprornd greatly during the past year, and it is hoped to secure the co-operation of the Government of the Dominion as well as that of the Bank of Canada in bringing the scheme to an early fruition.

The question of refunding i8 one that ·will be placed on the agenda for the next conference that will take place this year with the Government of the Dominion.

The general tendency has been towards ever lower interest rates, and it is the Government's desire to refund at least a large portion of the debt, if not all of it, on a 3% basis. The figures submitted in the following statement will show the


saving which would accrue to the Treasury should we be successful with our proposal. This refunding does not involve the inscribed or registered stocks in London, the sinking funds on which have been fully kept up, but relates to $127,010,575.16 of the deht; the proposal being that ne>v securities should be issued for a term of thirty years at a 3% rate of interest, with sufficient sinking funds to be set up on them after a period of five years to liquidate the debt at maturity.

AuoUN'l' OF DEBT SUB.TECT TO REFUNDING PROPOSAL.

Total gross debt ........................................................................ $169,902,872.37 Decluct-

Inscri!Jed and registered stocks ............ $24,471,936.00 B.C. House mortgage, London ................ 109,125.00 Portion of sinking funds to be used in

part repayment of debt other than inscribed or registered stocks.............. 18,311,236.21

42,892,297 .21

$127,010,575.16

' TOTAL DEB'r CHARGES REQUIRED ON Guoss DEBT. Interest Sinking funds

$7 ,935,231.09 3,884,188.94

$11,819,420.03

A thirty-year 3% refunding with sinking funds to retire the whole issue at maturity, the first instalment thei;eof, however, deferred for five years:-

·First five years-In terest ............................................ . Sinking funds ................................. .

Remaining twenty-five years-

Require1nenhL $4,811,225.34

233,752.00

$5,044,977.34

Interest .............................................. $4,811,225.34 Sinking funds .................................. 3,717,398.05

$8,528,623.39

Annunl Snvingo. $3,124,005.75 3,650,436.94

$6, 77 4,442.69

$3,124,005.75 166,790.89

$3,290, 796.64


For the infol'rnation of the members of this House, I would like to point out where our debt is payable and the average rate that is paid thereon:-

P1wv1NCIAL Gnoss DEBT.

Where Principal and Interest payable.

In sterling only ............................ . In sterling and Canadian funds. In U.S., sterling, and Canadian

funds ........................................ c ••• In U.S. and Canadian funchL .... . In Canadian funds only .............. .

Amount of Principal.

$24,581,061.00 20,160,000.00

4,000,000.00 76,103,800.00 45,058,011.37

$16fl,fl02,872.37

J\fTTNWIP ALITIES.

I Avprage Amount of Rate of Interest. Interest. Per Cent.

4.072 $1,000,fl08.08 4.50 fl07,200.00

4.50 180,000.00 4.6fl4 3,572,565.00 5.048 2,274,558.01

4.67 $7,fl35,231.0fl

The Government is seised ·with the gravity of the municipal economic situation in the Province; it is obvious that the real-property tax, now the main source of municipal revenue, is insufficient to defray the services which have to be provided by the local governments. It is the intention to apply remedial measures where necessary; however, no final pl'onouncement can now be made as the extent of the relief to be granted to organized areas depends in a measul'e upon the success of our efforts to obtain the much-needed redistribution of the taxation field as between the Province and the Dominion.

"GASOLINE TAX ACT."

Serious tax evasions made necessary the revision of regula-tions governing the collection of the gasoline tax. It was found that there prevailed what is commonly known as "boot-legging," particularly so on the part of a number of small vessels supposedly engaged in the fishing business.

Former regulations permitted the use of gasoline free of tax whenever this fuel was utilized for fishing purposes; it became the practice of a number of boats, however, to purchase large tax-free snpplies from gmmline-dealers, and hy disposing of them


privately a large quantity of the fuel consumed escaped the tax. It was estimated that the Treasury suffered as a consequence of these tax evasions a loss of approximately $GOO,OOO.

New regulations were put into force last October, with amaz-ing results. A three-month period, immediately preceding the enforcement in full of the. new regulations, when compared with a like period in 1933, shows tax collections as follows:-- ---------

August. ................................. . September .................................... . October ......................................... .

1933.

$214,079.75 215,993.52 194,262.57

1934.

$216,140.07 217,083.02 201,645.08

I Increase.

II $2,060.32

I. 1,089.50

7,382.51

I


of interest to the members of this Honse to know that whilst this may be quite true with respect to low incomes it does not apply to the higher incomes. In British Columbia, due to the dual taxation on incomes by the Prm-ince and the Dominion, persons in receipt of income8 h1 excess. of $50,000, after luwing been a1lowed the statutory exemptions, pay a tax that is greater than that imposed in the Old Land. As example, a single person in this Province with an income of $2,500 pays a tax to the Province of $28 and to the Dominion a tax of $50, or a total by way of income taxes of $78, as against the $263 tax levied in England. On the other hand, this disparity dis-appears as the volume of the gross income increa8e8; at $50,000 the Province collects $9,107 and the Dominion $10,363.50, or a total collection of $19,470.50; in Great Britain the tax on that amount would he $1!),860. From this point onwards the tax in England is lesser in amount; a single person with an income of $100,000 in British Columbia pays taxes thereon to both the Province nrnl the Dominion to the aggregate amount of $50,953, wlwreas in Gl'eat Britain he ·would pay $48,17fi, or $2,778 less.

It has been suggested repeatedly that to defray the cost8 of eertain additional services greater levies should be made on incomes. I would point out that in 1 DB3-34 individual incomes yielded to the Treasury $2,086,434 in taxes; that 108,3lfi per-:-;ons made retur1m indicating incomes lower than $2,GOO a year; that only 8,326 persons reported incomes exceeding $2,500 per annum, and of these but 1,539 hacl incomes of over $0,000. To mise another $2,000,000 from this source it would be necessary to impose most of the extra levy on the lower brackets, because the doubling of the rates l'ight up the line, apart from driving away those in receipt of large incomes, would reach the point where there would not be sufficient in-come to pay both the Dominion and the Provincial tax.

The following statement will set out clearly the various income-tax brackets, also the relatiYe number of retnnrn and the Provincial tax collected :-


INCOME-TAX CLASSII

BUDGE'l' SPEECH, 1935.

THE DOUBLING OF THE TAX WOULD ENTAIL.

Gross Inco1ne.

$5,000 ......................................... . 50,000 ......................................... .

100,000 ......................................... . 500,000 ......................................... .

To the Province.

$240.00 18,214.00 46,214.00

270,214.00

To the Do1ninion.

$180.00 10,363.50 27,846.00

233,730.00

21

------

Totnl Tux.

$420.00 28,577.50 74,060.00

503,944.00

--------------~-----~----- ~-----

vVith respect to the income tax on corporations, it is the con-sidered opinion of the Government that the present levy is already high, and that any increase would injure industrial recovery. Obsolescence, as >Yell as necessary repairs or re-placements of industrial machinery, equipment, and structures, require large amounts of new capital; industry must look for most of such new money outside the Province, and any increase in the tax rate would make it prohibitive to import capital; furthc1·n1orc, tax:ntion 'vhich preve11ts the infl-nx of i11c1rLstrial capital like-wise prevents many of our people, now unemployed, from rejoining the ranks of the gainfully employed.

Income-tax collections during 1933-34 from corporations were as follows: Income tax, $1,507,206.57; output and alter-nate taxes (coal and coke, mineral tax, insurance companies, public utilities, etc., and hanks), $806,500.35; and additional assessments applicable to previous years, $413,000; making the total from these sources $2,728,706.92.

Statistical data now follows which shows to what extent personal ineomes are now taxed in the Province by both the Federal and Provincial authorities, also to what extent in-comes are taxed in Great Britain.

22 PROVI:NCE OJ

TAXES I)AYABLE 0ÿ* IÿCOhiE OF TIÿE Yÿ;AIÿ 1934--SIN(ÿLE PERSON,ÿ39'

I PROVIN(2IAL.* DOMINION, "ÿ C0ÿIBINED.lncolne. Per Cent. Per Cent.Tax. 8m'tax. of Total Surtax. Total, of Total Income.

Ill COllie. all Taxes. IllCOnle,

$2,500 ..................

5,000 ..................

7,500 ..................

10.000 ..................

J2,500 ..................

15,000 ..................

17,500 ..................

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

22,500 ...................

25,000 ..................

27,500 ..................

30,000 ..................

32,500 .................. '

35,000 ..................

37,500 ..................

40,000 ..................

42,500 ..................

45,000 ..................

47,500 ..................

50,000 ..................

75,000 ..................

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

150,000 ..................

200,000 ..................

300,000 ..................

400,000 .................. :I

500,000 ..................

$28.00120.00273.00490.00768.00

1,110.001,513.001,940.002,190.002,440.002,690.002,940.003,190.003,440.003,690.003,940.004,190.004,440.004,690.004,940.007,440.009,940.00

14,940.0019,940.0029,940.0039,940.0049,940.00

Total.

$28.00120.00

I,I

2.4

TI/X.

$50.00180.00

Total°

$5O.O0180.00

Per Cent.of Total

I Income,

2.0

3.6

* Provincial exemption, $600.

$78.00300.00

$19.0063.00

132.00226.00345.00489.00658.00852.00971.00

1,315.001,584.001,878.002,197.002,541.002,9]0.003,304.003,723.004,167.008,667.00

13,167.0022,167.0031,167.0049,167.0067,167.00

5,107.00

292.00553.00900.00

1,336.001,858.002,429.002,848.003,292.0O3,661.004,255.004,774.005,318.005,887.006,481.007,100.007ÿ744.008,413.009,107.00

16,107.0023,]07.0037,107.0051,107.0079,107.00

]07,107.00]35,107.00

24.725.526.326.827.0

375.00630.00950.00

1,330.001,775.002,280.002,845.003,420.004,010.004,610.005,225.005,850.006,490.007,140.007,805.008,480.009,170.009,870.00

17,570.0026,520.0046,970.0009,200.00

116,660.00168,120.00222,600.00

$18.7531.5047.5066.5088.75

114.00142.25171.00200.50230.50261.25292.50324.50357.00390.25424.00458.50493.50878.50

1,326.002,348.503,460.005,828.008,406.00

11,130.00

393.75661.50997.50

1,396.501,8ÿ3.752,394.002,987.253,591.004,210.504,840.505,486.256,142.506,814.507,497.008,195.258,904.009,628.50

10,363.5018,448.5027,846.0049,318.5072,660.00

122,488.00176.526.00233,730.00

5.2

6.6

7.9

9.3

10.611.913.214.415.316.116.917.518.218.719.319.820.320.724.427.832.836.340.744.146.7

685.751,214.501,897.502,732.503,721.754,823.005,835.256,883.007,871.509,095.50

10,260.2511,460.5012,701.5013,978.00:l 5,295.2516,648.0018,041.5019,470.5034,555.5050,953.0086,425.50

123,767.00201,595.00283,633.003(;8,837.00

"i" Dominion exemption, $1,000.

3.1

6.0

9.1

12.115.118.221.224.125.927.528.630.331.632.733.931.936.037.038.038.946.050.957.661.867.270.973.7

$2,5005,0007,500

10,000]2,50015,00017,50020,00022,50025,00027,50030,00032.50035,00037,50040,00042,50045,00047,50050,00075,000

100,000150,000200,000300,000400,000

.500,000

BUDGE'!.' SPEECH, 1935. 25

UNITED KINGDOM lNCOMIC TAX (APPROX.)-SINGLE PERSON.

Inco1ne.

$2,iJOO ............................................ . 5,000 ............................................ .

10,000 ............................................ . 15,000 ............................................ . 50,000 ............................................ .

100,000 ............................................ . 150,000 ............................................ . 200,000 ........................................... .. 300,000 ............................................ .

------ -------------

Normal Tax.

$265.00 765.00

1,890.00 3,515.00

12,265.00 24,765.00 37,265.00 49,76G.00 74,76G.OO

Surtax. r_l_'otal.

................ $265.00

. ............... 765.00

. ............... 1,890.00 $310.00 3,825.00

7,5!l5.00 19,860.00 23,410.00 48,175.00 41,285.00 78,550.00 60,535.00 110,300.00

100,410.00 175,175.00

NoTE.-Norrnal tax up to $10,000 (incl.) computed on "earnell income" basis; $15,000 and up on " unearned income " basis.

01'TA-WA CONFERENCE.

The Government has prepared a financial brief to be pre-sented to the Government of the Dominion at the next inter-provincial conference at Ottawa. 'l'his brief deals chiefly with the financial arrangements which now exist between the Do-minion and the Proyince.

The revolutionary changes which haYe taken place in the social as well as industrial and commercial life of this Prov-ince since the days of Confederation make obdous the fact that economic rehabilitation in British Columbia cannot result whilst financial and economic problems are subject to the existing provisions of the B.N.A. Act.

The Fathers of Confederation, in their desfre to ha\'e the act of union consumrna ted with the least possible delay, agreed, when dealing with the Provinces, to financial provisions of a temporary nature, the proposal being that when union was accomplished the financial clauses would he referred to a com-mission or commissions for the purpose of making an exhaus-tive inquiry into the economic structure and needs of individual Provinces; the findings and recommendations of these com-missions would eyentnally enable the enactment of fiscal pro-dsions adequate and just in nature. The eonm1issions were not appointed owing to the growing antagonism to Confedera-tion on the part of certain political faetiohs.

The intent of the statesmen of that day is set out clearly in a speech made by Sir Charles Tupper in the House of Commons

PROVINCE OF BRITISH COLUMBIA.

on June 11th, 1869, during a discussion upon additional finan-cial assistance which it was proposed should be given to Nova Scotia. 'l'he unofficial report of the debate records in effect that:-

Sir Charles Tupper revealed the most interesting fact that the finan-cial clauses of the "British North America' Act" had never been designed, in their original form, to be permanent. It was distinctly understood at the Quebec Conference, he said, that the financial clauses as set out in the B.N.A. Act were to be only temporary-a meam; hy whkh a quick agreement between the confederating Provinces could be made--and that after Confederation had been accompli:-;hed it was in-tended to have Provincial and ]'ederal commissions set up to make an exhaustive inquiry into the needs of the Provinces. After this inquiry had been completed it was intended to make a just and final settlement. But the Act in its original form was only a stop-gap, and in framing these clauses the Fathers of Confederation had not had an~; idea of tlwir being co1rniclered permanPnt. It had been impossible to set up these commissions, howeYPl', because the political authority in Nova Scotia had fallen into the hands of the anti-confederationists and they wonld not co-operate. Dealing with the power to alter the settlement of 1867 and to change the B.N.A. Act, he said: He did not think that the House was prepared to assert the ln'inciple, under an~' circumstances, that it was not in a po:-;ition to giYe any fair comdderation which any Province ought to receiYe, or to extend it any relief be~·ond what the Union Act provided.

\Vhilst it is true that in recent years commissions 1iave from time to time been appointed to consider the financial relations between the Dominion and some of the Provinces, and that cer-tain adjustments lun-e been made, it is also true that such inquiries haye not been sufficiently exhaustive in scope and character. It is felt that the staggering financial burdens the rrovinces must carry with the meagre sources of income placed at their dispmml make imperative at this time, if justice is to be done, a review of the whole Act.

A brief on the general situation, so far as British Columbia is concerned, was submitted to the Federal Cabinet by the Premier and the Attorney-General at our last conference in Ottawa, with a request that a Royal Commission be set up to inquire into and report upon the position of British Columbia within the Union. Although a commission has not as yet been appointed, the merits of our case have been recognized in an appropriation of $750,000, which Parliament is being asked to \'Ote at the present Session as an interim payment pending further consideration.


TCI understand the position clearly, it is necessary to refer briefiy to the financial terms which formed the basis upon which British Columbia entered the Union.

BHITISH COLUMBIA PROPOSED.

(a,.) That Canada shall be re-sponsible for the debts of British Columbia at Union.

( IJ.) The population of British Columbia :>hall for the purpose of financial arrangements be esti-mated at 120,000. British Colum-hia, not having incurred debts equal to tl10se of other Provinces now constituting the Dominion, Hhall be en titled to receiYe, li;1· half-yearl~· imyment:> in advance from the General Government, in-terest at the rate of [)~lo per annum on the difference between the ac-tuul u1nount of its indebtedness at the elate of Union and the propor-tion of the pulilic debt of Canada for 120,000 of the population of Canada at the time of Union.

( c.) Tlw following sums shall he annually paid hy Canada to British Columbia for the support of the Local Government and Legislature, to wit: An annual grant of $35,000 and a furthei: sum equal to 80 cents a head per annum of the population, both payable half-yearly in advance, the po1mlation of British Columhia being estimated as aforesaid at 120,000. Such grant equal to 80 cents a head to be augmented in proportion to the increase of popu-lation, when such may be shown, until the population amounts to 400,000, at which rate such grant Rhall thereafter remain.

~1ER21IS ADOPTED.

Canada shall be liable for the debts and liahilities of British Columbia existing at the time of the Union.

British Columbia, not having in-curred debts equal to those of the other Provinces now constituting the Dominion, shall be entitled to receive, by half-yearly payments in advance, from the G0neral Gm·-ernment, intPrP:>t at the rate of 5% per mrnum .on the difference between the aetual amount. of its indebtedness per head of the 110llll-la tion of Nova Scotia and New BrnnRwick ($27.77), the population of British CGhnnbia being taken at G0,000 ..

'l'lH' following Rums shall he paid hy Canada to British Columbia for the support of its Governnwnt and Legislature, to wit: An annual sub-sidy of $3G,OOO and an annual grant equal to 80 cents per hearl of the Raid population of G0,000, both lrnlf-yearly in a1lvance; such grant of 80 cents per head to be aug-mented in proportion to the in-crease in population as ma~' he shown hy each subsequent decen-nial census, until the population amounts to 400,000, at which rate such grants shall thereafter re-main, it being understood that the first census be taken in the ~'ear 1881.

28 PROVINCE OJJ' BRITISH COLUMBIA.

'l'he following explanations will make clear the reason and effect of both the proposed and adopted terms :-

'l'he first clause is self-explanatory; Canada was made liable for the extent of British Columbia's debt at the time of Union.

In the second clause is found a demand on the part of the Colony for financial arrangements compute

BUDGE'!' SPEECH, 1035.

Original allowance ..................................................... . 1878 allowance ......................................................................... .. 1884 allowance ........................................................................... .

vVithdrawals and liquidatimrn

29

$1,666,200.00 279,600.00

83,091.00

$2,028,891.00 l,445,8G9.80

$583,021.20

On this difference of $583,021.20 between the debt allowance and the actual debt of British Columbia at the Union the Prov-ince was allowed 5% per annum, or $29,151.06, at which it remains.

The third financial clause deals, first, with a subsidy of $35,000 towards the cost of Government and Legislature; this sum was paid annually until 1907, when the basis was changed pursuant to a plea by all Provinces for increased aid. In that year amendments were made to the "British North America Act" at the request of the Canadian Parliament altering the basis upon which these subsidies had up till then been paid to the Provinces. The amendments provided a fixed grant to-wards cost of Government, based on population as follows:-

Where the population of the Province is under 150,000 ............ $100,000 Over 150,000 but not over 200,000.................................................... 150,000 Over 200,000 but not over 400,000.................................................... 180,000 Over 400,000 but not over 800,000.................................................... 190,000 Over 800,000 but not over 1,500,000 ................................................ 220,000 'Vhere the population of the Province exceeds 1,500,000.......... 240,000

The said amendments further provided that an additional grant of $100,000 be made annually to the Province of British Columbia for a period of ten years on account of economic con-ditions peculiar to this Province.

The present subsidy for cost of Government is, therefore, $190,000 annually, and at this figure it will remain until our population exceeds 800,000, when the sum ·will be increased to $220,000 annually until our population exceeds 1,500,000.

The second proviso in the financial clause now under review relates to the 80 cents per cnpita, annual grant; as aforesaid, a 120,000 population basis was asked, and the compromise arrived at provided 80 cents per head for a population basis of G0,000, to be augmented in proportion to the increase of population as shown hy each subsequent decennial census; at


the present time this grant amounts to $555,410.40. This per capi,fo grant was intended to make ample provision for the cost of local services, such as the administration of justice, education, hospitals and charities, and grants to literary and scientific societies; these purposes were inclicaterl clearly by the Hon. (later Sir) A. T. Galt, who, during the Confederation debates, said:-

'l'he 80 cents per head which it is proposed to allow the Local Govern-ment out of the general exchequer for the purpose of meeting their local expenditures, these local expenditures include such items as the admin-istration of justice, the support of education, grants to literary and scientific societies, hospitals and charities, and such other matters as cannot be regarded as devolving upon the General Government.

Further on in his speech Ur. Galt made the following strik-ing and significant statement:-

The fact that it is contemplated to give a subsidy of 80 cents per head to each of the Provinces, in transferring to the General Government all the larger sources of revenue, and placing in their hands, with a single exception-that of direct taxation all the a111ounts 1vhereby the ex-pencliture of the people may be made to contribute to the wants of the State, it must be evident to every one that some portion of the resources thus placed at the disposal of the General Government must in some form or other he available to supply the hiatus that otherwise takes place between the sources of local revenue and the demands of local expenditure.

The inadequacy of this provision is forthwith patent when considering the vastly different economic factors which govern to-clay as apposite to those existing on Confederation. The cost to the Province of the services referred to by Mr. Galt amounted to $7,969,297 in 1933. On the other hand, the grant of 80 cents per c(i,pUa amounted to $555,410.40, and the total amount recefred altogether that year from the Dominion by way of grants, subsidies, and debt interest was $87 4,561.46.

It must also be borne in mincl that a further intent of the 80 cents per capUa grant was to enable the Provinces to func-tion without having recourse to direct taxation. Sir Wilfrid Laurier, when moving the Address to the King asking for amendments to the "British North America Act" dealing with Provincial subsidy increases, as provided in the amending Act of 1907, referred to this matter in the following language:-

Lower Canada would not haYe entered Confederation if as a conse-quence she had been obligated to resort to direct taxation to levy the

DUDGICT SPEECH, 1035. 31

reyennes necessary to carry on her domestic affairs. 'What was true of Lower Canarla was er1ually true of the Maritime Provinces; Nova Scotia, New Brunswick, and Prince Edward Islaml would not have agreed to enter into Confederation if as a consequence direct taxation would have been resorted to.

EYer since the British Provinces of North America haYe been granted representative Government, the only mode so far as my information goes, through which they carried on their domestic affairs, municipal governments, and their Legislatures, has heen by means of customs and excise duties; therefore, it is not to be wondered at that, when the Provinces represented at that conference agreed to snrrem1er to the Central Government the exclusive right of taxation in way of customs and excise, they should at the same time have stipulated, as a condition precedent, that a certain portion of the revenue that is collected should be returned to them, and a portion sufficient to permit them without having recourse to direct taxation to carry on their provincial affairs. This is the reason of the enactment which we have before us in the sixty-fourth resolution of the Quebec Conference. It was one of the many promises which had to be made in order to render Confederation possible, and without which, possibly, Confederation would have re .. mained a dream.

It is interesting to note that whilst British Columbia sur-rendered its right to the collections of customs and excise duties to the Dominion Government on the understanding that the subsidies allowed would cover most of the cost of Govern-ment services in the Province, the Dominion collected from these sources within British Columbia, during the seven-year period which ended in 1934, the sum of $126,858,532, and the total payments made by the Dominion to British Columbia for the same period amounted to only $3,578,951; furthermore, that it was necessary for this Province to resort to direct taxa-tion within five years from the elate of Confederation.

In defining the respective fields of taxation the Provinces were by the Act restricted to licences, fees, royalties, ancl direct taxation, whereas the Dominion reserved to itself the right to levy by any mode of taxation; from Confederation onwards, however, a tacit understanding existed to the effect that direct taxation was the sole prerogative of Local Government. It is not surprising, therefore, that the Provinces vie·wecl ·with alarm the Dominion's invasion of this field in 1918 by the imposition of an income tax; at the time this tax measure was introduced, Sir Thomas \Vhite, the then Federal Minister of Finance, made the following statement in the House of Commons:-

32 I'ROYINCE OJ

BUDGE'l' SPEECH, l!J35. 33

thereon by both the Great \Var and the economic depression. But it must be remembered that the adverse effect of these calamities has, relatively, been just as severe to the Provinces; and, furthermore, that whilst the revenue system of the Do-minion is subject to expansion and is on the whole elastic in yield, that of the Provinces is, by its restricted nature and by Dominion encroachment, conspicuously inelastic in yield.

Conditions make imperative an immediate readjustment; this may be effected either by a very substantial increase in the subsidies paid to the Province or by having additional sources of revenue placed at its disposal. 'l'he increase in subsidies should, of course, imply a recomputation of these on a basis more akin to just compensation for the revenues surrendered and take into consideration the purchasing value of the dollar. It is felt, however, that the subsidies method is not a satisfac-tory solution of the problem, as what is most needed is an elastic i·evenue system applicable equitably to our economic structure.

There is necessary a broader interpretation of "direct taxa-tion,'' as the legal decisions handed clown leave open to attack, owing to the manner of their collection, a large m1mber of important Provincial forms of direct taxation in force. From an administrative point of view it is essential that Provinces be given the undisputed right to levy what is actually a direct tax with the medium of a third party as a collecting agency. A broader interpretation is suggested, and a petition will he made to the Government of the Dominion to that effect; a pe-tition will be made also to have all those taxes now subject to legal attack validated for Provincial purposes.

It is felt that the Dominion should withdraw from the field of direct taxation. Since its inception in 1919 the Fecleral income tax has yielded to the Dominion $59,298,491; its advent in the Province has created a dual tax which has the effect of ( (l) penalizing enterprise; (b) it prevents accumulation of industrial capital for the development of business; ( c) it penalizes conservative business practice; (cl) it discourages new ventures and thereby strengthens oM ventures in their monopolies; ( e) it prevents fluidity of capital.

'l'here is also the need for an immediate readjustment in the division of the field of taxation between the Dominion and the

34 PHOVINCE Ol!' BHI'l'ISH COLUJ\IBIA.

Provinces. It is submitted that it is just as necessary that the Provinces should be able to command the means of supply-ing their wants as it is for the Federal Government to possess the like faculty in respect to the wants of the Dominion. An indefinite power in Federal hands is depriving the Provinces of the means of providing their own necessities.

This Government will seek the adoption of a. principle that will permit the citizens of a Province to adopt such forms of taxation as they deem necessary as long as these forms do not affect trade relations with other Provinces or countries.

Considered opinion, pursuant to a comprehensive survey of existing forms of taxation and their effect on the economic life of this Province, suggests a turnover tax or a rntail-sales tax as the kind best suited to Provincial requirements. The entire wealth and prosperity of a country depends on the turning of raw materials into products or structures; on the buying and selling which always goes on; on all the movements of both raw materials or finished goods through the various channels of trade; and on all sales of personal service. This is the country's business and should be the mainspring of our revenue. Taxes as those referred to are cheaply and easily administered, and the relative contributions by the taxpayer, besides being more exact, scientific, and equitable in grading than under other schemes, would be paid out of his gross in-come as he goes along, ensuring steady revenue and ease in contribution. The adoption of either tax would, of course, predicate a readjustment of income-tax rates so as to exempt the lower incomes.

CONCLUSION.

Raving considered these financial details, let us attempt, for a concluding moment, to put each in its proper place, so that we may see the general situation of British Columbia in its true perspective.

It is clear, in the first place, that the disastrous drift in our current financing has been definitely arrested. The Govern-ment worked from the beginning in the helief that the first step in British Columbia's recovery was the re-establishment of the Provincial credit through the balancing of our current budget. This step has been taken.

BUDGET SPEIDOH, 1D3G. 35

On current account we are living "-ell within our income, but this, while it must always be the foundation of credit and financial stability, is not the full perspective. T\T e have other important obligations to fulfil; other heavy potential expenses to meet and the future development of this country to consider.

Our present revenues are sufficient to maintain the public service at its present level, bnt they are not sufficient to enable the Government to grant the municipalities that measure of assistance which they require and which is essential to ease the burden of taxation on land.

They are not sufficient to cover the cost of unemployment relief, which is being borne by this and nearly every other Government in the world out of borrowings, but which is properly a current expenditure.

They are not sufficient to finance that sane expansion of social services which our modern civilization demands and which this Province could well afford if its financial and economic affairs were placed on a just basis.

In a Province clestinecl to undergo rapid and vast develop-ment within our lifetime, heavy importations of capital are necessary, both governmentally and in private lmsiness; but if industry is to come here and employ our people it must not be crushed with new taxes imposed to carry the borrowings of Gov-ernment. Our present revenues, however, are not now suffi-cient to finance the new borrowings essential to develop our resources with roads and other facilities needed alike by the industrialist, the settler, and the tourist.

In a word, while we have put our financial house in order on our current account, the whole of existing revenue is needed to maintain our services at their present level when conditions are such that many of them must be increased. It would be folly to imagine that we can maintain a sonnd position by balancing our current budget if ·we continue to increase our capital debt without increasing the means of repaying it.

That is the financial picture. But the background of it, of course, is economic. Our finances are merely a reflection of our position within the economy of Canada. That position, I need hardly remind the House, is unjust, artificial, and must be changed. British Columbia, as a result of its one-sided dealings with Eastern Canada, suffers yearly large trade losses; despite the handsome favourable trade balance it has with

3() PHOVINCE OF BRI'l'ISH COLUMBIA.

fol'eign countries, this gain is entil'ely wiped out by the un-favourable trade relations with the East; in fact, the resnlt of this adverse policy to British Columbia's economic weal is a net unfavourable trade balance of many millions.

Such a condition ohvimrnly cannot continue, but, relieved of an artificial arrangement which forces it to bny in dear markets and sell in cheap, British Columbia, with its resources, can become one of the most prospel'ous areas in the world. A sound economic policy would instantly reflect itself in om· Pro-vincial finances, and it is to the development of industry, to the production of real wealth, that we must finally look for the prosperity of our Province.

Summing up, then, our current position is sound, but our future development, the security and happiness of our people, are hedged about by barriers not of our making whiCh must be removed. That is the challenge which these times present to British Columbia. \Vhat, you may ask, is the Government doing to meet it?

As I have said, the Government has taken the first vital step in placing our current finances upon a sound basis. \Ve can-not pause there, and we are not pausing there. The depression of these times is many-sided and its cure will not be accom-plished by any sudden, magical process. \Ve must attack it from many sides at once, through the channels of Government, through industry, through the initiative of our people indivi-dually.

For this year the Government has mapped out a programme designed to effect a real improvement in our position, as has been pointed out by the Ilon. the Pl'emiel' upon various occa-sions.

First, we shall seek at the interprovincial conference to be held in Ottawa this year a new allocation of revenue sources as between the Dominion and the Province. \Ve shall ask the Dominion, for the reasons I have mentioned, to vacate the income-tax field, also to discontinue taxation of gold. \Ve shall ask for the validation of all our existing taxes to place them beyond possibility of legal attack. \Ve shall ask for the right to impose a sales tax, and when it is imposed we propose to exempt the lower brackets of income from the present in-come tax.


Second, we shall continue our argu~ent for greatly increased Fedeml subsidies, to which, as I think I have demonstrated to the House, we are entitled. \Vhile the justice of our case has been recognized this year by an interim payment of $750,000 on account of the annual subsidy for the present fiscal year, this by no means fulfils our reasonable request and we propose to press for further consideration.

Third, we shall press for the removal, by one means or another, of those barriers to trade that are strangling the development of our Province, exacting from onr people an intolerable toll, and forcing us to make up an unfavourable trade balance by large public and private borrowings. It is becoming clear that in a country so diversified as Canada some form of zonal treatment must be devised if our people are to enjoy the natural wealth at their very doors.

Fourth, while anxious that hours of work and working con-ditions generally shall be stanclarclized as far as possible across Canada, we shall insist in British Columbia upon the main-tenance of a standard of wages, working conditions, and living generally which we believe the wealth of this Province justifies. \Ve shall also ask that products shipped here from other Prov-inces shall meet the conditions imposed for similar British Columbia products under marketing legislation, and we shall seek to have this right of control clearly established by law.

Fifth, to relieve the overshac101ving problem of unemployment, we shall continue to press for action on a national scale, in the belief that this is a problem which is primarily the duty of the National Government, and which c~m be solved only by the recognition of this responsibility and by the formulation of such measures as will put our people to work.

Sixth, realizing that better roads are essential for the de-velopment of industry and for the encouragement of tonrif:~t traffic, we shall, in addition to the regular road-maintenance requirements, begin this year a programme designed to give industry the transportation facilities that it requires and to develop the tourist business as far as finances will permit.

Seventh, recognizing that the welfare of municipal govern-ment is essential to the well-being of our people, that the municipal credit must be restored, that the municipalities are urgently in need of financial assistance, and that the load of taxation on real property must be relieved, the Government

38 PROVINCE OF BRITISH cor,Ul\IBIA.

proposes to deal with this problem before the House meets again. I have shown you that the Government's present revenues are all required for its own expenditures, but we are confident that the redivision of revenue sources which should follow this year's interprovincial conference will enable the Government to extend a substantial and necessary measure of assistance to the municipalities next year.

Eighth, we propose to widen and extend our social and health services, limited only by desirability and our capacity to pay for them. -V\Then we know definitely what social services the Dominion intends to undertake we shall be in a position to augment and supplement them provincially where this is con-sidered necessary.

Ninth, we shall proceed as rapidly as possible with the re-funding of the Provincial debt on a lower interest basis. ·we propose to proceed through amicable agreement with our bond-holders, paying off in cash those who do not care to accept a lower interest rate, and thus always protecting the full prin-cipal of all investors. 'l'o effect this refunding scheme, the first requirement is a sound credit which this Government has endeavoured to establish. If we are able to refund our debt, or part of it, the savings, as I have pointed out before, will greatly ease our financial position in all departments of Government.

This programme, we believe, attacks the economic difficulties of British Columbia at the root. It is designed to cover the various phases of our current probleTI?-s in a sane, businesslike fashion. It is not a programme of wild experiment of mi-raculous cures, and it is based on the preservation of private property.

The coming year may prove to be the most momentous since Confederation; important decisions will have to be made in order that our people may enjoy not only the fruits of recovery, but also the wealth of every sort with which this Province is blessed.

VICTORIA, B.C.: Printed by CHARLER F. BANFIELD, Printer to the King's ~lost Excellent Majesty.

1935,

1, 750-335-2999

Blank Page

Documents

PROVINCE OF BRITISH COLUMBIA · 2013. 8. 22. · referred to amount to $7,806,lGG.76, making the grand total of all assets $199,5:56,043.98, which, compared with the total of $195,267,357.34