Taxes for Peace

There was standing room only in the public galleries. As the lanky, sandy-haired Finance Minister unfolded himself and got to his feet in the House of Commons, members thumped their desks in applause. James Lorimer Ilsley nervously cleared his throat, picked up a sheaf of notes, took off his glasses, put them on again, and waded into a 10,000-word speech telling what the coming year's tax picture would be. It proved to be good.

Mr. Ilsley was quick to make one thing crystal clear: the Government was going to strike off some of the shackles that heavy wartime taxes had placed on private enterprise. With the statistical gobbledegook pared away, this is what he had to say:

"The excess-profits tax is a war measure which . . . in this period of reconstruction . . . is becoming a barrier to expanding employment." Therefore, to encourage greater production and full employment: 1) the 100% excess-profits tax would be reduced to 60% for all, and 2) removed entirely for some 12,000 of the smaller firms (those making less than $15,000 in excess profits).

That was not all. To help manufacturing firms reconvert to peacetime production as quickly as possible, all machinery used in the production of manufactured goods would immediately be taken off the 8% sales-tax list.

Furthermore, much of the new peace time equipment would have to be imported, "and it would be a short-sighted policy not to assist." Therefore the "war exchange" tax on all non-Empire imports (85% of them from the U.S.) would be abolished forthwith.

For Plain Citizens. The wage earner also needed encouragement. Said the Finance Minister: "Our present high personal income tax [is] discouraging work and initiative in all groups at a time when we need a rapid expansion of employment and a willing mobility of labor. . . . I recognize that . . . wartime taxation has begun to blunt incentives." Therefore, personal income taxes would be cut 16%, retroactive to Oct. 1.

The savings to individuals would be comparatively small (a married man with two children who paid $106 last year on a $2,000 income would pay $101 this year, $89 next year).

The tax plan that Minister Ilsley thus announced would raise about $2,500,000,000, a little more than half the $4,650,000,000 he would need to run the Government, maintain the armed services, pay for social reforms, and help the needy nations of Europe. Much of the difference would have to be made up by borrowing. Mr. Ilsley hoped that the people themselves would be the lenders. He recalled that Canada's Ninth Victory Loan drive would begin Oct. 22 (the goal: as close to $2,000,000,000 as possible). Said he: "There is still a great national need for systematic saving."

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