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Synopsis of report and full report of Royal Commission on Taxation, 1911 Price Ellison; British Columbia. Royal Commission on Taxation 1912

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Printed by William H.  Cullin-, Printer to the King'
.Hnrf Frrnllrnr. JMaiestv.
This book is for use
the Law Building ONI
in, Printer to the King's Most Excellent Ma*  To His Honour Thomas Wilson Paterson,
Lieutenant-Governor of the Province of British Columbia:
1 please Your Honour :
The Royal Commission on Taxation, appointed by Order in Council, dated the
fourteenth day of September, 1911, for the purpose of making inquiry into the
operation of the " Assessment Act" with regard to its practical bearing on the
financial requirements of the Province, have the honour to submit the following
Chairman of Commission.  SYNOPSIS OF REPORT
ioners, abbreviated for
i the synopsis refer to
! Secretary to the
r each in
The following ^is the synopsis of the detailed Report of the Commiss
easy reference. The numbers given in and at the end of each section i
the pages in the full Report.
The Commissioners were:—
Hon. Price Ellison, M.P.P. (Minister of Finance), Chairman.
Hon. A. E. McPhillips, K.C., M.P.P. (President of the Council).
C. H. Lugrin, Esq., of the City of Victoria.
W. H. Malkin, Esq., of the City of Vancouver.
They were accompanied by Dr. H. B. Gray, M.A. Oxon, who acte
Commission, and by Mr. P. M. Ward, who acted as Stenographer.
They sat for four days in Victoria, for four days in Vancouver, and for c
eighteen other places.    (Page 11.)
Evidence was given on sworn testimony by one hundred and sixty-four (164) witnesses, and
the Commissioners gained information also from Government officials -and other individuals
during their travels.
They found the condition of the Province prosperous and the people contented generally
under the taxation at present imposed,. with the exceptions hereafter to be mentioned. There
seemed to be practical Unanimity in favour of maintaining the existing rate of taxation coupled
with a rapid rate of development rather than of having recourse to a lower rate of taxation
and a slower rate of development.    (Page 12.)
The machinery of the assessment, on the other hand, appeared not to have kept pace with
the recent rapid development of the Province, and the staff of assessors, was considerably undermanned. Hence there was some inequality in the assessment in different districts, while lands
of varying value in the same district were not always bearing their proportionate incidence of
taxation. For this reason, and on account of the rapid development of the Province, the appointment of the Commission at this particular time was regarded with favour by the people of
the Province.
The General Report begins by defining " equality of taxation," the limitations of the taxing-
power of the Provincial Government, and the true aim and principles which should govern any
policy of taxation.    (Pages 12-14.)
An analysis of the revenue shows that there was a very satisfactory surplus of revenue
over estimates ($10,492,892.27 as against $7,000,026.66) for the year 1910-1911 in the Provincial
Treasury. This surplus, however, for reasons given, is not to be relied upon as sufficient to
warrant altering largely at present the principles of assessment or the incidence of taxation,
except to the degree and of the nature recommended; nevertheless, the Commissioners believe
that the reduction of taxes as suggested in the Report will prove of material benefit to the
people of the Province.    (Page 14.)
A division of the revenue into five separate heads, and an examination of the amounts
derivable from each prove that the total abolition of the taxes on property and persons and
the raising of the revenue solely from an increased tax on natural resources would, even if it
were held desirable for other reasons, involve a 50-per-cent. increase in the rate of taxation of
such resources—i.e., timber, coal, and minerals.    (Page 19!) Royal Commission
5   (OB POIX)   TAJ
, the Report
Revenue for the year 1910-1911, $313,338.00.
After a consideration of the tax from historic and economic points of view, the Report
proceeds to show that the evidence for and against this tax was voluminous and varied, and
the Commissioners have set forth at length their reasons, after considerable deliberation, for
recommending the abolition of the tax.    (Pages 16-19.)
Pebsonax-pbopebty Tax.
Revenue for the year 1910-1911, $179,052.70.
After a consideration of this tax, principally from an economic point c
proceeds to show that the evidence was almost universally unfavourable
as being unequal in its incidence and leading to evasion, as well as acting as a check to trade,
and the Commissioners strongly advocate its abolition and reliance on income-tax in its stead. -
(Pages 19, 20.)
Revenue for the year 1910-1911, $192,924.78.
After a consideration of this tax from a historic and economic point of view, the Report
proceeds to analyse the evidence connected with it, and shows that it is generally regarded
as " the fairest tax," but that there was strong evidence that the phraseology in Form 8 should
be rendered more clear, comprehensive, and " informative."
The Commission recommend—
(1.) The raising of the exemption from $1,000 to $1,500:
(2.) The withdrawal of any exemption from incomes above $11,500 and under $50,000:
(3.) The withdrawal of any exemption from incomes above $50,000, with the addition
of a super-tax of 5 per cent, for that part of the income which exceeds $50,000:
(4.) An exemption of $200 for each legitimate child under eighteen for certain classes
of income:
(5.) An exemption of an additional $1,500 for farmers:
(6.) An average system for assessing incomes from trades.
It will be seen from the foregoing recommendations that the Commissioners have attempted
to achieve the task of reducing taxation in the case of citizens with smaller incomes, and at
the same time of readjusting its incidence on the possessors of larger incomes.    (Pages 20-23".)
s Effi
For an approximate estimate of the effect of t
?es 23, 24.
a changes on the
Revenue for the year 1910-1911, $316,130.83.*
The Report touches on land-taxes, viewed in their historic and economic aspects, and set'
forth general considerations why improvements on land should not be taxed, definin;
same time what is actually meant by "improvements."    (Pages 24, 25.)
Reai-pbopebty Tax.
Revenue for the year 1910-1911, $352,372.44.   One-half of 1 per cent, on assessed vj
The evidence showed that the rate of taxation was generally rega
but some representations were made as to the inequality of assessme
brought forward as to the taxation of improvements.
The Commissioners recommend—
(1.) A periodical reassessment of property according to actual
(2.) The abolition of taxation on improvements:
ded as r
it, and c
ralue as defined:
the accounts
also a land-ti
i wild land, Royal.Commission on Taxation.
(3.) Legislation enforcing registration of real estate on affidavits setting forth the true
consideration for purchase:
(4.) That the registration fee of % of 1 per cent, on the value of real estate up .to
$5,000 should be extended to all real estate irrespective of value.    (Pages 25, 26.)
1-land Tax.
Four per cent, on assessed value
The Report begins by defining " wild land " according to the terms of the " Assessment Act."
The evidence went to show that in some eases the assessment value of wild land was
somewhat low. At the same time the Commissioners regard the tax of 4 per cent, as
sound, and are of opinion, despite a few objections raised by some witnesses, that the rate
should remain as at present fixed.
The Commissioners, however, by way of general recommendation, consider that there
should be an increase in the staff of assessors.
They also recommend that the regulation which at present prescribes that wild land situate
west of the Cascade Mountains shall be classed as improved land, when improvements have
been effected thereon to the assessed value of $2.50 per acre, should be extended to land situate
east of the Cascade Range, when it is also situate to the north of the 53rd parallel of latitude.
(Pages 26, 27.)
Timber-land Tax.
Two per cent, upon assessed value.
The Report begins by defining timber land according to the terms of the " Assessment
Act." The evidence showed that the rate of the tax was generally regarded as satisfactory,
though views differed as to the fairness of the respective rates of licences and royalties. Considerable satisfaction was expressed as to the operation of the present system of fire protection,
but some witnesses ventured the opinion that a still more efficient method might be adopted,
and that the owners of timber land should share the cost of such fire protection, while others
urged the appointment of a permanent Fire Commission.
The Commissioners refer the evidence alluded to in the foregoing paragraph to the consideration of the Government.    (Pages 27, 28.)
Coax-land Tax.
One per cent, on assessed value on worked mines; 2 per cent, on unworked mines.
Many witnesses directed the attention of the Commissioners towards the disparity between
the cost of coal at the mine-head and the price paid by the consumer.
Appeals to be relieved f r&m the tax on coke were also .urged.
The Commissioners refer the evidence regarding the cost of coal to the consideration of
the Government.
They recommend that the tax on coke should be reduced from 15 cents to 10 cents a ton.
(Pages 28, 29.)
Revenue for the year 1910-1911, $91,038.43.   Two per cent, on assessed value of ore.
The Report describes the system of taxing minerals In vogue in the Province, and draws
attention to the present market value of copper.
Complaints of witnesses were generally directed towards the inequality of the tax as
between high-grade and low-grade ores. A suspension of the tax was asked for, or alternatively a reduction of the tax.
The Commissioners do not recommend any change in the tax imposed on minerals. (Page 29.)
Tax on Crown-granted Unworked. Mineral Claims.
Revenue for the year 1910-1911, $42,020.84, at 25 cents an acre.  SUMMARY   OF   APPENDICES.
" Compai
Representations were made to the Commission in Victoria and Vancouver as, to the
working of the " Companies Act" and the effect it was having and would have on trade, a
complaint being made, among others, that unlicensed and unregistered extra-provincial companies could not sue for the recovery of debts, and that this restriction did not apply to
individuals, partnerships, or unincorporated associations. i
The Commissioners regard this subject as outside the scope of their inquiry, and refer
the evidence in its entirety to the consideration of the Government.    (Pages 35, 36.)
Certain difficulties
■of the Commissioners,
scope of their inquiry,
•Government.    (Page 36
n the operation of the " School Act" were brought to the attention
7ho, however, are of the opinion that this subject also is outside the
and refer the evidence in its entirety to the consideration of the
" Railway Assessment Act."
Certain difficulties with regard to the interpretation of section 6 of the " Railway Assessment Act" connected with the assessment' of railways under the " School Act" were also
brought to the notice of the Commissioners.
The Commissioners regard this subject also as outside the scope of their inquiry, and refer
the evidence to the consideration of the Government.    (Page 37.)
Church-sites in Municipalities.
An influential deputation consisting of clerical and lay representatives connected with
nearly all the important denominations desired relief from taxation on the land and the
immediately adjacent lands on which places of public worship stood.
Though they listened to the arguments advanced, which are set forth at length in the full
Report, the Commissioners regard this subject also as outside the scope of their inquiry, and
refer the evidence in its entirety to the consideration of the Government.    (Pages 37, 38.)  "1
Royal Commission on Taxation.
To His Honour the Lieutenant-Governor in Council:
Terms op Reference. ,
By Order in Council dated the 14th day of September, 1911, the undersigned were appointed
to be Commissioners under the "Public Inquiries Act" "for the purpose of inquiring into
the operation of the ' Assessment Act' with regard to its practical bearings on the financial
requirements of the Province," and the Commission, which is returned herewith, was accordingly
issued to them for such purpose.
visited, i
: Dates.
Notice of such appointment, of the purpose and scope of the inquiry, and of the times and
places of holding the meetings of the Commission having been duly published, the Commissioners,
pursuant to such notice, met in the Executive Council Chamber, Parliament Buildings, Victoria,
on Monday and Tuesday, 25th and 26th September, and at the Court-houses or at the Government offices at the following places and times:—
Nanaimo, Wednesday and Thursday, 27th and 28th September.
Vancouver, Friday and Saturday, 29th and 30th September.
New Westminster, Monday, 2nd October.
Revelstoke, Wednesday, 4th October.
Golden, Thursday,  5th  October.
Cranbrook, Saturday, 7th October.
Fernie, Monday, 9th October.
Nelson, Wednesday, 11th October.
Rossland, Thursday, 12th October.
Grand Forks, Friday, 13th October.
Princeton, Saturday, 14th October.
Merritt, Monday, 16th October.
Kamioops, Tuesday, 17th October.
Summerland, Thursday, 19th October.
Penticton, Friday, 20th October.
Kelowna, Saturday, 21st October.
Vernon, Saturday, 23rd October.
Vancouver (second meeting), Monday and Tuesday, 6th and 7th November.
Chilliwack, Wednesday, 8th November.
Victoria (second meeting), Friday and Saturday, 10th and 11th November.
Duncan, Tuesday, 14th November.
Nature .'
\ Evidence.
Ample opportunity to be heard was given to all persons wishing to appear before the
Commission, and a great mass of evidence bearing on the operation of the " Assessment Act" Royal Commission on Taxation.
was gathered from witnesses in the various places visited on behalf of the manufacturing,
mercantile, banking, agricultural, lumbering, coal-mining, mineral-mining, educational, and
Teligious interests.
One hundred and sixty-four witnesses were examined on oath or on solemn affirmation.
In addition, however, to this sworn testimony, your Commissioners have had the advantage
of testing the opinion of numerous Government officials, and of many individuals representing
•different types of industry.
They have also, as far as time would permit, examined by personal observation into the
incidence of the various kinds of taxation to which those living in the Province are at present
liable, and have been, moreover, eye-witnesses during their progress through the Province of
the effect of the real-property tax, the wild-land tax, and the timber, coal, and mineral taxes on
the natural resources and material development of the Province.
ioint out that they found abundant proof
i strong spirit of optimism on the part of
lrface, it was observable that they were
amount of taxation;  and in reply to a
Prosperity c
And here 3
•of rapidly advancing prosperity side
the people. Whenever complaints e
•complaints regarding the method rather than
question, not infrequently asked of witnesses by the Commissioners, whether they would prefer
a higher scale of taxation and quicker development, or a lower scale of taxation and slower
movement, the answer was invariably returned in favour of the former alternative.
3 Commission.
Side by side, however, with these signs of contentment there was, nevertheless, general
satisfaction expressed with the policy of a Taxation Commission having been appointed at this
particular juncture in the history of the Province; a warm welcome was everywhere extended
to your Commissioners, and as a general rule witnesses were willing and even anxious to place
their opinions and experiences fully and candidly at their service.
.With the soundness of the popular view as expressed in the foregoing sentence your Commissioners are in strong accord. After digesting and reviewing the mass of evidence which
they have collected, they have become impressed with the foresight which dictated a serious
inquiry into the financial conditions and requirements of the Province at the very, time when
a period of flux and movement is swiftly giving place to a period of settlement and solidarity,
and when the development of the country points to the necessity of the Government assuring
itself that the scheme of taxation is being based on scientific and permanent principles,
due regard being paid, of course, to, economic, geographical, and climatic features
•of the Pr
Before approaching the task of writing their Report, your Commissioners think it well to
submit one or two preliminary considerations which appear to them to affect the financial
problem presented to them for solution.
Definition of "Equality of Taxation."
, that any attempt to adjust the
1 that equality of taxation should
iciple of equality is impracticable
The first is axiomatic, and has been often quoted—ns
burden of taxation in any country must proceed on the pri
be arrived at by contemplating the revenue as a whole. Th
of execution, and indeed unfair, if applied to one tax alor
Complaints, therefore, that the operation of one particular tax works unfairly should be
met, not necessarily by removing the tax objected to, but by placing the class which it affects
prejudicially in a relatively advantageous position with regard to some other tax.
Limitations on t
:nce l
1 Scope
e Commission.
Secondly, any scientific attempt to adjust the Provincial taxes in British Columbia may
be modified or checked in three distinct ways:    (1.) By the fact that foreign countries are Royal Commission on Taxation.
often able to export their own products free of duty, or with such small duty as enables
them to undersell native products, thereby rendering it difficult to tax such native products.*
(2.) By the fact that the "British North America Act" restricts the power of the Province
to the imposition of direct taxation only, so that no supposed inequality resulting from some
direct tax in one direction can be set right by the imposition of some indirect tax in another
direction. (3.) By the fact that, on the other hand, the authority delegated to the municipalities
to levy taxes for municipal purposes may prevent the free exercise of taxing-power by the
Province in some direction along which otherwise it might be fair and obvious to proceed. Thus
it will be easily seen that the financial problem is complicated by this " intermediate " position.
Terms of Reference.
Thirdly, your Commissioners have endeavoured to keep steadily before their minds the
principle underlying the terms of reference.
These terms are that they should " inquire into the operation of the • Assessment Act' with
regard to its practical bearing on the financial requirements of the Province."
Incidence of Taxation affected by Condition of Pbovince.
These instructions have been interpreted by your Commissioners to meap that the present
and future conditions of the Province—a condition still of flux and movement, with an indefinitely
enlarging prospect—-may render it politically and economically advantageous to retain, modify,
or abolish certain imposts, though such retention, modification, or abolition might not be so
advantageous in a country of settled growth and crystallized institutions and industries; indeed,
it is conceivable that a financial policy might be relatively advantageous in the one case, and
yet might be relatively prejudicial in the other, and vice versa.
Your Commissioners venture to go still further. It seems to them impossible to exaggerate
the paramount importance to the future welfare of the Province, wherein developments, alike
of natural resources and of population, are increasing from year to year with almost unexampled
rapidity, that just and wise conclusions as to the principles to be followed in administering its
future taxation should be reached at this particular juncture in Provincial history.
Keenly conscious, therefore, of the vast issues involved, and of the responsibility thrown on
their shoulders in undertaking the task committed to their trust, they are of opinion that it is
not only defensible, but desirable, to lay down certain fundamental principles of taxation on,
which their recommendations to the Government should be based.
True Aim of the Policy of Taxation.
It is self-evident that a Government cannot be carried on without taxation, direct or indirect.
The machinery of law and order must be paid for.
Now, over indirect taxation the Provincial Government (as has been already pointed out)
has no jurisdiction.
Notwithstanding, however, the various limitations on their powers above mentioned, it-
would appear to be the duty of the Provincial Government, and therefore of your Commissioners,
acting in an advisory capacity, to endeavour to formulate a scheme for raising revenue in such
a way as to interfere as little as possible with the free production, distribution, and exchange of
wealth—in other words, with the material prosperity of the Province.
All other considerations, social and ethical, however valuable in themselves, are outside the
province of taxation as such, and should be considered subsidiary to the main principle named
above. ,,      .
As an illustration, it might be shown that a heavy tax on liquor licences would raise the
price of alcohol, and bv discouraging its consumption thereby produce greater temperance in
the community; yet it would not be in accordance with sound principles of political economy
to paralyse the consumption of alcohol by imposing a tax of greater severity than would be
required for the purpose of revenue.
nearly 165,000,000 feet of lumber  .
;   been  exported Five Subobdinate Canons of Taxation,
Keeping, then, the foregoing considerations steadily in view—viz.', that revenue should be
raised with the least possible interference with the material prosperity of the Province, and
that no taxation should be imposed, except with the one object of raising revenue to carry ou
the Government—your Commissioners venture to lay emphasis also on certain subordinate
principles originally promulgated by Adam Smith, the father of English economists, and
accepted by all the leading political economists, as emerging from the fundamental principle
enunciated above:—
(1.) That citizens should contribute to the maintenance of the Government as nearly as
possible in proportion to the revenue which they enjoy under its protection.
(2.) That the taxes should be certain and not arbitrary in their incidence.
(3.) That they should be levied at the time and in the manner most convenient to the body
of taxpayers as a whole.
(4.) That the machinery of their administration should be of such a character that it should
take out of the pocket of the taxpayer as little as possible over and above what it brings into
the Treasury of the Province.
(5.) And to these principles a fifth may be added, which has already been alluded to by your
Commissioners, and which may be regarded as explanatory of the first—viz., that when there is
inequality of incidence in respect to any individual tax, it does not necessarily follow that that
tax should be modified, still less abolished, but that possibly such inequality may be remedied
by the counterbalancing inequality of another tax.
Analysis of Revenue.
After enunciating these preliminary principles, and before submitting for the consideration
of the Government the evidence which they have gathered, and their recommendations based
both on that evidence and on their own united judgment, your Commissioners have thought it
well to present a digest of the revenue of the Province, analysing it into the various sources
from which it is derived.
s Pb:
To begin with, it cannot be too strongly emphasized that the fact that th(
be a large surplus to the credit of the Province at any particular time, or tl
any particular year may considerably exceed the estimated income, should b
of temporary significance only, and should not be taken into account in determi
of assessment or the incidence of taxation, although it may quite properly
taxation for a subsequent year.
For instance, the estimated receipts for the year ending March 31st, 1911, j
whereas the actual receipts were	
showing a balance of  	
succession duty; (4) registry fees.
These surpluses could not have been forecast and the types of taxation
accrued are of too uncertain a nature to warrant any scheme of assessmenl
Their uncertainty is well shown by the fact that the estimated revenn
year is $8,192,101.06, a figure which proves that the Finance Minister in submil
Moreover, the estimated expenditure
$11,035,389.75, or a deficit of $2,S43,2SS
1910-1911 would be nearly swallowed up. Royal Commission on Taxation.
Following a similar conservative estimate, your Commissioners have based their recommendations on the calculation that the normal condition of British Columbia at the present
time, and for many years to come, is likely to be one of gradual (not abnormal) expansion as
regards receipts on the one hand, and expenditures on the other.
The Provincial revenue for the purpose under consideration may be divided as follows:—
(1.) Revenue from Federal grant:
(2.) Revenue from taxes on persons and property and on the income won from property:
(3.) Revenue from natural resources:
(4.) Revenue from incidental duties:
(5.) Revenue from interest on investments, ete.
(1.) The revenue from Federal grant is of course the amount receivable from the Dominion
Government, not including the Provincial share of the Chinese head-tax.
(2.) The revenue from person or property and income won therefrom is that derived from
direct taxation, not including anything from which the individual taxpayer receives at the
time of payment some immediate personal advantage.
(3.) The revenue from natural resources is that derived from the sale'or rental of land,
including timber licence fees in the term "rental," and from royalties or taxes imposed upon
the products of land in the form of timber, coal, or metalliferous ores.
(4.) The revenue from incidental duties is that derived from everything in the nature of
fees—e.g., death duties, succession duties, business licences, or from general sources which do
not properly come under the other heads.
(5.) The revenue from interest includes whatever of that nature may be derived from any
source whatever.
The revenue derived last year from these several sources was as follows:—
(1.) Federal $   522,076 66
(2.) Property and persons    1,395,839 59
(3.) Natural  resources     5.235,411 72
(4.) Incidental     3,028,S68 05
(5.)  Interest        310,696 25
With reference to (3), it is probably more scientific to regard the receipts from the sale of
land as capital rather than as current revenue, inasmuch as they are being derived from the
alienation of Provincial assets. It is true that the receipts from timber royalties and taxes
upon coal and minerals might also be said to denude the Province of its natural resources;
but it is practically certain that these will not be exhausted for an indefinitely long period
of years, whereas it is obvious that the receipts from land-sales are of a temporary nature
and cannot last indefinitely. For this reason receipts from land-sales are likely to be extremely
fluctuating from year to year; moreover, they must depend upon the policy of any Government
happening to be in power with regard to the sale or reservation of Crown lands.
Deducting, therefore, the receipts of land-sales—i.e., $2,431,231.36—from the revenue derived
from natural resources of last year, there remains a sum of $2,804,180.36 as the net revenue under
this head. This sum is made up of the receipts from timber licences and leases, timber royalties,
the mineral-tax, and the coal-tax. It will be observed that this amount is slightly more than
double the receipts from taxes on property, etc. (No. 2). It follows that if it were to be
decided to abolish all taxes under head (2), and to raise revenue now obtained from that
source by an additional charge upon the natural resources of the Province, an increase of a
little less than 50 per cent, in the charge on those resources would be entailed—a charge which
your Commissioners consider that the industries of lumbering and mining are by no means in
a position to bear at the present time.
For this reason, apart from others of a more generally scientific character, your Commissioners submit that the revenue under head (2) derived, from some sources or other must
undoubtedly be continued for some time to come, subject to such changes in the incidence of
taxation as are hereinafter proposed, and subject also to such variations in the rate of taxation
from year to year as may be deemed desirable by the Ministry of the day. Royal Commission (
The several items under head (2) are derived from the following sources:—
(a.) The revenue tax:
(6.) The personal-property tax,:
(c.) The income tax.
It is proposed to consider these in order, and to make recommendations seriatim.
Revenue for year ending March 31st. 1911, $313,338.00 at $3 per capita.
A poll or capitation tax is a tax imposed upon a person on the principle that he, as am
individual, enjoys the personal protection and the social advantages secured to him by the
Government of the country in which he lives, and is quite irrespective of the amount of
property which such a person may or may not possess. It is levied upon him on the basis-
of his residence  (permanent or transient) in the country, and on that ground alone.
It may, therefore, be called a " security " tax—i.e., a tax levied for the security of his well-
being; and the justice of its imposition can be defended on the plea that the individual gets-
some advantage for which he would otherwise give nothing in return. If, however, it can be
shown that the fact of his presence in the country and the share he contributes to its development by his labour more than outweigh the value of the wages which are paid to him for that
labour, then, it may be logically submitted, the raison d'etre for such a tax ipso facto disappears.
From the point of view, therefore, both of equity and economics, the justification for the continuance of such a tax in British Columbia simply depends on the small or the large value
which the Province in its present condition sets on the difference between a restricted and
unrestricted influx of white man's labour.* In other words, it depends on the- urgency of her
need for development of the Province by human agency. If that need be urgent, it seems clear-
that every bar which would tend, however slightly, to obstruct the fulfilment of that need
should be swept away; if, on the other hand, that need be not considered urgent, tbe retention
of the bar to the free influx of labour can, from a utilitarian point of view, be reasonably
defended. It will be seen that these a priori considerations are meant to cover the case of the
transient as well as of the permanent workman, and the problem as to the encouragement or
restriction of the former class. The differentiation of treatment between the two will be dealt
with by your Commissioners later on in discussing the evidence which they have received as-
to the retention or abolition of the tax.
The general arguments for and against the continued imposition of the tax ought not,,
however, to be discussed without dwelling briefly on its justification historically. Confessedly,
a poll-tax is the outcome of a primitive condition of society. It presupposes a certain rough,
equality in the personal condition of the individuals who compose the community. Hence such.
a tax is to be found among people in the early stages of civilization, and not among them only,
but also in countries where the population is only sparsely settled. It has been pointed out
that such people pay equal dues, like members of a club, because their interests and their obligations are equal. But when society in the new regions becomes more highly organized and
differentiated the idea of equal interests and equal obligations tends to disappear. Then the-
poll-tax becomes unjust, oppressive, and often accentuates the difference between class and class,
which on the surface it appears to equalize. It is through this fiction of " equalization " that,
by a curious " backwater of history," the poll-tax has been retained in some parts of the United'.
States, notably California. But that the poll-tax is unpopular in that State is stated in a
communication from a public official there which has recently reached your Commissioners,
while it is a notable fact that it has disappeared for other than municipal purposes from the>
i provided by legislation, and a poll-t<
raid i Royal Commission on Taxation
nished; it has
3 the property-
excepting British Columbia. It can be shown, more-
it still exists the economic basis of the poll-tax has
to become merely and1 frankly political. Its lineal
r Commissioners will treat in its due order.
iARDiNo Revenue Tax.
Proceeding now to the testimony of witnesses, it may be said without exaggeration that
a larger mass of evidence was forthcoming as to the desirability of retaining or of abolishing
this tax than on nearly all the other taxes put together. This evidence was of an extremely
varied and sometimes of a conflicting character, and it was clear to the Commissioners that
discussion on the tax had occupied men's minds very seriously.
On the one hand a certain body of ratepayers and taxpayers were in favour of its retention
on the ground that it taxed a large number of men who would otherwise contribute nothing
to the revenue of the Province, and who yet enjoyed the institutions and security paid for by
the Provincial contributions of more permanent citizens.
Among these there were several who held that those who paid other taxes and rates,
whether Provincial or Municipal, should be relieved therefrom. Others suggested that all
persons should be theoretically subject to the tax, but that its face value might be deducted
by the taxpayer when he paid other Provincial taxes (say, from $5 upwards), the receipt being
pinned to the assessment form.
The opinion that it should be retained as against the transient employee was even shared
to some small extent by the permanent labourer.
On the other hand, there was a strong objection to the retention of the tax by men of
various avocations, and in many quarters perhaps where it might not have been altogether
expected; and it was noticeable that the criticism was usually directed to the question of
principle. Opposition came not only from representatives of labour unions, but also from those
who appeared to have no personal interest in either direction. Its opponents characterized the
tax variously as a relic of feudalism, as attacking personal liberty, and again as interfering with
the free operation of supply and demand in the labour market of the world.     I
It was also pointed out that British Columbia was the only Province in the Dominion where
such a tax was levied Provincially, and that the causes which had led to its original imposition
had passed away. ■
But the main strength of the objection to the tax centred on the system employed in collecting
it, and on the adoption by the recognized officials of the principle of payment by commission, which was commented on as undignified. The method also of deducting it from the wages
of the employees through the agency of the employers led, it was held, to some abuses (such
as dual payment in some cases), and to great irritation on the part of those who had to pay
the tax by such indirect means.
It was pointed out, in connection with the above system of payment (through employers),
that those easy to reach (i.e., employees) paid, while many citizens comparatively difficult
to reach escaped. Some witnesses of good standing indeed admitted that they had not been
asked for, nor had they paid, the tax for many years.
Evidence was also forthcoming that in the case of miners its imposition led to serious
financial hardships.
Furthermore, some witnesses took up the position that, if the tax were retained, those under
twenty-one should be exempt, on the principle that they possessed no voting-power.
Finally, it was pointed out that the annual amount collected ($313,338.00 for the year
ending March 31st, 1911) showed that a fair proportion of those who paid the tax must be a
floating population. In one district it was calculated that more than 30 per cent, of revenue-tax
payers paid no other tax.
r Evidence and R
Reviewing the evidence as a whole, your Commissioners beg leave to submit that the
argument in favour of retaining the tax on those paying no other taxes (transient labourers
or otherwise), while the rest of the community should be relieved from its imposition on the
ground that they pay other taxes, would be both unscientific and indefensible, and Royal Commission on Taxa:
spring from an underlying feeling c
the objector has to carry. But to ta
he has no property to be taxed, seei
kind. Moreover, such a man contr:
behind him   (even if he takes av
vexation that some one else should escape a burden which
an individual personally any sum whatever, simply because
5 to your Commissioners to be class legislation of the worst
utes to the revenue in three distinct ways: (1) He leaves
y  some of his  wages)   the fruits  of his labour,  which
indeed, that the
: Courts; but so
lich those who
ito the country
in the present economic condition of the Province your Commissioners venture to regard as a
valuable asset; (2) he contributes indirectly to the revenue of the Dominion, and hence pro
tanto to the revenue of the Province, by spending part of his wages on the necessities of life;
and (3) he swells the revenue of the Province directly through the subsidy per capita paid over
by the Dominion Government.
But, further, your Commissioners are unable to draw any distinction between a " transient"
person who comes to the Province to work at manual labour for wages, and some other
" transient". who .comes on a few days' visit, for the purpose of enjoyment or some gain to be
acquired by mental work, whether that gain takes the form of profit by speculating in real estate,
or of profit upon a business venture, or of anything else. It has been argued, :
"transient" workman has the benefit of our roads and the protectio
also has the " transient" tourist who travels for pleasure. The real purpose \
advocate a poll-tax on the " transient" have in mind is that a person who comes
to work for wages should pay something for the privilege of doing so. Your Commissioners
submit that, in a country where "transient" labour is needed as much as it is in British
Columbia, a tax for such a purpose is objectionable. The retention of the tax upon " transients "
has not been demanded by any of the witnesses as a protection to white domestic labour.   Nor,
But the objection presents itself in a still stronger light in the case of the man who is a
permanent resident in the country, but who yet is not possessed of any property or taxable
Being a permanent resident, he must either rent a dwelling or some part of one, and thereby
he pays his share, not merely theoretically but actually, of the taxes on the land upon which
that dwelling is situated. It is true that he is enabled to enjoy all the advantages derivable
from government, and that if he is a man with a family, his children enjoy the benefit of free
education'; but your Commissioners fail to see in these facts any reason why he should be singled
out from among his fellows and compelled to pay a tax upon himself personally. There might
be good reason why such a man should be compelled to contribute, together with all other
residents of the country, a personal tax, supposing the revenue of the country from other sources
were otherwise insufficient to provide him with the advantages referred to, and why he should
pay for any other services rendered to him by the State; but it seems indefensible that he should
be singled out from among all the residents of the country, and have a special tax imposed on
him which bears no relation whatever to his relative " ability to pay." This seems to your
Commissioners to be a policy based on no principle, but on a sentiment, which carries with it
little weight ethically or politically.
Your Commissioners submit, therefore, that no differentiation whatever should be made
between one person and another with regard to this tax.   Either all should pay, or none.
Revenue Taj
Method of Collecti
They now proceed to deal with the method of its collection. The present method is very
objectionable, or at least it is felt to be so by those who pay it, and while this need not be
necessarily considered in arriving at a principle of taxation, it is a factor that may be taken
into account in determining whether a specific tax shall be retained or abolished, specially if
it becomes difficult to see how this method can be radically altered. It is evident, on the other
hand, from what has been stated by many witnesses, that a considerable number of citizens
liable to the tax do not pay it for the simple reason that they are not asked for it.   Many gave
that thej
tad 1
and j
had nev
eed that
demanded; on the other hand, the amount collected last year ($313,338.'
persons paid the tax.
As the tax is levied only on male persons over eighteen, and as the population of British
Columbia has been this year returned as about 390,000, it seems to follow that a very considerable Royal Commission on Taxation.
proportion is paid 1
them through their
inequality would apj
ie ease with which it is collected from
■ neighbours not seldom escape. This
is against one of the principal canons of
To sum up. Firstly, looking to a priori principles, viz., that the poll-tax is suitable to a
primitive condition of society, or to a sparsely populated country, and that historically it has
always tended to become unjust, and finally to disappear in a more settled order of things, and
believing that the Province has now advanced considerably beyond the stage referred to both
in development and solidarity;
Secondly, looking to the fact that both its continuity as a working principle and the method
of its assessment act disadvantageously, as having a tendency to check the free flow of labour
to the Province;
Thirdly, while not losing sight of the fact that they are recommending a surrender of a
considerable source of revenue, being confident, on the other hand, that that gap can be filled
from other sources to the extent at least that the revenue requires.
Your Commissioners recommend to the Government the abolition of the present revenue tax.
Revenue for year ending March 31st, 1911, $179,052.70. at % of 1 per cent.
Historically considered.
Historically the property-tax, whether of real estate or personalty, marks the next stage in
the evolution of direct taxation, and these two kinds of property, though for the purpose of
taxation they are treated separately, are really identical so far as the principles governing
taxation are concerned, for if the income of an individual is greater than the cost of living
for himself and family, he must invest the residue in one of two ways, either in improvements
in land or in personal property, including in the latter category stocks, shares, bonds, etc.
The question of improvement in land being reserved to be dealt with later on, it remains
for your Commissioners to express their views with regard to personal-property tax, with due
regard to the financial requirements of the Province.
The general principle may be stated thus, that when society is of an extremely simple nature,
as is the case with the uncivilized communities or settlements in a new land, the.kinds of personal
property are also simple, and therefore it is easy to assess them on some fair basis of valuation.
For instance, in a purely agricultural state it would be a simple matter to assess the values of
animals, implements, and furniture. But directly a community becomes commercial, the forms
assumed by personal property become exceedingly complex, and it becomes correspondingly
difficult to approach to even an approximately fair valuation.
Every trade differs in the amount of stock that is required for its operation. The rapidity
with which that stock has been renewed also varies considerably, and it becomes practically
impossible to "focus" all avocations so as to obtain a just measure of assesment for all.
Therefore, as there is a lack of uniformity in the trades, there must be also a lack of uniformity
in the assessment.
For the same reason it becomes increasingly impossible to reach more than a small fraction
of personal property: the tangible stock pays, the intangible stock escapes. In the United States
it has been stated that in some instances taxes on personal property are paid to the extent of no
more than 3 per cent, of its total value.
There is inherent also in the system of taxing personal? property a distinct inducement to
dishonesty on part of the possessor.
Finally, there is the danger from it of double taxation. Very often in the case of debts the
borrower is taxed on property for which he owes, and therefore does not really own, and the Royal Commission
lender is taxed on
deduction for debt
debts, and therefore to fraud,
personal-property tax.
hich b
ater e
imption for debt.   It leads 1
i of this point shows the ii
} Pe
r Ta:
ur Com
srs found that these a priori considerations were fully borne out by the
evidence brought before them. The evidence given was almost universally unfavourable to the
continuance of this tax. It was pointed out that, having respect to the fundamental differences
between the characters of different trades and avocations affected by the tax as regards the rapid
or slow depletion and renewal of the taxable stock in hand, and as regards the necessity of
carrying such stock in large or small quantities at one and the same time, it was quite impossible
for an assessor to come to any, even a distantly fair, conclusion as to what would or would not
be a proper charge on such stock.
Statements were even made to the effect that in some trades stock held over from one year
to another were taxed twice over, and the idea that tangible "goods in sight" should be the
principal objects of taxation was condemned.
Others held that it was unfair to charge debts from solvent debtors as liable to taxation,
if, on the other hand, the traders' own liabilities were not exempted.
The tax was furthermore objected to as being unsound in principle, and as acting as a
restraint on trade.
A minority expressed themselves as satisfied with the retention of the tax, if a remission of
50 per cent, on taxable stocks were allowed. Others, again, regarded it as only tolerable, if the
taxes were collected for Municipal, and not for Provincial,, purposes.
It should be added that there was also a considerable feeling that the system of compelling
the taxpayer to make a return of his personal property and also a return of his income on the
same assessment form (No. S), so that the Government might claim the alternative of charging
the taxpayer on the larger amount (section 5a of the "Assessment Act,
undignified and undesirable procedure. Finally, the phraseology of the assessment form (No.
on which returns have to be made was criticized as being obscure, illogical, and insufficie
and a general belief was expressed that in consequence the tax was only fractionally collec
from those who were liable to pay it. Royal Commission on Taxation.
Its imposition, however, presupposes a high standard of social and political morality.
Your Commissioners need not enlarge on the demoralizing effect produced by the habit of
making incorrect returns of income. But they have too firm a faith in the integrity of their
fellow-citizens to suppose that any such low standard of probity exists in the Province of
British Columbia as would deter them from following out the natural evolution of fiscal policy,
and recommending that the personal-property tax should give way to a tax on income. It may
be added that this latter tax possesses one strong advantage over other taxes (and especially
over the so-called single tax) in the fact that it is very elastic.
And here a brief sketch of the history of the income-tax in the Mother-country may be
useful, when the policy of its continuance in this Province is being considered.
Originally imposed by Parliament during the Civil War of 1642, when funds were needed to
resist the Crown, it was levied again in 1798, when the war with France was being waged; it
was afterwards dropped until 1842, when Sir Robert Peel imposed it to counteract the effects
considered likely .to arise from the abolition of the Corn Laws. Ever since it has remained part
of the English fiscal system, and the fact that (though originally raised as a temporary war
tax) it has remained on the statute-books in England for seventy years and has never been
repealed is in itself an evidence that it has been regarded by the greatest business nation of the
world as being the least objectionable and on the whole the fairest form of direct taxation.
It may be remarked in this connection that the income-tax in Great Britain, levied as it is on
a 5-per-cent. basis, yielded in 1909 the sum of $162,000,000 for the use of the British Government.
It may further be added that the serious attention of' statesmen and scientific economists in
the United States has been concentrated for some time past on the question of the income-tax as
being .a means of substituting gradually direct for indirect taxation.*
In recommending the income-tax as the best impost wherewith to cover a wider taxable
area, your Commissioners would, however, safeguard its operation by drawing serious attention
to the imperative necessity of clothing Form No. 8 with a more appropriate and more comprehensive phraseology.
As the form is at present phrased, it would be in their judgment difficult for the ordinary
taxpayer, however honest, to realize clearly on what or for what he ought to assess himself
without the aid of the assessor. The insufficiency of the present form reflects no discredit on
the original draftsman. It is obvious that, with the disappearance of the phraseology appropriate
to the alternative personal-property tax, the phraseology of the income-tax form would in any
case require modification. Your Commissioners would therefore urge the Legislature that expert
draftsmen of the highest calibre should be employed, who should, after study of the phraseology
in use in the Mother-country and other lands, frame such a form of assessment as would cover,
as far as possible, the whole area of taxable income, and render it easy for an honest man
to make a complete return and difficult for a dishonest man to evade payment by anything less
than an intentional fraud.
Your Commissioners have had it unmistakably brought to their notice in the course of
evidence adduced that a large number of persons clearly liable to income-tax have escaped
payment both of personal-property tax and income-tax since the time they were imposed in
the Province, and it naturally cannot but be surmised that their failure to make a return of
income may have.been in the main due to the existence of the alternative between personal-
md income-tax, and partly perhaps to the incompleteness of the machinery of
lent employed.
Your Commissioners now proceed to the evidence which has been brought before them,
and they beg leave to submit afterwards their recommendations. There was a great preponderance of evidence in favour of the retention of a graduated income-tax, but there was practical
unanimity in pressing for a higher exemption than at present obtains, the reason given being
practically the same throughout—viz., the high cost of living in the Province.
have  been   upholders  o
f  the   income-tax.    The  late
lheritanee-tax should re
e'ive the careful attention of
s should be part of ou
system of Federal taxation.
of the proper type would b
a desirable feature in Royal Commission <
Some witnesses of high commercial standing urged exemption for interest on borrowed
capital, not only if (as at present obtains) such interest is paid to a lender or company doing
business in the Province, but also if such interest were paid to capitalists from outside the
Province, on the ground that such exemption would stimulate the introduction of capital into
the Province itself. There was also strong feeling in some quarters that the profits derived
from land-sales should be treated as taxable income.
Another proposal was that the exemption from income-tax should be further extended in
the case of married men in proportion to the size of their families.
Complaints were also heard to the effect that residents in the Province who derived their
income partly or wholly from capital invested in England had been, since 190'9, subject to a
double taxation on their income, i.e., both in this Province and in the Mother-land, the practice
. being there to deduct income-tax at the source, i.e., from dividends due to stockholders. ' It was
pointed out that before 1909 a rebate in the Old Country was allowed on production of proof
that income-tax had been paid in this Province, but that this rebate had been since the date
named abolished.
In the case of income-tax there was an almost universal opinion that, owing to the character
of the phraseology employed in the assessment form (No. 8), the returns could not be properly
made by the most honest taxpayer, and that the Provincial Treasury was deprived of considerable revenue from this cause.
Few taxpayers would, it was alleged, make out a proper return without the presence and
help of the assessor. It was also openly asserted that there was a large minority of cases
throughout the Province where income-tax had not been paid, sometimes for many years, by
those who were clearly liable to it.
After reviewing all the circumstances of the case, your Commissioners recommend—
(1.) That the present exemption from income-tax in favour of a person whose income
from all sources does not amount to $1,000 should be extended to the person
whose income does not amount to $1,500, and that this exemption should extend
to Classes A, B, C, D, and to a redrafted Class E in section 5 of the " Assessment
(2.) That when the (net, not taxable) income of a person exceeds $11,500 add does
not exceed $50,000, the income-tax should be 2y2 per cent., with no exemption,
and that such persons should be grouped under a new class, to be termed Class F:
(3.) That when the income of a person exceeds $50,000, the income-tax should be
2% per cent., with no exemption, and a super-tax of 5 per cent, imposed on the
part of the income beyond $50,000, and that such persons should be grouped under
a new class termed Class G.
The emendations in the " Assessment Act" would then stand as follows:—
Alter Section 4 (20) re Exemption.—The income up to and including $1,500 of every person
whose income does not exceed $11,500.
Alter Section 5 as folloios:—
Class A.—When the income of a person does not exceed $3,000, 1 per cent., with an exemption of $1,500.
Class B.—When the income of a person exceeds $3,000 and does not exceed $4,000, 1% per
cent., with an exemption of $1,500.
Class C.—When the income of a person exceeds $4,000 and does not exceed $5,000, 1% per
cent, with an exemption of $1,500.
Class D.—When the income of a person exceeds $5,000 and does not exceed $8,000, 2 per
cent., with an exemption of $1,500.
Class E.—When the income of a person exceeds $8,000 and does not exceed $11,500, 2% per
cent., with an exemption of $1,500.
Class F.—When the income of a person exceeds $11,500 and does not exceed $50,000, 2% per
cent., with no exemption.
Class G.—When the income of a person exceeds $50,000, 2% per cent., with no exemption,
and also a super-tax of 5 per cent on all income beyond $50,000. Royal Commissioi
3.—It will be observed that for the purpose of drafting, the net income and not the
: income (as in the Act) is quoted.
ur Commissioners venture also to submit three additional recommendations:—
(4.) That a person whose income from all sources, though exceeding $1,500.  does
not exceed $11,500 (Classes A, B, C, D, and E), and who has a child or children
living and under the age of eighteen years at the commencement of the year
for which the income-tax is charged, shall be entitled in respect of every such
■ child to relief from income-tax upon $200.
N.B.—-The  term  "child"   as  here used  includes  a  stepchild,   but not  an
illegitimate child, unless and until after the parents shall have married each
(5.) That (as a special encouragement to a most important industry) a person engaged
in the production of food products should be entitled to an additional exemption
of $1,500 (besides the exemption of $1,500 referred to in the first recommendation), but that this exemption should not apply to any part of such person's
income which may be derived from any source other than the production of food
(6.) Among other ways of rendering more effective the system of securing fair returns
of income-tax, your Commissioners suggest that, in the case of returns from
trading concerns, the profits of three years, in order to form an average, might
be brought into the account, and the sum or product divided by three. If the
trade has not been carried on for three years, but has been carried on (say)
for thirty months, then the average will be the just proportion of the profits
for twelve months, and so on. It will be seen on reflection that such a system
of " averages " would have the effect of leading the trader to spread his gains
and losses over a larger period, and thus render the tax imposed more fair in
its incidence for the more and less successful years respectively.
Financial Effect of Recommendations re Taxation of Persons and Property.
Your Commissioners venture to think that at this, stage of the Report it would be well to
review the effect of the recommendations already made.
The deduction of the revenue tax and of the. personal-property tax would represent the
following loss, supposing the deduction had been made for the financial year ending March
31st, 1911:—
Table A.
Revenue tax   $313,338 00
Personal-property tax    179,052 70
Total    $492,390 70
Your Commissioners, however, are confident that the loss of the personal-property tax
would be more than compensated for by the substituted income-tax. as well as by the increased
and increasing volume of business and the material prosperity throughout the Province generally.
This increased gain is estimated at $200,000.   Deducting, therefore, $200,000 from the loss
under Table A, the figures would stand thus:—
TaUe B.
Loss according to Table A  $492,390 70
Deduct   200,000 00
Net loss   $292,390 70
It has been calculated that the loss resulting from raising the exemption of income-tax
from $1,000 to $1,500 would be $37,500, while the loss from partial exemption for men with
3 would be (say) $10,000—i.e., $47,500 in all.
■_ Royal Commission on Taxation.
Table C.
Loss according to Table B   $292,390 70
Add        47,500 00
Net loss    $339,890 70
On the other hand, the gain under Class F, under which no exemption (as heretofore)
would be made for incomes between $11,500 and $50,000, and the gain under Class G, under
which a super-tax of 5 per cent. (7% altogether) would be imposed on that part of income
which is over $50,000, would, it is calculated, more than wipe off the loss from the increased
limit of exemption and from the partial exemption for men with families.'
Calculating this at $50,000, the figures stand thus :—
Table D.
Loss according to Table C  $339,890 70
Deduct      d0,000 00
Total net loss  $289,890 70
ur Commissioners propose to touch first on land-taxes as i
(d.) The real-property tax;
(e.) The wild-land tax;
(/.) The timber-land tax;
(g.) The coal-land tax;
(ft.) The  mineral-tax;
(i.) The tax on unworked mineral claims.
whole, and then to i
, Pri
►vincial Government has s
ivately held in fee into tw
fit for
The P
Columbia ]
(1.) Lands for use or occupation; and
(2.) Lands held for an increase in value.
It has also, in imposing rates of taxation, differenti:
according to the use to which they were put.
At present, land held for occupation or agricultural u
cent.; land held as " coal land " on which mines are woi
2 per cent.; land held as " timber land," at 2 per cent.:
only, at 4 per cent.; unworked Crown-granted mineral cla
Your Commissioners desire to draw the attention <
considerations :—
Land held for occupation or use (the terms are si
beneficial purpose. It is true that its owner is turning
indirectly he benefits the community'. It seems to follow
be more lightly taxed than land held for an increase in
It has been argued, indeed, that as a matter of principle
of land for the purpose of taxation, namely:—
(1.) Land of whatever kind, whether such land:
lands actually worked, or tim
held for some purpose beneficii
used for such purpose:
•ding to the r
) divide lands in British
ive which prompted their
i land ought to
nly two classes
jd in connectio
er and to the c Royal Commission on Taxation.
(2.) Land of whatever kind, whether such lands be agricultural, timber, coal, or any
other description, held as an investment for the profit accruing from enhanced
As, however, the revenue is at present arranged, it would seem perhaps premature as a
matter of practical economics to attempt to carry such a general principle into legislation.
Improvements should not be taxed.
Further, it has been argued, again as a matter of principle, that improvements on lands
should be exempt from taxation altogether, and that the basis of valuation for the purpose
of taxation should be the reasonable sale price of the land in a state of nature, due regard
being had in fixing the price to all the conditions as to location, facility of access, fertility,
and so on, that would influence a purchaser. On such a theory it would follow that all land
•of the same class or character would' not necessarily be valued at the same rate, and also
that the use to which the owner may put the land would not be taken into account. One
might put a building on his land; another might grow hay; another might use his" as pasture.
All these uses would be beneficial to the community, but (according to such theorists) they
ought not to be the determining causes of the value of the land. If they were, the value would
fluctuate with the changing uses to which the land might be put from time to time.   '
Further, it has been contended that an improved piece of land should be valued for purposes
of taxation at the same value as a similar piece of unimproved land, but that in valuing the
improved land the value of the improvements ought not to be considered except for the purpose
of arriving at the value of the land itself, and that this true value should be the selling value
of the land subject to deduction for the present value of the improvements thereon. Improvements should include houses, other buildings, fencing, putting in crops, planting of orchards,
draining and irrigation of land, clearing from timber and scrub, laying down in grass or pasture,
and any other improvements whatever, the benefit of which is unexhausted at the time of
valuation. It has been urged that the taxation of improvements, like the taxation of personal
property, would be a penalization of thrift and energy, and ought to be abolished in a community
whose chief aims are progress and the development of all kinds of industry.
Finally, it has been maintained that the exemption of improvements from taxation would
more especially relieve the farmers and the agricultural classes generally, who, in the judgment
of your Commissioners, should be especially encouraged, the prosperity of no other class being
so essential to the best interests of the Province at large.*
Leaving these general considerations, your Commissioners proceed to an examination of
the special kinds of lands, and the rates thereon.
(d.) •
Revenue for year ending March
There was a general agreement
The chief criticism was directed ag
:he real-property tax.
1st, 1911, $352,372.44,
to the fairness of the
st the system of asse
it % of 1 per
amount of tas
The taxable value of land should, according to most critics, be the reasonable sale price,
determined by such considerations as its proximity to centres of population, its natural
advantages as regards climate, fertility of soil, irrigation, geographical features, and the ease
of its productiveness—in fact, everything which a buyer would take into account when making
a beneficial purchase; whereas it was a matter of common observation among witnesses that
the assessment was in many cases based on the amount of improvements effected by the owner.
For example, the expenditure employed in making an arid area fertile by irrigation seemed to
have had the effect of considerably increasing the assessment of that area.
It was pointed out also by a large number of witnesses that the machinery available for
assessment generally was both inefficient and insufficient, and had not kept pace with the
t is
a serious fact that the Province of British Columbia imported nearly $15,000,000 \
produce (including poultry, fruit, etc.) from other Provinces of Canada, and from the
le year 1910. . Commission on Taxatio:
development of the Province; that the assessors had no time to visit the land personally for
the purpose of such assessment, and often had to determine values from second-hand evidence
and from the kind of cultivation to which the land was being put
There was a considerable weight of evidence against taxing improvements and a general
consensus as to some degree of inequality prevailing.
Your Commissioners recommend—
(1.) That the valuation of real property should be brought up as near as possible to
actual value, due regard being paid in assessing such values to proximity to centres
of  population,  fertility  of  soil,  irrigation,  geographical   features,   and  kindred
(2.) That there should be no taxation on improvements:
(3.) That in real-estate transactions there should be an affidavit made at the Land
Registry Office as to the true consideration given for purchase:
(4.) That the registration fee of % of 1 per cent, on the value of real estate up to
$5,000 should be extended to all real estate irrespective of value.
Revenue for year ending March 31st, 1911, $316,130.83.
These, for the convenience of compilation, have been grouped together in the Provincial
Accounts.   Your Commissioners, however, would prefer to deal with them seriatim.
Wild land is defined in the " Assessment Act" as " all land (other than coal and timber land)
claimed by any person on which there shall not be existing improvements to the value, when
assessed, of two dollars and fifty cents per acre, in addition to the cash value of the land itself,
on land situate west of the Cascade Range of Mountains, and one dollar and twenty-five cents
per acre on land situate east of said Cascade Range."
There was a general feeling that in many cases the assessment of wild lands was somewhat
low, and that if a more thorough examination and assessment of " all wild land in sight" were
properly made, and a consideration as to its practicability for agricultural purposes taken into
account the increased assessment might ultimately justify a reduction of the present rate
of 4 per cent., but not otherwise. Here, as in the case of real property, the evidence showed that
the machinery of assessment was somewhat inadequate.
The suggestion was made by some witnesses that a portion of the substantial balance at
present in the hands of the Government could not be more profitably employed than in undertaking a gradual examination and assessment of the land of that part of the Province which
had been settled, or which was proved capable of settlement.
It was pointed out that this would be a capital expenditure which would not recur to any
extent, but at the same time it was urged that there should be an increased staff of deputy
assistants for office-work, which would enable the head assessors of districts to assess lands
after thorough personal inspection.
Some witnesses expressed themselves as being in favour of the appointment of permanent
Equalization Boards.
It was held that the adoption of the above-named recommendations would result in such an
increased revenue flowing into the Treasury as would enable the Government to lighten, or
dispense with, taxation in other departments, and that it would have the collateral effect of
bringing settlers on to the land by preventing speculators " holding up " wild land on the present
system of " flat rate" assessments. Royal .Commission on Taxa-
(1.) Your Commissioners recommend that, in order to obtain a just assessment of land, the
staff of assessors should, as many witnesses suggested, be increased, and that the assessors thus
appointed should be experts on various kinds of land to be met with in the Province, e.g.:—
(a.) Timber land (see below):
(6.) Dry areas:
(c.) Non-irrigable lands:
(d.) "Delta" lands.
Your Commissioners venture to point out that the cost of this increased machinery would
far more than repay itself in the increased valuation both of lands held for use and' of lands
held for an increase in value, a large percentage of the latter and a smaller percentage of the
former being at present, according to many witnesses, taxed too low.
(2.) The Commissioners also recommend, in accordance with the evidence given, that a
gradual examination of land of certain sections of the Province be undertaken (maps being
at the same time made of districts where none at present exist), and that the cost of such
examination might legitimately be regarded as a capital expense.
They beg leave to point out that in their judgment such an assessment and such an examination might be found to justify as their ultimate result the lowering of the present tax of 4 per
cent, on wild land. They cannot, however, advise a reduction in the present rate until the
assessment has been undertaken and the financial results proved.
It may be here observed that some witnesses suggested that the minimum value of all wild
lands should in future be the Government selling price; but this proposal assumes that all lands
purchased from the Government have been acquired at the present (increased) minimum price
of $5 per acre, which is too high an estimate. With such qualifications as is necessary to meet
this difficulty, your Commissioners are disposed to think that the suggested minimum would be
fair, this minimum to be increased to such an extent in each case as circumstances warrant, so
as to bring the value up to the correct sale price.
(3.) Your Commissioners recommend that the regulation which at present prescribes that
wild lands situate west of the Cascade Mountains shall be classed as improved lands, when
improvements have been made thereon to the assessed value of $2.50 per acre, should extend to
land situate east of the Cascade Range, when it is also situate to the north of the 53rd parallel
of latitude.
Two per cent, upon assessed value.
Timber land is defined in the "Assessment Act" as "all land owned, leased, held under
licence, claimed, or occupied by any person for the special purpose of cutting or removing
timber therefrom, or which is held as an Investment for the accruing value of the timber
growing thereon, and which is not held for any other purpose, and which averages at least
5,000 feet of merchantable timber to the acre."
The evidence with regard to the timber-land tax was voluminous, but its range was chiefly
concentrated on the question of values.
The 2 per cent, on assessed value was generally supported, though those advocating the
" single tax " expressed a desire to tax timber land, as well as all other natural resources, more
heavily than at present, so that they should bear the whole expense of the government of the
Province. No very definite complaint was adduced on the question of the royalty paid for
timber (board measure).
Lumber representatives were generally of opinion that all holders of timber leases and
timber licences ought to contribute towards the expenses of fire protection in proportion to the
area of stumpage, and that there had not been much disposition shown by some owners of such
lands hitherto to safeguard their timber limits against fires.
Others advocated the appointment of a Fire Commission, as in Idaho, where large proprietors
form part of the Commission, and establish patrols. vituesses commented strongly on the depletion of timber in the Provii
extravagant or careless felling and destruction by fire combined.
It was pointed out in connection with this matter that, if the tax on timber land were
lower, there would be less temptation to cut down timber so fast as is being done, the general
practice being at present (according to these witnesses), on account of the higher rate, to fell
the best timber, and then to give up the licence or lease.
Others were in favour of a lower rate of licence and increased royalties, for the reason
above given—viz., that the present rate tempts the logger to cut the best part of the timber
and then surrender the lease or licence. Others held that the land should be taxed on stumpage
basis and not on royalties: There were also some statements to the effect that the $140 licence
fee on timber acreage in the Coast districts and the $115 fee in the Interior districts were
respectively too low and too high compared with the relative value of the timber in the two
regions.   Witnesses, however, were not altogether in accord on this point.
ere also made to your Commissioners that, for the prevention of waste of a
valuable natural resource, permission ought to be granted to the owners of timber limits to
export logs suitable for piles, poles, and posts, and railway-ties. It was explained that in
the process of cutting saw-logs much smaller timber, for which a market could be found abroad,
3 necessarily thrown down, and that, if operators were permitted to export these, the danger
of destruction of forests by fire would be greatly diminished, employment would be given to
more labour, and a substantial addition would be made to the revenue. The last-mentioned aspect
of the case is the reason why the Commissioners bring the subject under the attention of the
Government but without making any recommendation, since the question of policy involved does
not appear to lie within the scope of their instructions.
On the whole, your Commissioners are not prepared, after reviewing the evidence at their
disposal, to suggest any modification in the existing legislation regarding timber lands and
timber holdings, and refer the question of fire protection to the consideration of the Govern:
Having regard to the important interests already involved, and to the fact that the frequent
discovery of new coal-areas is likely to form a marked feature in the future development of
the Province, your Commissioners took special care to invite the views not only of those interested
g industry, but also of the general public as consumers.
With regard to the latter, there was a general expression of feeling that the cause of the
great disparity between the cost of producing coal and the cost to the consumer should i
the attention of the Government.   It was pointed out that the cost to the consumer was a1
double the price of the coal at the pit's mouth, and that even after deducting the cost of fi
and the r
mouth and the 1 Royal Commission on Taxation.
aiding March 31st, 1911, $91,038.43,
In, approaching this subject, your Commissioners are conscious that the situation is a difficult one on account of the somewhat unusual conditions now obtaining in the mineral, and
particularly in the copper market, and the low prices prevailing; though, whether this condition
is likely to be permanent or transient, it is beyond their knowledge to estimate, as it is beyond?
tbe scope of the Commission to inquire.   They proceed, therefore, simply to set forth the evidence-
I thei
It should be explained, however, beforehand that the tax of 2 per cent, is at present levied
on the gross value of the ore as per smelter assays, deducting therefrom all charges incurred
between mine's mouth and market—i.e., cost of transportation, of treatment, of refining, of
insurance, of selling, etc.; in other words, the taxable value is the profit plus the cost of bringing
the ore up to the mine's mouth.
Witnesses were almost unanimous in their contention that, while the tax, according to-
system at which it is at present levied, may be fairly paid by mines producing high-grade ores,
yet it works a positive hardship on mines which show only a very small margin between smelter-
returns and the cost of production. Evidence was forthcoming in one case that it worked out
to about 10 per cent, on the net returns of the ore.
Some witnesses urged that the tax, owing to the unfavourable condition of the metal market,
might be suspended for a period of years, and expressed their belief that such a policy would
stimulate the industry. As an alternative, it was proposed that either the ore should be taxed
at % of 1 per cent, on the recovered value of the ore, or else that the mines should pay an.
It was pointed out with regard to the silver-lead industry that it was paid a bounty by ■the
Dominion Government, and that it was illogical that an industry so fed should be taxed by
the Province.
imissioners, on a careful review of all the
rd the Act imposed on minerals.
i for the year ending March 31st, 1911, $42,020,84, at 25 cents per acre.
Very scanty evidence on this taxiwas brought to the attention of your Commissioners.
Practically the only suggestion made was that the land so held should be treated as wild land,
and assessed-at 4 per cent, on its assessed value. Royal Commission on Taxa
3 adduced before them, your Comn
, Efi
5 Ta;
r Lands /
) of Natubaj
Having now taken under their survey the land-taxes and the taxes on natural resources,
it remains for your Commissioners to resume their estimate of the financial effects of their
recommendations as regards the six taxes surveyed in their Report.
(1.) They are of opinion that a more complete and accurate reassessment of the land
in the Province by an increased staff of assessors might, so far from entailing
loss to the Treasury, bring in sufficient revenue not only to cover the expenditure,
on the improved machinery employed, but also to justify the Government after
a year or more in lowering the rate of taxation now imposed on all classes of land.
(2.) They are of opinion that the imposition of a flat rate of y5 of 1 per cent, on the
registration of all real-estate transactions would result in a large gain to the
(3.) They see no reason to estimate the loss to the Treasury by the relief from
financial burdens which they have proposed in the various classes of taxable
property to be greater than that arrived at in Table D, i.e., $289,890.70—say, in
round figures, $300,000.
Revenue for probate  fees  for year  ending  March 31st,  1911,
succession duty for year ending March 31st, 1911, $200,459.SS.
Difference between the Two explained.
Your Commissioners have thought 1
not only on the ground that they both
of the owners, but also because there :
together form a " double tax."
By the " Fi
with the old ":
"estate duty."
Whether or not the time is ripe for a similar merging of the two
Columbia, your Commissioners are not prepared to advise.
Nor do they propose to offer any suggestion as regards the modifi
that these two taxes should be treated together,
1 that they both affect estates at a specific period, viz., on the decease
3 because there lingers in some people's minds the idea that the two
Act" passed in 1894 by the Mother-country, these two taxes, together
duty," " legacy duty," and " estate duty," were merged into one new
i the Province of British
tion of the probate fees.
Succession Duty:   its Chaj
They desire also to add that no evidence, as far as they are aware, came before them as
to any unfairness in the present succession duties.
Furthermore, they realize that any revenue derived from such a source must be of an
extremely fluctuating character.
Nevertheless, as was pointed out by the Surveyor of Taxes in a letter written to the late
Minister of Finance, the tax is of a sound constitutional character, "violating no principle
-of economic science, inflicting no hardship on the owner during his lifetime, and adding no
burden to the poor man at his death "; nor, again, has its imposition brought in its train any
obvious tendency " to drive away capital for investment in the countries where inheritance
■duties exist."
Your Commissioners, however, are of opinion that the tax should be for revenue purposes
only, and not levied as a penalization of large fortunes.
——:- Royal Commission <
The followin
ovince, and Jit
$5,000 and under	
$5,001 to $25,000	
$25,001 to $100,000	
$100,001 to $200,000	
$200,001 upwards (to $400,000)
($400,001 and upwards) .
lr Commissioners suggest the following increases:—
(1.) That in the case of an estate valued at between $100,001 and $200,000, the rate
should be increased from 5 per.cent, to 7% per cent, if the estate pass (or so
much thereof as so passes) to any person under Class B, and from 10 per cent,
to 12% per cent, if the estate pass (or so much thereof as so passes) to. any
person under Class C:
(2.) That in the case of an estate valued at between $200,001 and $400,000, the rate
should be increased from 5 per cent, to 10 per cent, if the estate pass (or so
much thereof as so passes) to any person under Class B, and from 10 per cent,
to 15 per cent, if the estate pass (or so much thereof as so passes) to any person
under Class C:
(3.) That in the case of an estate valued at between $400,001 and upwards, the rate
should be increased from 5 per cent, to 7% per cent, if the estate pass (or so
much thereof as so passes) to any person under Class A, from 5 per cent, to
10 per cent, if the estate pass (or so much thereof as so passes) to any person
under Class B, and from 10 per cent, to 20 per cent, if the estate pass (or so
much thereof as so passes) to any person under Class C.
:nerai. Principles of taxing Bani
> the question of the taxation
Before entering into the question of the taxation on banks in
question your Commissioners called for evidence during their pro;
certain preliminary remarks seem desirable.
It has been laid down by an eminent political economist that b
British Columbia, on which
gress through the Province,
j be divided into
(1.) Money;
(2.) Capital;
and that it is from " money " that revenue may best be obtained; whereas the trade in capital
seems comparatively unsuitable for intervention by  Government with the view  of raising
revenue.   It is difficult, indeed, to see how any substantial revenue could be expected from bank
capital, unless there were Government inspection.
Such inspection has been from time to time demanded in  Canada, but has not been
inaugurated, partly  (it is said)  on account of the difficulty of arranging any practical plan,
, the proposed alterations
the above r
Royal Commission on Taxa
Department of the Domini
;y of bank-examination,
connection that the brand
and partly because the Finan<
way to undertake the responsib
It may be observed in th
Canada presents problems in
distinct from those with which Governments are confront
of (some) comparatively small banking institutions, as is
America (where there are more than 22,000 banks), or wh
case in Russia or Sweden.
With these general observations, your Commissioners
the Government to the practice prevailing in this Provinc
Provinces of the Dominion.
Banks in British Colum
enture to direct the attention of
as compared with' that in other
Banks in British Columbia at present contribute to the Provincial revenue by the payment
of a fee of $1,000 for each head office and $125 for each branch office in the Province. This
is in addition to any taxes paid upon real estate within the municipalities where the banks
are established, in respect to which they are upon the same footing as other business houses
or individuals. The sum at present paid to the Provincial Government is more in the nature
of a licence fee than a tax, and it bears, of course, no relation whatever to the amount of
business transacted by the banks. Hence it sometimes happens that a bank doing a relatively
small amount of business may pay as much, or even more, to the rt
a large business.
In some of the other Provinces the banks are taxed either Provin<
the amount of their business. From evidence submitted to them j
learned that:—
than a bank doing
i in Halifax.
In Halifax, Nova Scotia, each bank pays a fee of $1,000 j
upon the average volume of business done, including all loar
and savings deposits. The minimum so payable is $750, and a
and taxes by paying $3,000 yearly.
in New Bbi
pay fees to the Provincial Go1!
\ In St. John, N.B., a municip;
J of business done, as in Halifas
rnment, which are graded,
. tax of 1/12 of 1 per cent.
i in Prince Edwa
In Prince Edward Island there is a Provincial tax upon the avera;
done, as in the case of Nova Scotia and New Brunswick, of 1/15 of 1 per
of $1,000; but if the average volume of business done exceeds $2,500,0i
1 per cent., with a minimum of $1,600. There is a municipal licence ft
this Province.
Banks in Quebec and Montreal.
In Quebec the Province collects $100 on every $100,000 of paid-up
and $50 on every $100,000 in excess of $1,000,000, and licence fees vai
head office to-$30 for certain branches.
In Montreal a special licence of $600 is exacted from each head c
branch.   In Quebec City the municipal licence is $1,000, with $200 foi
! per
similar tax of 12%.   These tax
i the :
i additioi
to the Royal Commission on Taxation.
r Ont
In Ontario the Province collects a tax of 1/10 of 1 per cent, on the paid-up capital up to
$2,000,000, and $25 on every $100,000 of capital over $200,000, and not in excess of $6,000,000.
A licence fee of $100 for each head office and $25 for each branch is exacted.
In Manitoba, Saskatchewan, and Alberta the only Provincial taxes are by way of fees,
varying from $800 in the case of head offices in Manitoba to $25 in Saskatchewan for each
branch over eight.
and e
ioners from those representing banking interests
it appeared to be beyond dispute that the deposits
le loans made within the Province, and that the
where. In view of this, it seems not unreasonable
i tax bearing some relation to the volume of business
The evidence derived by you:
was not, as a rule, full or illumini
in the banks of British Columbia
surplus is loaned in Eastern Canac
that the banks should be required to pi
done, as is the case with commercial and industrial houses. Difficulties have been experienced
in ascertaining the income of banks doing business in this Province, and it is obvious that it
must always be largely a matter of book-keeping to differentiate locally between the various
items of a bank's income. Therefore the only method of levying equitably a tax in proportion
to a bank's share of the business of the community would be to impose it upon the gross average
amount of its business, including therein both loans and deposits, the gross average to be
computed upon the monthly totals (as in Nova Scotia and Prince Edward Island).
After taking into consideration the practice prevailii
the existing conditions of British Columbia, your Commi
to the present annual flat rate of $1,000 on each head c
there should be imposed an additional rate of 1/15 of 1 i
of business done, including both loans and deposits, the
the monthly totals (as expressed above).
in other Provinces of Canada and
ioners recommend that, in addition
ice and $125 on <each branch bank,
r cent, on the gross average amount
;ross average to be computed upon
Before bringing their Report to i
general, and particularly the financial,
General and Fin^
c. Efe
f Recommendations.
(1.) They have been uniformly impressed with the rapidly increasing prosperity of
the people, and the potential and actual, explored and (indisputably vaster)
■ unexplored, wealth derivable from the natural resources of the Province.
(2.) They realize at the same time that, while the revenue is in consequence expanding,
the expenditure must for many years to come be expanding in at least an equal
(3.) In making, the financial recommendations set forth in the foregoing Report, they
have taken the above-mentioned factors into their serious consideration.
(4.) They have come to the deliberate opinion that a substantial remission from
taxation can safely be effected without imperilling the solidity of the Provincial
Treasury, and they have proceeded on the principle that any " surplus not proved
to be needed by the Province should be left to fructify in the pockets of the
taxpayer," more particularly when a balance so left is likely, in a new country,
to be used in some form or other for the exploitation of the Province. Royal Com mis
(5.) They are of opinion that the abolition of the revenue or poll ti
to $313,338.00 for the year ending March 31st 1911) would
principles of political science, a substantial relief, and one
ment could best afford to remove.
(6.) They believe that the abolition Of the personal-property tax
improvements on land" would be largely compensated for
of income-tax for personal-property tax, aided by the natural
tion and the rapid accumulation of wealth by the citizens c
(7.) They are further of opinion that the proposed extension of th<
would be also largely counterbalanced by its readjustment, in 1
prosperous citizens.
(8.) They desire to emphasize again very strongly the need of altei
under Form 8 to suit the altered conditions through the abclil
property tax, and not only the need of altering, but also of r<
ology more clear and comprehensive to the mind of the taxpaj
that if this were done it would result in a substantial gain 1
(9.) They are further of opinion that the proposed extension of th
in the income-tax would be at least counterbalanced by the 1
on Class F and Class G under the proposed alterations.
(10.) They desire also to draw the attention of the Government
their calculation under   (6),   (7),   (8)   as  to  the amount
compensation for the loss of the revenue tax and personal-pi
too high, there would still be, as a reserve fund, an increas
in the Dominion subsidy through the increase of population
(about 390,000* as against 17S,657 in 1901).
(11.) They are convinced that a gradual examination and a more
of certain sections of the lands of the Province  (which can
an increased number of assessors and a machinery more ads
and future development)   would lead to  such a  solid adji
thereon as could not but be of economical advantage to the revc
All of which, together with a transcript of the Stenographer's notes o:
the Commission, is respectfully submitted.
x (which a
* The total i
f the
Dated at Victoria the 19th day of Jan
a Otta\
s De
W. H. MALE Royal Commission on Taxation.
iich were strictly within
of the foregoing Report,
vidence on the following
10 came from Toronto for
;oard of Trade at Victoria,
arsons who gave testimony
collecting money du(
The Government
of, so that there she
of the Dominion and
rorking of the " Companies Act." Some
and some evidence was brought to show
Irawn their agencies. Part IV., sections
or the licensing and registration of extra-
11, making provision for process against
nimadverted upon.
he Canadian Manufacturers' Association
tie as that of British Columbia, and that
pany if a mail order be sent to stores in
registered extra-provincial company from
ssioners to modify the clauses complained
gislation between the different Provinces
)f the Empire, and it was contended that
some particular case to test the question
one result might be a retaliatory policy.
>r were made by the Victoria Board of
pointed by the Board that the restrictions
Dvincial companies desirous of trading in Royal Commission on Taxation.
British Columbia, were not placed on Individuals, partnerships, or unincorporated associations.
Their committee had recommended as follows, and passed on the recommendations to your
"(1.) That  the British  Columbia   'Companies  Act'  should  be  amended  so  that  its
provisions should not go further than the British Act of 190S, which only requires
a foreign company to register if it has a place of business in the United.Kingdom,
registration not being necessary if it does business by correspondence or through
" (2.) That a company domiciled in the Province should be required to file with the
Registrar of Joint-Stock Companies only such information as is required in section
274 of the ' Companies Act' of Great Britain, and that the fee for such registration
should be nominal :
" (3.) That sections 110 and 111 of the British Columbia 'Companies Act' should only
apply   to   a   licensed   or   registered   company in respect to property in British
" (4.) That no obstacles should be placed in the way of extra-provincial companies recovering just debts in the Courts of British Columbia."
Your Commissioners do not regard it as within the scope of their inquiry to make any
suggestions or recommendations with regard to the above-mentioned criticisms, but merely
refer the evidence in its entirety to the consideration of the Government.
Various questions, some of which, however, were beyond the scope of the Commission, were
raised by witnesses in the different places visited.
Most of these questions consisted of complaints on the part of individuals who felt themselves aggrieved by apparent inequalities in the operation of the law—such as, their taxation in
unorganized school districts when they had no children to send to school, or when they lived
too far away to take advantage of school opportunities.
Some criticisms reflecting on the alleged extravagance and high rate of school taxes in
certain municipalities were listened to, but were adjudged to be beyond the scope of the
There- emerged, however, a fair amount of evidence advocating a change in the system
which prescribed the paying-over of the amount collected for other school purposes, over and
above the sums provided by the Province, in rural school districts to the Provincial Government,
and the delay in the return of such moneys coincidently with the payment to the district of the
Provincial subsidy, which delay involved arrears of payment on the part of the rural school
It was pointed out also that residents in municipalities did not pay any personal-property
tax to the school authorities, since such tax is payable as a Provincial tax only.
The "other school purposes" referred to include (section 49) the further payment of
teachers' salaries, the purchase of school lands, the erection of school-houses, ete. It was pointed
out that in many unorganized districts the sums so voted by the rural school trustees were
often so small that when assessment was made on the ratepayers the fractional sums (as little
in one or two instances as 4 cents) were swallowed up in the cost of collection.
Your Commissioners do not regard it as within the scope of their inquiry to make any
suggestions or recommendations with regard to the above-mentioned criticisms, but merely
refer the evidence in its entirety to the consideration of the Government. Royal Commission on Taxa:
(Amended 1908.)
A somewhat important point arose in the interpretation of section 6 of this Act, in connection
with district assessments under school law.
Section 6 provides that " the land occupied and claimed as the right-of-way by any railway
company, and the railway with the personal property and income of the company derived from
its railway, and its rolling-stock, shall be assessed and taxed as a whole as real property, and
the assessed value shall be at the sum of ten thousand dollars per mile and fractions thereof of
the track of the main line and branches of the company."
Section 65 (6) of the " School Act" runs as follows: " In estimating the value of railways
and railway property, the real estate of such railways, including the right-of-way and improvements thereon, shall be estimated and valued on the same basis as other real estate in the
neighbourhood, and such plant and personal property of the railway as is usually found within
the school district shall also be valued and assessed therein."
Commissioners were informed that, notwith-
i in section 6 of the "Railway Act," which
:sonal property derived from its railway, and
of the whole railway system, yet assessment
le interpretation or misinterpretation
of section 65 (6) of the "School Act") has been treated as if (to use the expression of one
witness who gave evidence on the point) the railway's lines were " so much scrap-iron."
According to evidence received by them,
standing the principle of assessment as laii
treats " railway land, and the railway with
its rolling-stock," as an organic and necessai
of railway property in various school districts (thn
Your Commissioners do not regard it
recommendations with regard to the above
Government to this alleged discrepancy, wi
regard to the loss of revenue to the schoo
on the point, possibly with the view of fixin
as within t
mentioned «
:ope of their inquiry to make any
nee, but draw the attention of the
lquiry into the matter and (having
amendment or authoritative ruling
it rate per mile for school purposes.
The "Assessment Act, 1903," section 4 (3), runs as follows:—
("The following property shall be exempt from assessment and taxation, that is to say:")
..." Every place of public worship and all lands used exclusively for public burying-grounds
or cemeteries not exceeding five acres, and the personal property and income of such public
burying-grounds and cemeteries, when such personal property and income are used wholly for
burial purposes, but not otherwise."
The "Municipal Clauses Act, 1896," section 170, exempts: "(1.) Every building set apart
and in use for the public worship of God. (2.) Every burying-ground in actual use as such,
and every cemetery." ,      ^      ,       1t-.      ^
Certain municipalities have now exempted buildings from taxation, throwing all taxation
on land, thereby increasing the rate of taxation upon the land upon which churches stand. Royal Commission on Taxation.
This question was raised in several places during your Commissioners' progress through
the Province, and the evidence as adduced was found to be largely in favour of the exemption
of a certain limited area of land on which the place of public worship stands, though there
were some opponents of the principle.
Deputation of the Clergy.
The matter culminated in a deputation composed of clergy and laity, some of whom were
representatives of the Ministerial Association, and included also Anglican, Roman Catholic,
Presbyterian, Methodist, and Congregational clergymen, who were uniformly in favour of
exemption. It is right to mention that the Baptist denomination, which is said not to be in •
favour of exemption, was not represented.
It was urged by these representatives that the religious communities, unlike ordinary traders,
had not built, nor were they maintaining, their churches for the sake of profit, nor were they
gaining any revenue therefrom except free-will offerings; that the existence of the churches
tended to the preservation and promotion of law, order, and morality, and thereby effected a
saving in the cost of affording protection to society; that the taxation of the ground on which
they stood would have the effect of driving the churches to the outskirts of a city, and that the
existence of a church had the direct result of raising the value of the land and houses in its
immediate neighbourhood.
Witnesses were practically unanimous in admitting that the exemption should extend only
to a limited area beyond that on which the church stood, though some urged that the exemption
should include the ground on which Sunday-schools stood, always provided that such school
buildings were not used in any way for the purpose of profits-—e.g., as places of entertainment
where payment was made.   Moderate limitations of area were defined by several of the witnesses.
Your Commissioners do not regard it as within the scope of their inquiry to make any
suggestions or recommendations with regard to the above-mentioned criticisms, but merely
refer the evidence in its entirety to the consideration of the Government. "I
iK-                                             |d
mm&%gig$&  UBC LAW LIBRARY
This book is for u:3 if!
I        the Law Building ONLY   


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