I. M IMAGE EVALUATION TEST TARGET (MT-3) / O JP: 1.0 I.I 2.5 1^ 1^ Illll 1.8 1.25 Illll 1.4 11.6 V} <^ /] /: C%./ 0-. /A w f '/ CIHM/ICMH Microfiche Series. CIHM/ICMH Collection de microfiches. Canadian Institute for Historical Microreproductions institut Canadian de microreproductions historiques 1980 Technical Notes / Notes techniques The Institute has attempted to obtain the best original copy available for filming. Physical features of this copy which may alter any of the images in the reproduction are checked below. D Coloured covers/ Couvertures de couleur L'Institut a microfilm^ le meilleur exemplaire qu'il lui a 6t6 possible de se procurer. Certains ddfauts susceptibles de nuire d la quality de la reproduction sont notds ci-dessous. D Coloured pages/ Pages de couleur Tl P< o1 fil Tl C( oi D Coloured maps/ Cartes gdographiques en couleur D Coloured plates/ Planches en couleur Tl fil in n Pages discoloured, stained or foxed/ Pages ddcolor^es, tachetdss ou piqu6es Tight binding (may cause shadows or distortion along interior margin)/ Reliure serrd (peut causer de I'ombre ou de la distortion le long de la marge intdrieure) D D Show through/ Transparence Pages damaged/ Pages endommag6es M in UF be fo Additional comments/ Commentaires suppl6mentaires Original copy restored and laminated. Bibliographic Notes / Notes bibliographiques n Only edition available/ Seule Edition dispunible Bound with other material/ Relid avec d'autres documents Cover title missing/ Le titre de couverture manque D D D Pagination incorrect/ Erreurs de pagination Pages missing/ Des pages manquent Maps missing/ Des cartes g^ographiques manquent D Plates missing/ Des planches manquent D Additional comments/ Commentaires suppldmentaires 9 ns la The images appearing here are the best quality possible considering the condition and legibility of the original copy and in keeping with the filming contract specifications. The last recorded frame on each microfiche shall contain the symbol — ► (meaning CONTINUED"), or the symbol V (meaning "END"), whichever applies. The original copy was borrowed from, and filmed with, the kind consent of the following institution: Library of the Public Archives of Canada Maps or plates too large to be entirely included in one exposure are filmed beginning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les images suivantes ont 6X6 reproduites avec le plus grand soin. compte tenu de la condition et de la nettetd de I'exemplaire film6, et en conformity avec les conditions du contrat de filmage. Un des symboles suivants apparaTtra sur la der- nidre image de cheque microfiche, selon le cas: le symbole — ► signifie "A SUIVRE", le symbole V signifie "FIN". L'exemplaire filmd fut reproduit grfice d la g6n6rosit6 de I'dtablissement prdteur suivant : La bibliothdque des Archives publiques du Canada Les cartes ou les planches trop grandes pour §tre reproduites en un seul clichd sont filmdes d partir de I'angSe supdrieure gauche, de gauche d droite et de haut en bas, en prenant le nombre d'images ndcessaire. Le diagramme suivant illustre la mdthode : 1 2 3 t 1 ■ 2 3 4 S 6 di 01 be nt m cc xn re ac pr in pr th sh ha dii ini be Ihi pr po T 1 ) e \i u s i 11 c:" s B "P ei x . (Reprinted from the Ottawa Evening Journal ui Jan. 22, i8yi.) What is it ? ' " " ^ And what is the occasion which has given rise to it ? '. These questions naturally suggest themselves to the readers of Thk Journal who have been fjlluwing the proceedings of the City Council during the past few weeks. Naturally, we say, because any change in our system of inunicipal taxation, so sweeping as that proposed, should be sustamed by very strong reasons to justify its agitation. Some three or four weeks ago the desirability of adopting a " busi- ness tax " was brought up in the council by Aid. Henderson, and on motion was referred to the finance committee for consideration. The committee reported at the meeting held on the 1 2th instant, recom- mending that the system be adopted in Ottawa and stating briefly the reasons which had influenced them in coming to this decision. On account, however, of some of the members of the council not being prepared- in view of the novelty of the subject--to pronounce upon it intelligently, the report was withdrawn for the present, but will most probably be re-introduced at an early date. In view of this position of the matter, we propose briefly 10 reply to the questions |)ropounded and shall deal with the second one first, viz., '• What is the occasion which has given rise to the proposed tax ?" IHK OCCASION. I. linefly speaking, it springs from the present unsatisfactory con- dition of the law relating to the taxation of personal property and income. That taxation in some shape or foini is inevitable and that all benefitting by the expenditure of public moneys have a right to bear their fair proportion of its burdens, are principles admitted by all. The I>rinciples are .sound, but their practical application from an equitable l)oint of view is not s(j sim|tle, as we know of no country in whirh the question has been satisfactorily settled, or in which great conflicts of ''K o|)inion on the subject do not exist. In (ireai IJritain, municipal taxa- tion is levied on real property alone. The taxation of personal property has no existence there, and the income tax exists only for state pur- poses. This was not always the case. I'or some centuries the national revenue was raised entirely by a tax on personalty, but as the values ot such property inc reused, as the nation became more wealthy, the system^ gradually became im[iracticable, until at length it was abandoned en- tirely, and now such a tax, either for national or municipal purposes, is unknown. In the United States and in Canada we follow a different system, and instead of being content to learn frotii the experience of the mother country, we are endeavoring to solve the problem of, " how best to levy municipal taxation," for ourselves. The result would seem to be, as admitted by all who have given careful attention to the subject, that no other conclusion can be come to but that arrived at by Clreat Britain years ago, that any system of taxation of personal property is impracticable. Impracticable because the property cannot be reached, and because the attempt to reach it gives rise to a system of fraud and deceit which is appalling* to think of. The report of the municipal commission of Ontario does not exaggerate when it states •'That tht total amount \vliicli])crsonal property .and income contribute to the expenditure of a city does not coJiipensate for the enormous amount of falsehood and misrepresentation to which the taxation of that kind of property gives occasion." The testimony is similar in any country in which this tax exists and so totally inadequate is the value reached, in comparison with what should be obtained, that the best authorities on this subject, both in Canada and the United States, advise its entire abolition. It is believed that in cities the value of all personal property at least equals the value of the real estate. In Great Britain it is said to be twice as great and yet how is this borne out by our assessments ? In New York the assessed value of personal property is less than one-fifth of thai of the real estate. In Toronto, Hamilton and Halifax the dis- propriation is about the same, while in Kingston and Ottawa it is very much greater, being nearly ten to one. In St. John, N.B., alone, is the peculiar spectaclp presented of the assessed value of the personal pro- 3 perty and income being greater than that v{ real estate. In view of these facts is it to be wondered at that all authorities on this subject should write as they do ? Is it to be wondered that Henry (ieorge writes as follows : "Taxes on the products of labor, taxes which take the earnings of industry and the aav ingy of thrift away liavt l)egotten and always must beget fraud, cornq)tion and eva.*-ion. All the penalties of the law — imprisonments, fines, tortures and death — have failed to secure their honest and equal collei tion. They an- unjust and unequal in their very nature, aUvays falling on tiie poor with greater severity than on the rich. Their collection always entails great waste and coat, increases the nundicr of ofiice-holders and tlie comiilexity of goverinnent. and compels inter- ference with individual affairs; always checks production, lessens general wealth, and takes from labor and capital their due reward — thestinuxlus to j)roductive exertion, ^h^n naturally evade and resist them, and with the sanction of the moral sense even where their duller intellectual faculties are convinced that such t.ixes are right and beneficial in themselves. There may be prote(^tioni^ts who will not smuggle or undervalue when they get a chance, but I have never met them. There may I'e rich men who make a true return of their wealth for taxation, but they an* very few." Mr. David A. Wells in a report to the New York Legislature says : Oaths as a matter of restraint or as a guarantee of truth in respect to official statements, have in great measure ceased to be effectual ; or in other words perjury, direct or constructive, has Ix'come so common as to almost cease to occasion notice", His opinion also agrees with that of Mr. George when he states "that the richer a man is, the smaller in proportion to his property is the contribution he pays to the state.'' On the other hand, with re- spect to the income tax, it cannot be questioned that persons having fixed incomes and employees of large establishme.its, are generally assessed to the limit of their means allowed by law, while frecjuently the very employers from whom they receive their income, and profes- sional men who earn and spend five or ten times amach, pay little or nothing. We might go on quoting, did space permit, many other authorities, all to the same effect, but have, we think, said sufficient to prove our assertion, that the system of personal property taxation is, to say the least, utterly impracticable and should be wiped out of our statute book with as little delay as possible. To (juote one more authority. Prof. Ely says ; "Although our system of taxation is in the face of it fair and simple, it is found in practice to be an unpracticable theory, for a large portion of property escapes taxation, anti that the i)roperty of those best able t<. bear the burdens of goveriiiuoiit, niinu-ly. tlu' wtmlthy resideiity of cities. . . . it is impossible to Hml till.-, ptopi-rt y, arni to I'uic;,^ mt-n to iiialco ri'tiirns under oath results invariuhly in pcrjurj' and demoralization withf)iit dis- covery of property."" And a^ain tlii- same authority writes; "Tiie tax never has worked well in any modtin community or state in tlie entire civilized worlii. though it. lias In-en tried tiiousands of times and altiioujjh the mental reHOurces of able men have been «)mployed to make it work well'". As a remedy for this state of things JVof. K\y advises that the entire system of taxation of invisible pr()])erty he abandoned and in its stead a business tax based upon property values be imposed. IHi: I'AX. II, This brings us to our Hrst (piestion, namely, "What is a business tax?" — which we will now endeavor to answer. It is not an expermicnt, having been in existence for years both in Montreal and Quebec and having been found to work most satisfactorily. In Montreal the tax is 7^ per cent, on the annual rental, and there is no such thing as assessment of merchandise or intangible property or income in any shape. " It is levied upon all hotel or tavern-keepers, brewers, distillers, merchants, traders, manufacturers, banks, bankers, brokers, or money lenders, auctioneers, grocers, bakers, butchers, rail- way, telephone, telegraph, insurance, steamship companies, managers of theatres; or generally in all trades, manufactures, arts, occupations, and professions. Banks pay a specific amount according to paid up capital. The tax on gas companies, insurance, telegraph and telephone, is also specific. So also with regard to the street railway, which pays a tax of $12,000. On hotels it is also specific, upon a graduated scale according to the rental of the premises. As stated, the system is found both in Montreal and (Quebec to work most satisfactorily and we understand that real estate owners make no complaint against it, because they realize that it assists the business of the city and thereby enhances the value, of their property. With the experience of these cities before us there can be no reason to doubt that it would prove equally efficacious in Ottawa. The law bearing on this subject was j^assed at the last session of the Provincial legislature, acting on the strong recommendation of the municipal con- vention held in Toronto in November, 1889. It came into operation on the first of the present month as a permissive measure, which any municipality may accept by passing a by-law to that effect. Its provi sions are very simple but as the law at present stands are only applicable to persons carrying on a mercantile business. It gives power to the Council of the municipality to substitute in place of the present personal property tax, a business tax in lieu thereof. Such business tax bfeing levied on the aimual value of the i)remises in which the business is carried on, at a rate not to exceed 7^ per cent, on such annual value. It also jirovides for the manner in which the annual value is to be arrived at, namely, by taking the assessed value of the premises and charging the same with 7 per cent. Thus, supposing the council has decided to impose 5 per <.:ent. as a tax to be levied in Ottawa. Given the assessed value of the premises, say $1,000, multiplied by seven equaly $70, which must be accepted as the annual value. The tax being 5 i)er cent., $70x5 equals $3. 50, which would be the annual busi- ness tax on all premises assessed at $r,ooo. On jiremises assessed at $5,000. the tax would be in the same ratio, namely, five times $3.50 or etjual $17.50, and so on a-cording to valuation. The above appears *o Uo lo De a very fair way in which to obviate the difficullic.-i insuperable to the present system and is certainly well worthy of a trial. Indeed the present system is so utterly and radically unsatisfactory that we can hardly conceive of any alteration which would not be for the better and we sincerely trust that when this matter again comes before the council, it will decide to put a new law into oi)eration at as early a date as possible. There ar^ several reasons which suggest themselves as valid grounds on which to adopt the new system. rst. It will greately simplify the work of the as.sessors. 2nd. It will put and end to the inquisitorial inquiries which under the existing law they are compelled to make. 3rd. It will distribute the burden of taxation much more equitably than is or can be done at present and on account of its wide distribution it will fall so lightly in its operations as to be very slightly felt. 4th. It is a step m the direct f abolishing the taxes upon the products of labor and thrift and placing them upon the basis of land values, upon which alone in our opinion taxes should be imposed. To our iiiiiul the drift of public opinion is rnpidly tending in this direction, and the single tax theory at Henry (leorge particularly, in re- lation to municipal taxation has much to commend it. We conceive that no one crin with justice controvert the truths expressed by him in a recent publication, as follows : Tiixes on incoinc an; unjust in natun' ainl cannot he eolleiled fairly. Tuxes on l;t'(|m'sts and inhfiilanrts aic also unjust in nuturi', and would soon Im' evaded wlii-n lar^e amounts were involved. But tlie tax on land values lias pre-eminently the element of Justice. It takes from the indivirlual noi in proportion to liis needsor to his energy, industry or thrift, but in [tro- portion to tlu! value of the sjiecial privilei^e he enjoys. It can be collected with a uraximum of ease and certainty and with tlie mininuun of cost. Land lies out of doors. It cannot be hid or carried off. Its value is always more detinitely known than other value, and a little sign on ever}' lot stating si/e, owner, and assessed value, wttuld enable public opinion to check the assessment. Let us have the business tax and we trust that before long the legislature will see its ways clear to extend its operation to such an extent as will enable all other classes to benefit by it instead of being confined as at present to the mercantile community alone. . I APPENDIX. UET'OKT (*' THK StIH-COMMITTRE OF FINANC;E TO THE FINANCE COMMITTEE OF THE OTTAWA CITY COUNCIL. riENTi.E.MEN, — Your Committee appointed to consider the question of introduction of a busine.ss tax, upon persons carrying on a mercantile busi- n.ess in the Municipality, under the provisions of the amendi-d Municipal Act of 1M9(), in substitution for the ordinary tax upon personal property, beg to report that tliey have given the subject careful eons.ideration and have also advised with the Assessment (Jommissioner, Mr. Pratt, and the Honorable Mr. Bronson. Your Committee are unanimously of opinion that the introduction of such a tax ia highly desirable for the following amongst other reasons : 1. It will greatly simplify the work of the assessors. 2. It will do away with the personal property tax on the mercantile community, which is so ol)Jectionable on account of its in(|uisitorial character and the impossibility of applying it equitably, 3. It will distribute the burden of taxation over a large number who are not now reached ; relieve many unduly burdened and generally prove .■} more equitable system than exists under the o|>eration of the present law. At tht same time your Committee are of opinion, that the Act as it ai present stands is capalile of improvement in so far as it is limited in its ojieration to the mercantile classes. They are of opinion that it would be ig in this ly, in re conceive y him in e