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 SYNOPSIS OF REPORT 
 
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 FULL REPOET 
 
 -OF- 
 
 ROYAL COMMISSION ON LLXATION, 
 
 1911. 
 
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 THEGOVERNIVIENTOF 
 THEPROUINCE OF eRITISHCOLUMBIfl. 
 
 VlilNTED BT AVTUORITT OF 
 THE LEGISLATIVE ASSEMBLY OF BRITISH COLUMBIA. 
 
 VICTORIA, B.C.: 
 Printed by William H. Cdllin, Printer to the King's Most Excellent Majesty. 
 
 1912. 
 

SYNOPSJS OF REPORT 
 
 AND- 
 
 FULL EEPOKT 
 
 — OP — 
 
 Vi 
 
 ROYAL COMMISSION ON TAXATION, 
 
 1911. 
 
 THE GOl^RNMENr OF 
 THE PROl'INCE OF eSITlSH COLlXBIfl. 
 
 I'JtJNTKJ) BY AVTHOIiITT OF 
 THE LEGISLATIVE ASHEMHLT OF ItRITISU COLl'MSLA. 
 
 VICTOniA, B.C.: 
 Printed by Wii.mam II. Cui-lin_, Trliiter to the King's Most Excellent Majesty. 
 
 1912. 
 
J . < ■ 
 
 
 ; » ^ 
 
 Q 
 
 C 
 
To His Honour Tho^mas Wilson Paterson^ 
 
 Lieutenant-Governor of the Province of British Columbia: 
 
 May it please Your Honour : 
 
 The Eoyal 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 
 
 Eeport. 
 
 PEICE ELLISON, 
 
 Chairman of Commission. 
 
 329268 
 
SYNOPSIS OF REPORT 
 
 OF THE 
 
 ROYAL COMMISSION ON TAMTION. 
 
 The following is the synopsis of the detailed Report of the Commissioners, abbreviated for 
 easy reference. The numbers given in and at the end of each section in the synopsis refer to 
 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. Mallvin, Esq., of the City of Vancouver. 
 
 They were accompanied by Dr. H. B. Gray, M.A. Oxon. who acted as Secretary to the 
 Commission, and by Mr. F. M. Ward, who acted as Stenographer. 
 
 They sat for four days in A^ictoria, for four days in Vancouver, and for one day each in 
 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, witli 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 liept pace with 
 the recent rapid development of the Province, and the staff of assessors was considerably under- 
 manned. 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 appoint- 
 ment 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.GG) for the year 1910-1911 in the Provincial 
 Treasury. This surplus, however, for reasons given, is not to be relied upon as suflicient 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 ta.x on natural resources would, even if it 
 were held desirable for otlier reasons, involve a 50-per-cent. increase in the rate of taxation of 
 such resources — i.e., timber, coal, and minerals. (Page 15.) 
 
iB 6 JJOYAL COM>lISSION ON TAXATION. 1912 
 
 Revenue (or Poll) Tax. 
 
 Revenue for the year 1910-1911, $313,33,8.00. 
 ( 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 lG-19.) 
 
 Personal-propeety Tax, 
 
 Revenue for the year 1910-1911. ,$179.0.12.70. 
 
 After a consideration of this tax, principally from an economic point of view, the Report 
 proceeds to show that the evidence was almost universally unfavourable to its continuance, 
 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.) 
 
 Income-tax. 
 
 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.) 
 
 ArPROxiM.\TE Effect of Changes. 
 
 For an approximate estimate of the effect of these changes on the revenue, see full Report, 
 pages 23, 24. 
 
 Land-taxes. 
 
 Revenue for the year 1910-1911, $316,1.30.83.* 
 
 The Report touches on land-taxes, viewed in their historic and economic aspects, and sets 
 forth general considerations why improvements on land should not be taxed, defining at the 
 same time what is actually meant by "improvements." (Pages 24, 25.) 
 
 Real-property Tax. 
 
 Revenue for the year 1910-1911, $352,372.44. One-half of 1 per cent, on assessed value. 
 The evidence showed that the rate of taxation was generally regarded as not burdensome, 
 but some representations wei'e made as to the inequality of assessment, and complaints were 
 brought forward as to the taxation- of improvements. 
 The Commissioners recommend — 
 
 (1.) A periodical reassessment of property according to actual value as defined: 
 (2.) The abolition of tilxation on improvements: 
 
 * The revenues from wild land, timber land, and coal land are classed together as " land-taxes " In 
 the accounts for convenience of compilation, though logically the real-property tax may be regarded as 
 also a land-tax. 
 
2 Geo. 5 Royat. C6m:mission on Taxation. B .? 
 
 (3.) Legislation enforcing registration of real estate on affidavits setting forth the true 
 
 consideration for purchase: 
 (4.) That the registration fee of i^ 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 2~>, 26.) 
 
 .Wild-land Tax. 
 
 Four per cent, on assessed value. 
 
 The Ileport begins by defining " wild laiul " according to the terms of the " Assessment Act." 
 
 The evidence went to show that in some cases 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, desjiite a few objections raised by some witnesses, that the xate 
 should remain as at present fixed. 
 
 The Commissioners, however, bj- way of general recommendation, consider that there 
 should be an Inci'ease in the staff of assessors. 
 
 They also recommend that the regulation which at present pre.'jcribes that wild land situate 
 west of the Cascade Rlountains shall be classed as improvetl land, when improvements have 
 been effected thereon to the assessed value of $2..'">0 per acre, should be extended to land sitxmte 
 east of the Cascade Range, when it is also situate to the north of the o3rd parallel of latitude. 
 (Pages 2G. 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. Con- 
 siderable satisfaction was expressed as to the operation of the present sjystem of fire protection, 
 but some witnesses ventured the opinion that a still more efficient method might be adoptt^d, 
 and that the owners of timber land should share the cost of such fire protection, while others 
 urged the apj)ointmeut of a permanent Fire Commission. 
 
 The Commissioners refer the evidence alluded to in the foregoing paragraph to the con- 
 sideration of the Government. (Pages 27, 2S.) 
 
 CoAL-LAND Tax. 
 
 One per cent, on assessed value on worked mi!ies; 2 per cent, on nn worked mines. 
 
 Many witnesses directed the attention of the Conunissioners towards the disparity between 
 the cost of coal at the mine-head and the price paid by the consumer. 
 
 Appeals to be relieved from 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.) 
 
 Minkrai.-tax. 
 
 Revenue for the year 1910-1911, i?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 alterna- 
 tively a reduction of the tax. 
 
 The Conunissioners do not recommend any change in the tax imposed on minerals. (Page 29.) 
 
 Tax on Ckowx-granted Uxworked Mineral Claims. 
 Revenue for the year 1910-1911. .$42,020.84, at 25 cents an acre. 
 
B 8 Royal Co:\i mission on Taxation. 1912 
 
 Upon the evidence as adduced before them, the Comiuissioners are of oi)inion that this 
 tax IS fair and reasonable. (Page 29.) 
 
 Approximate Effect of Changes. 
 
 For an approximate estimate of the effect of the Commissioners' recommendations on the 
 revenue of the Province as regards the land-taxes and the taxes on natural resources, see full 
 Report, page 30. 
 
 Probate Fees and Succession Duty. 
 
 Revenue for probate fees for the year 1910-1911, $37,294.41. Revenue for succession duty for 
 the year 1910-1911, ?200,459.8S. 
 
 After explaining the diffei'ence between these two duties, the Commissioners suggest the 
 raising of the duty for all the degrees of relationship in the case of estates over $400,000, and 
 ill the two more distant degrees of relationship in the case of estates over $100,000 and $200,000, 
 according to the table displayed in the Report. (Pages 30, 31.) 
 
 Banks. 
 
 The Report, after enunciating certain principles regarding the taxation of banks generally, 
 shows in detail the practice of taxing them in other Provinces of Canada, and recommends a 
 tax, in addition to that imposed at present, of 1/15 of 1 per cent, on " business done," including 
 in this term both loans and deposits. (Pages 31-33.) 
 
 Summary of Report. 
 
 The Commissioners bring their Report to an end by commenting on the development and 
 prosperity of the Province, and the increasing revenue and expenditure attending that develop- 
 ment, as factors affecting the nature of their financial recommendations, and sum up the 
 probable effects of all the changes proposed. (Pages 33, 34.) 
 
2 Geo. 5 Royal Commission on Taxation.' B 9' 
 
 SUMMARY OF APPENDICES. 
 
 APPENDIX A. 
 
 " Companies Act." 
 
 Representations were made to the (^'ouiniission 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 com- 
 panies could not sue for the recovery of del)ts, and that this restriction did not apply to 
 individuals, partnerships, or unincorporated associations. 
 
 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, 3G.) 
 
 APPENDIX B. 
 
 " School Act." 
 
 Certain difficulties in the operation of the " School Act " were brought to the attention 
 ■of the Commissioners, who, however, are of the opinion that this subject also Is outside the 
 scope of their inquiry, and refer the evidence in its entirety to the consideration of the 
 ■Government. (Page 36.) 
 
 APPENDIX C. 
 
 " Railway Assessment Act." 
 
 Certain difficulties with regard to the interpretation of section 6 of the " Railway Assess- 
 ment Act" connected with the assessment of railways muler the "School Act" were also 
 bi'ought 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.) 
 
 APPENDIX D. 
 
 Church -siTKs 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 Conunissioners 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, 3S.) 
 
2 Geo. 5 Royal Commission on Taxation. B 11 
 
 FULL REPORT 
 
 OF THE 
 
 ROYAL COMMISSIOiN ON TAXATION. 
 
 To His Honour the Lieutenant-Governor in Council: 
 
 TERiis OF Reference. 
 
 By Order in Council dated the 14th day of September, 1911, the undersigned were appointed 
 to be Commissioner.s 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. 
 
 Places visited, with 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, 2;jth and 26th September, and at the Court-houses or at the Govern- 
 ment offices at the following places and times :— 
 
 Xanaimo, Wednesday and Thursday. 27th and 2.Sth September. 
 
 Vancouver, Friday and Saturday, 29th and oOth September. 
 
 New Westminster, INIonday, 2nd October. 
 
 Revelstoke. Wednesday. 4th October. 
 
 Golden, Thursday, 5th October. 
 
 Cranbrook, Saturday, 7th Octolier. 
 
 Fernie, Monday, 9th October. 
 
 Nelson, Wednesday, 11th October. 
 
 Rossland. Thursday. 12th Octoljer. 
 
 Grand Forks. Friday, l.'^.th October. 
 
 Princeton, Saturday, 14th October. 
 
 Merritt, Monday, IGth October. 
 
 Kamloops, Tuesday. 17th October. 
 
 Sumnuniand. 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, Sth November. 
 
 Victoria (second meeting). Friday and Saturday. 10th and 11th November. 
 
 Duncan, Tuesday, 14th November. 
 
 Nature of Evidexce. 
 
 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 " 
 
B 12 EoYAL Com MISSION on Taxation. 1912 
 
 was gathered from witnesses in the various places visited on behalf of the manufacturing, 
 mercantile, banking, agricultural, lumbering, coal-mining, mineral-mining, educational, and 
 religious 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 Govei'ument officials, and of many individuals representing 
 different types of industry. 
 
 They have also, as far as time would permit, examined by personal ol>servatiou 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. 
 
 Prosperity of Province. 
 
 And here your Commissioners take leave to point out that they found alnuidant proof 
 of rapidly advancing prosperity side by side with a strong spirit of optimism on the part of 
 the people. Whenever complaints came to the surface, it was observable that they were 
 •complaints regarding the method rather than the amount of taxation ; and in reply to a 
 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. 
 
 Importance of the 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 I'rovince ; 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 Com- 
 missioners 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 lieing based on scientific and ]ierinanent principles, 
 due regard being paid, of course, to the social, economic, geographical, and climatic features 
 of the Province. 
 
 PRELIMINARY PRINCIPLES. 
 
 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," 
 
 The first is axiomatic, and has lieen often quoted — namely, that any attempt to adjust the 
 burden of taxation in any country must proceed on the principle that equality of taxation should 
 be arrived at by contemplating the revenue as a u-hole. The principle of equality is impracticable 
 of execution, and indeed unfair, if amilicd to one tax alone. 
 
 Complaints, therefore, that the operation of one particular tax works unfairly should be 
 met, not necessarily by removing the tax ol)jected to, but by placing the class which it affects 
 prejudicially in a relatively advantageous position with regard to some otiier tax. 
 
 Limitations on the Taxing-powers of the Province limit also the Scope of the 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 
 
2 Geo. 5 Royal Commission on Taxation. B 13 
 
 often able to exiiort their own products free of duty, or with such small duty as enables 
 them to undersell native products, thereby renderinj? 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 imix)sitioii of dircH-t taxation only, so that no supposed inequality resulting from some 
 dircK-t tax in one direction can be .set rif^ht by the imposition of some indirect ta.x in another 
 direction. (3.) By the fact that, on the other hand, the authority delegated to the municii>alities 
 to levy taxes for municipal i)uri)oses may prevent the free exercise of taxinji-power by the 
 Province in some direction along which otherwise it might be fair and obvious to proceed. Thus 
 it will be ea.sily seen that the financial iiroblcni is complicated by this "intermediate" position. 
 
 Terms of Reference. 
 
 Thirdly, your Conmiissioners 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 retiuirements of the Province." 
 
 Incidence of Taxation affected by Condition of Province. 
 
 These instructions have been interpreted by your Commissioners to mean 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 policj' might be relatively adviinlageous in the one ca.se, 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 Polict 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. 
 
 Notwithstaiuling. however, the various limitations on their powers above mentioned, it 
 would appear to be the duty of the Proviiici.il Government, and therefore of your Commissioners 
 acting in an advisory capacity, to endeavcmr to formulate a scheme for raising revenue in such 
 a way as to interfere as little as po.ssil)le 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 t:ix on liipiDr licences would raise the 
 price of alcohol, and by discouraging its consumption thereby produce greater temperance in 
 the conuHiuiity; yet it would not be in accordance with sound principles of political economy 
 to paralyse the consunq)tion of alcohol by imposing a tax of greater severity than would be 
 requircnl for the purpose of revenue. 
 
 * For Instance, nearly lO.'i.OOO.OOO foot of lumber liave been exported from tlie I'nlted States of 
 America into the three Provinces of Manitoba. Saskatchewan, and .Mherta In the last five months at a 
 price less than tlie cost to deliver the tiinher srown in the Province at the I'rovincial mills. 
 
B 14 EoYAL Commission on Taxation. 1912 
 
 FrVE SXJBOEDINATE CaNONS OF TAXATION, UNIVERSALLY ACCEPTED, GOVEKN ALSO THE CONSIDERATION 
 
 OF THE Commissioners. 
 
 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 
 hy 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. 
 
 Surplus not to be begarded as affecting the Principles of Taxation. 
 
 To begin with, it cannot be too strongly emphasized that the fact that there may happen to 
 be a large surplus to the credit of the Province at any particular time, or that the receipts of 
 any particular year may considerably exceed the estimated income, should be regarded as one 
 of temporary significance only, and should not be taken into account in determining the principles 
 of assessment or the incidence of taxation, although it may quite ijroperly affect the rate of 
 taxation for a subsequent year. 
 
 For instance, the estimated receipts for the year ending March 31st, 1911, were $ 7,000,026.66 
 
 whereas the actual receipts were 10.402,802.27 
 
 showing a balance of 3.402,865.61 
 
 But of this surplus nearly two-third.s — i.e., $2,310,783.46 — was made up of (more or less) 
 unanticipated increase of receipts from — (1) Land sales; (2) the Chinese head-tax; (3) the 
 succession duty; (4) registry fees. 
 
 These surpluses could not have been forecast, and the types of taxation from which they 
 accrued are of too uncertain a nature to warrant any scheme of assessment being built upon 
 them. 
 
 Their uncertainty is well shown by the fact that the estimated revenue for the current 
 year is $8,192,101.06, a figure which proves that the Finance Minister in submitting the estimates 
 for the financial year ending March 31st, 1912, counted upon only a normal increase in actual 
 receipts over the estimated receipts for the year ending March JHst, 1911. 
 
 Moreover, the estimated expenditure for the year ending March 31st, 1912, amounted to 
 $11,035,389.75, or a deficit of $2,843,288.69 over estimated receipts, so that the surplus of 
 1910-1911 would be nearly swallowed up. 
 
2 Geo 5 Koyal Commission on Taxation. B 15 
 
 Following a similar conservative estimate, youi* Commissioners have based their recom- 
 meudatioiis on the calculation that the normal condition of British Columbia at the present 
 time, and for many years to come, is likely to he one of gradual (not abnormal) expansion as 
 regards receipts on the one hand, and expenditures on the other. 
 
 DIVISION AND SURVEY OF REVENUE. 
 
 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, etc. 
 (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 reveime 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 3.02S.S6a 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 nuist 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., J?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 Commis- 
 sioners 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. 
 
B 16 Royal Commission on Taxation. 1912 
 
 REVENUE FROM PROPERTY, PERSONS, AND INCOME DERIVED 
 
 THEREFROM (NO. 2). 
 
 The several items iiiuler head (2) are derived from the following sources: — 
 
 (a.) The revenue tax: 
 
 (ft.) The personal-property tax: 
 
 (c.) The income tax. 
 It is proposed to consider these in order, and to make recommendations seriatim. 
 
 («.) THE REVENUE TAX. 
 
 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 arr 
 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. 
 
 Arguments for and against Poll-tax considered economicalia' and historically. 
 
 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 develop- 
 ment 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 }-aison fVetre for such a tax ipso facto disappears. 
 From the point of view, therefore, both of equity and economics, the justification for the con- 
 tinuance 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, the 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 Conunissioners 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 obliga- 
 tions 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 Conunissioners, 
 while it is a notable fact that it has disappeared for other than municipal purposes from the 
 
 * The chocks on Oriental labour are provided by legislation, and a poll-tax would not of course act 
 as any Impediment to such immigration. 
 
2 Geo. 5 Uoval Commission on Taxation. B 17 
 
 Rt.itiitc-books of all tlif r;ui;i(li;iii Proviiues exfpptins Kritish Colnnibia. It can bo shown, more- 
 over, that in all otlu'i- conumiiiitit's where it still exists the eeononiic basis of the poll-tax has 
 entirely vanished; it has had a tendency to become merely and frankly political. Its lineal 
 successor is the property-tax. of which yonr Cnnniussioners will treat in its dne ordei-. 
 
 lOviUKNCi; HKGARmNG RkVENUK TAX. 
 
 Troceedini,' now to the testimony of witnesses, it may be said without exasseration that 
 a larger mass of evidence was fortlicoming as to the desirability of retaining or of abolishing 
 this tax than on nearly all the other taxes ]mt togetlier. 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 
 ou the ground that it taxed a large mimlier 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 I'rovinciul or Mmncipal. should be relieved therefrom. Others suggested that all 
 persons slumld be theoretically subject to the tax, but that its face value might be deducted 
 by the taxpayer when he i)aid other Provincial taxes (say, from .$5 upwards), the receipt being 
 liinned to the assessment form. 
 
 The ojiinion that it should be retained as against the transient eni]»loyee was even shared 
 to some small extent by the ]>ernianent labourer. 
 
 On the other hand, there was a strong objection to the retention of the tax l>y 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 dii'ected to the question of 
 principle. Opposition came not only from rejjresentatives of labour unions, but also from those 
 who appeare^tl 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. 
 
 It was also pointed out that British Columbia was the only Province in the Dominion where 
 such a tax was levied I'rovincially. and that the causes which had led to its original imposition 
 had passed away. 
 
 But the main strength of the objection to the tax centreti on the system employed in collecting 
 it. and on the adojition by the recognized officials of the ])rinciple of payment by commis- 
 sion, which was couiuiented 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 i)ayment in some cases), and to great irritation on the part of those who had to pay 
 the tax by such indirect moans. 
 
 It was pointed out. in connection with the above system of pa.vment (through employers), 
 that those easy to reach (i.e.. emitloyees) paid, while many citizens comparatively difficult 
 to reach escai)ed. 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 hardshii)S. 
 
 Furthermore, scmie 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 jwinted out that the annual amount collected (?31o.33S.OO for the year 
 ending March .'list, 1011) showed that a fair ]iroiiortion of those who ]>ald the tax must be :i 
 floating population. In one district it was calculated that more than 30 per cent, of revenut^tax 
 payers paid no other tax. 
 
 Review of Evidence and Kk.co.mmendation. 
 
 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 t, while the rest of the community should be relieved from its imposition on the 
 
 ground that they pay other taxes, would be bnth unscientific and indefensible, and seems to 
 
 2 
 
B 18 EoYAL Commission on Taxation. 1012 
 
 spring from au underlying feeling of vexation tii;>t some one else shonlrt escape a burden which 
 the objector has to carry. But to tax an individual personally any sum whatever, simply because 
 he has no property to be taxed, seems to your Commissioners to be class legislation of the worst 
 kind. Moreover, such a man contributes to the revenue in three distinct ways: (1) He leaves 
 behind him (even if he talies away some of his wages) the fruits of his labour, which 
 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 irro 
 taiito to the I'evenue of the Province, by s]iending 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 specul;\ting in real estate, 
 or of profit ui)on a business venture, or of anything else. It has jieen argued, indeed, that the 
 ''transient"' workman has the benefit of our roads and the protection of our Courts; but so 
 also has the " transient " tourist who travels for pleasure. The real purpose which those who 
 advocate a poll-tax on the " transient " have in mind is that a person who comes into the country 
 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 pur])o.se is objectionable. The retention of the tax ujiou "'transients'" 
 has not been demanded by any of the witnesses as a protection to white domestic labour. Nor, 
 again, has there been shown any evidence that it is necessary for such a- pur])ose. 
 
 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 
 income. 
 
 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 ail other 
 residents of the country, a personal tax. supposing the revenue of the country from other sources 
 were otherwise insulticient to provide him with the advantages referred to. and why he shoulrl 
 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 ])olitically. 
 
 Your Commissioners snl)mit, 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 Tax, Method of Collection. 
 
 They now proceed to deal with tlie 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 s]iecific tax shall be retained or abolished, specially if 
 it becomes dillicult 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 
 evidence that they had been several years in the country, and yet the tax had never been 
 demanded; on the other hand, the amount collected last year (if313,33S.0U) showed that lU4.44(i 
 persons paid the tax. 
 
 As the tax is levied only on male persons OA'er eighteen, and as the population of British 
 Columbia has been this vear retnrn<>d as about 3!)().()00, it seems to follow that a very consideral)le 
 
2 Geo. 5 Royal Commission ox Taxation. B 19 
 
 proportion is paid iiy workinj; i)eople on account of the ease with which it is collected from 
 them throiijLch their employers, while their wealthier neighbours not seldom escape. This 
 inequality would appear hard to remedy, and yet offends against one of the principal canons of 
 taxation. 
 
 IlKCOMMENDATION. 
 
 To sum up. Firstly, looking to (i 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 lias now advanced considertibly beyond the stage referred to both 
 iu 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 reconnnending a surrender of a 
 considerable source of revenue, being confident, on the other hand, that that gap can be tilled 
 from other sources to the extent at least that the revenue recpiires. 
 
 Your Commissioners recommend to the Government the abolition <>f tb'- i.r<"<.'ii» r.-v.-nue tax. 
 
 {h.) THE PERSONAL-PKOPEKTY TAX. 
 Revenue for year ending March 31st, 1911, $179,0.52.70. at 14 of 1 per cent. 
 
 Historically consideuko. 
 
 Historically tlie property-tax, whether of real estate or personalty, marks ihi- nexi ^<Lage in 
 the evolution of direct taxation, and these l->vo kinds of property, thougli for the purpose of 
 taxation they are treated separately, are really identical so far as the principles governing 
 taxation are concerned, for if the incon>e 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 propertj', including in the latter category stocks, shares, bonds, etc. 
 
 The question of improvement iu 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 reiiuirements 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 iu a new land, the kinds of personal 
 property are also simple, mid 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. P.ut 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. 
 
 Economically and ethically considered. 
 
 Every trade differs in the amount of stock that is recpiired 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 pr()i)erty : the tangible stock pays, the intangible stock escapes. In the United States 
 it has lieen stated that iu some instances taxes on personal property are paid to the extent of no 
 more than P, 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 jiossessor. 
 
 Finally, there is the danger from it of double taxation. Very often in the case of debts the 
 bM-rower is taxed on property for which be owes, and therefore ilot>s not really own. and the 
 
B 20 EoYAL Commission on Taxation. 1012 
 
 lender is taxed on money which he is owed hut lias not yet received. And yet, on the other hand, 
 deduction for debt is a greater evil than c.renii)tion for debt. It leads to creation of Qctitious 
 debts, and therefore to fraud. The citation of this point shows the inherent weakness of a 
 personal-property tax. 
 
 Evidence regaei)i>"o Personal-propekty Tax. 
 
 Yonr Commissioners 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 b.y 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 Municiiial. and not for Provincial, pur])oses. 
 
 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 (Xo. S), so that the Government might claim the alternative of charging 
 the taxpayer on the larger amount (section 5a of the "Assessment Act, 1903"), was an 
 undignified and undesirable procedure. Finally, the phraseology of the assessment form (No. 8) 
 on which returns have to be made was criticized as being obscure, illogical, and insufficient, 
 and a general belief was expressed that in consequence the tax was only fractionally collected 
 from those who were liable to pay it. 
 
 Recommendation. 
 
 Having regard, therefore, both to general principles and to the weight of the evidence 
 received, your Commissioners have no alternative but to recommend strongly the abolition of 
 the personal-property tax, and the sulistitution for it of an income-tax in all cases where a 
 personal-property tax has been hitherto imposed. 
 
 (e.) THE INCOME-TAX (VARIOUS). 
 Revenue for y(>ar ending March 31st, 1911, .$192,924.78. 
 
 Historically, economically, and ethically viewed. 
 
 It is universally conceded that the substitution of income-tax for a tax on jiersonal property 
 or products is the tendency of all States which are passing from a simple and unorganized to a 
 more complex and organized condition. 
 
 It has already been shown that in any but a primitive community the imposition of a 
 personal-property tax becomes unfair and (what is almost equally unpopular) grotesque and 
 ridiculous. 
 
 There seems, on the other hand, solid justification for the assertion of the principle that it 
 is the duty of every citizen to supjiort the Government in accordance with the measure of his 
 capacity to support himself and his family, and his income, though not an ideal test (for there is 
 no absolute test which can take into its survey all the varying circumstances of each individual), 
 is yet the best and fairest test that can be devised. 
 
2 Geo. 5 IJoyai. foM^ri.ssiox ox Taxation. B 1*1 
 
 Its imposition, liowever, presiipposos ;i liigli stniHljinl of social and political nioralitj'. 
 
 Your Commissioners need not enlarge on tlie demoralizing effect produced by the liabit of 
 making incorrect returns of income. But they have too ttrm a faith in the integrity of their 
 felldw-citi/.ens to suppose that any such low standard of iiroliity exists in the I'rovince of 
 British Columliia as would deter them from following out the natural evolution of fiscal policy, 
 and reconunending 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 esi)ecially 
 over the so-called single tax) in the fact that it is very elastic. 
 
 And hero a brief sketch of the history of the income-tax in the Mother-country may be 
 useful, when the policy of its contnuiance in this I'rovince is being considered. 
 
 Originally imposed by Parliament during the Civil War of 1042, when funds were needed to 
 resist the Crown, it was levied again in 17!)'^. when the war with France was being waged; it 
 was afterwards dropped until 1S4-2. 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 pai-t 
 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 coiniection that the inconu'-tax in Creat Britain. levied as it is on 
 a 5-per-cent. basis, yielded in 11)09 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. S with a more appropriate and more compre- 
 hensive 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 insuUieiency of th(> 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 calilire should l.e employed, who should, after study of the phraseology 
 in use in the IMother-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- 
 property tax and income-tax. and partly perhaps to (be incompleteness of the machinery of 
 assessment employed. 
 
 Evidence. 
 
 Your Commissioners now proceed to the evidence which has been brought before them, 
 and they beg leave to submit afterwards their reconnuendatious. There was a great prepon- 
 derance of evidence in favour of the'retention of a graduati>d income-tax. bnt 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. 
 
 * Many omincnt ni-niiMican lo;u1ov.<5 in tlio pnst liavo Ix-cn upholdors of tho incomo-tax. The late 
 Sonator Shornian. of Ohio, niaintainod that it was th.' least inqnisiton:.' and unjust of all tho tiixes. 
 rrosirtont Taft has dechirod in favour of it. and px-Presidont RoosovpU says: " Whon our tax iaw.« 
 are revised, the ouestion of an ineonie-tax and an inlieritanee-tax should receive the careful attention or 
 our legislators. In mv judgment, hoth of these taxes should he part of our system of Federal taxation. 
 .V graduated income-tax of the proper type would be a desirable feature in such taxation." 
 
B 22 EoYAL Commission ox Taxation. 1912 
 
 Some witnesses of high commercial standiug 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 taxal)le income. 
 
 Another proposal was that the exemption from income-tax should Ite 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 Pi'ovince who derived their 
 income partly or wholly from capital invested in England had been, since 1000. subject to a 
 double taxation on their income, i.e.. both in this Province and in the Mother-land, the i)ractice 
 being there to deduct income-tax at the source, i.e., from dividends due to stockholders. Tt 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 phraseologj' 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 consider- 
 able revenue from this cause. 
 
 Few taxpayers would, it was alleged, make out a proper return without the ]iresence 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, bj- 
 those who were clearly liable to it. 
 
 Recommendation. 
 
 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 lie 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 
 Act " : 
 (2.) That when the (net. not taxable) income of a person exceeds $11,500 and does 
 not exceed $50,000, the income-tax should be 2^2 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 hicome-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 evei"y person 
 whose income does not exceed $11,500. 
 Alter Section 5 as foUoirs: — 
 
 Class A. — When the hicome of a person does not exceed $3,000. 1 per cent., with an exemp- 
 tion of $1,500. 
 
 Class jB.— When the income of a person exceeds $3,000 and does not exceed $4,000, 1 14 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, 1^4 per 
 cent., with an exemption of $1,500. 
 
 C70.S-.S' D. — When the income of a i)ersou 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. 2y-2 per 
 cent., with an exemption of $1,500. 
 
 C'Zrts.s' F. — When the income of a person exceeds $11,500 and does not exceed $50,000, 2^ per 
 cent., with no exemption. 
 
 Class 0. — 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. 
 
2 Geo. 5 liovAL Com mission- ox Taxation-. 1> L'3 
 
 X.B. — It will ho oliservcd that for tlu' purpost' of draftinjx. the net income and not the 
 taxable income fas in the Act) is quoted. 
 
 Yonr Tonnnissioners venture also to suhmit tliree additional recommendations: — 
 
 (4.) That a person whose income from all sources, though exceeding; $1,500. does 
 not exceed .$11,500 (Classes A. P.. C 1 >. and E). and who has a child or c-hildren 
 livinir and under the ase of eiirhteen ,vears at the conuiiencement of the year 
 for which the income-tax is charged, shall he entitled in respect of every such 
 child to relief from income-tax upon .$200. 
 
 X.B. — The term " child " as here used includes a stepchild, but not an 
 illegitimate child, nnless and until after the jiarents shall have iiiarried each 
 other. 
 (5.) That (as a special encouragement to a most important industry) a per.sou engaged 
 in the jn-oduction of food products should be entitled to an additional exemption 
 of $1,500 (besides the exemption of $1,500 referred to in the first reconnnenda- 
 tion), but that this exemption should not a])ply to any part of such person's 
 income which may be derived from any source other than the production of food 
 in'oducts. 
 (G.) Amon.ij; other ways of reuderius more effective the system of securiut,' fair returns 
 of income-tax. your (Commissioners su^.s^est 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 
 trjide 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 ;i larger period, and thus render the tax Imposed more fair in 
 its incidence for the more and less successful years respectively. 
 
 ESTIMATE. 
 
 Financial Effect of Kkcommendations 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, 1011:— 
 
 Table A. 
 
 Revenue tax $313..33S 00 
 
 Personal-propert.\' ta x 170.0."i2 7(> 
 
 Total $4!)2.3!H) 70 
 
 Your Connnissioners, however, are confident that the loss of the personal-jtroperty tax 
 
 would be more than compensated for liy the substituted income-tax. as v.cll as by the increased 
 
 and increasing volume of business and the materhil lU'osix^rity throughout the Province generally. 
 
 This increased gain is estimated at .$200,000. Deducting, therefore. $200. (Kio from tb.' biss 
 
 under Table A. the figures would stand thus : — 
 
 Tiihlr /?. 
 
 Loss according to Table .V $402..300 70 
 
 Deduct 200.000 00 
 
 Net loss $202,300 70 
 
 It has been calculated that th(> loss resulting I'roni raising the exemjition of income-tax 
 from $1,000 to $1,500 would 1u> $37,500. while the loss from partial exemption for men with 
 families would be (say) .$10.000— i.e.. .'i:i7.."()() in all. ' 
 
B 24 EoYAL Commission on Taxation. 1012 
 
 Table C. 
 
 Loss accoi-diiis to Table B $292,300 70 
 
 Add -17,500 00 
 
 Net loss $:{39,S90 70 
 
 On the other hand, the .sain under Class F, nnder which no exemption (as heretofore) 
 would be made for incomes between $11, ."00 and $50,000. and the gain under Class G, under 
 which a super-tax of 5 per cent. (7i/^ 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 i)artial exemption for men with families. 
 Calculating this at $50,000, the figures stand thus : — 
 
 Tahle D. 
 
 Loss according to Table C .$3.39.800 70 
 
 Deduct 50,000 00 
 
 Total net loss .$289,800 70 
 
 LAND-TAXES. 
 
 Your Commissioners propose to touch lirst on land-taxes as a whole, and then to review 
 in order — - 
 
 ((7.) The real-property tax; 
 
 (e.) The wild-land tax; 
 
 (/.) The timber-laud tax; 
 
 (fir.) The coal-land tax; 
 
 (7^.) The mineral-tax; 
 
 (i.) The tax on unworked mineral claims. 
 
 General Pkinciples of Taxation of Land. 
 
 The Provincial Governmeut has seen tit for taxing purposes to divide lauds in British 
 Columbia privately held in fee into tv.'O classes, according to the motive which prompted their 
 purchase : — 
 
 (1.) Lands for use or occupation; and 
 (2.) Lands held for an increase in value. 
 It has also, in imposing rates of taxation, differentiated between various classes of laud 
 according to the use to which they were put. 
 
 At present, land held for occupation or agricultural use is taxed at the rate of i/^ of 1 per 
 cent. ; land held as " coal land " on which mines are worked, at 1 per cent. ; if unworked, at 
 2 per cent. ; land held as " timber land," at 2 per cent. ; land held for appreciation of i)rice 
 only, at 4 i)or cent.; unworked Crown-gr:inted mineral claims, at 25 cents per acre. 
 
 Your Connnissiouers desire to draw the attention of the Government to the following 
 considerations : — 
 
 Land held for occupation or use (the terms are substantially identical) is held for a 
 beneficial purpose. It is true that its owner is turning it to use beneficial to himself, but 
 indirectly he benefits the comnmnity. It seems to follow, therefore, that such land ought to 
 be more lightly taxed than land held for an increase in value, or for other kindred i>ur])oses. 
 It has been argued, indeed, that as a matter of principle there ought to l»e only two classes 
 of land for the purpose of taxation, namely : — 
 
 (1.) Land of whatever kind, whether such lands be farm lands, i»;isture lands, co.-il 
 lands actually worked, or timiuM- binds used in connection with sawmills, when 
 held for some purpose beneficial to tlie owner and to the coninumity and aclnally 
 used for such i)\irpose: 
 
2 Geo. 5 Kov.sl Co.xniissiox on Taxation. li '2'. 
 
 (2.) I.iuul of wiiiitt'x cr kind, whether such lands lie asiricultural. liiiilier. coal, ur any 
 other descriiitioii. held as an investment for the jirolit accruing; from enhanced 
 value. 
 As. however, the revenue is at present arran;;ed. il would seem perhaps premature as a 
 matter of practical economics to attempt to carry such a general principle into lej^islation. 
 
 Imi'kovi:mi:nts should not bk taxed. 
 
 Further, it has heen ariijued, ajiain as a matter of princijtle, that improvements on lands 
 should he exempt from taxation altogether, and that the Itasis of valuation fqr the purpose 
 of taxation should be the reasonable sale price of the land in a state of nature, due regard 
 beui.g had in fixing the price to all the conditicms as to location, facility of access, fertility, 
 and so on, that would intluence a jmrchaser. On such a theory it would follow that all land 
 of the same class or character would not necessarily he valued at the same rate, and also 
 that the use to which the owuer may put the land would not he 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 jturposes 
 of taxaticm 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 imin-ovements thereon. Improve- 
 ments should include houses, other buildings, fencing, puttuig in crops, planting of orchards, 
 draining and irrigation of land, clearing from timber and scrub, laying down in grass or pasture, 
 and any other inii)rovements whatever, the benefit of which is unexhausted at the time of 
 valuation. It has heen 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 heiug 
 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. 
 
 (cI.) THE KEAL-PROPI']IlTY TAX. 
 
 Revenue for year ending March 31st, 1911, .$352,372.44. at % of 1 per cent. 
 There was a general agreement as to the fairness of the amount of taxation on real property. 
 The chief criticism was directed against the system of assessment. 
 
 Evidence. 
 
 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 accouut 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 ;irea. 
 
 It was pointed out also by a large number of witnesses that the machinery available for 
 assessment generally was both inefficient and in.sutlicient. and had not kept pace with the 
 
 * It is a sorious fact that tho Provinco of British Colninliia importod nearly ?!.". 000.000 worth of 
 iigriciiltural produco (inclndinn ponltr.v. fruit, otf.) from other ITovinees of Canada, and tv..ii, ili,. Tnit-l 
 States, in tlie year 1010. 
 
B 2G EoYAL Commission ox Taxation. 1012 
 
 development of the Province; that the assessors had no time to visit the laud 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. 
 
 Recommendation. 
 
 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 
 
 characteristics : 
 (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. 
 
 WILD-LAND. COAL-LAXI). AXD TIMBER-LAND TAXES. 
 
 Revenue for year ending March .31st, 1911, .$310,130.83. 
 
 These, for the convenience of compilation, have been grouped together in the Provincial 
 Accounts. Your Commissioners, however, would i)refer to deal with them seriatim. 
 
 (r.) THE WILD-L.\ND TAX. 
 
 Four per cent. 
 
 Definition. 
 
 Wild land is defined in the " Assessment xVet " as " all land (other than coal and timber land) 
 claimed by any person ou 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 INIountains, and one dollar and twenty-five cents 
 per acre on land situate east of said Cascade Range." 
 
 Evidence. 
 
 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 jiracticability for agricultural ]>uri)oses 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 b.-ilance at 
 present in the hands of the (Joverument could not be more in-ofitably eini)loyed than in under- 
 taking a gradual examination and assessment of the land of that part of the Province which 
 tad been settled, or which was ])roved 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. 
 
2 Geo. 5 Kov.\r. Commission on Taxation. I> 27 
 
 Recommendations. 
 
 (1.) Your Comuiissioiiors ivcomuR'ud thiit, in order to ohtain a just a.ssossment of land, the 
 staff of assessors should, as many witnesses susj;ested. lie increased, and that the assessors thus 
 appointed should be exjjerts on various kinds of land to he met with in the I'rovince, e.j^. : — 
 
 (rt.) Timber land (see below) : 
 
 (?>.) Dry areas : 
 
 (c.) Noii-irrigable lauds : 
 
 (d.) "Delia " 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 perceutage 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 examhia- 
 tion might be found to justify as their ultimate result the lowering of the i)resent 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 j)roved. 
 
 It may be here observed that some witnesses suggested that the mininnim value of all wild 
 lands should in future be the Government selling price; but this proposal assumes that all lauds 
 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 uecessary to meet 
 this difficulty, your Commissioners are disposed to think that the suggested minimum would be 
 fair, this mininuim 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 ^lountains shall be classed as improved lands, when 
 improvements have been made thereon to the assessed value of .$2.."0 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. 
 
 (/.) THE TIMBER-LAND TAX. 
 
 Two per cent, upon assessed value. 
 
 Timber land is defined in the '"Assessment .Vet" as "all land owned, leased, held under 
 licence, claimed, or occupied by any person for the special purpose of cutting or removing 
 timlier 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."' 
 
 Evidence. 
 
 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 (juestion of the royalty i>aid for 
 timber (board measure). 
 
 Lumber representatives were generally of opinion Ihai all holders of timber leases and 
 timber licences ought to contribute towards the exi^Mises of fire protection in proi>ortion to the 
 area of stumpage. and that there had not been nuuh dis]»osition shown by some owners of such 
 lands hitherto to safeguard tlu'ir timber limits against fins. 
 
 Others advocated the api)ointment of a Fire Commission, as in Idaho, where large prdjirietors 
 form part of the Commission, and establish patrols. 
 
B 28 KoYAL Commission ox Taxation. 1!)12 
 
 Some witnesses foaunented strongly on the depletion of timber in tlie Province througli 
 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 jiart 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 $14U 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 relatiA'e value of the timber in the two 
 regions. 'Witiiesses. lura'ever. were not altogether in accord on this point. 
 
 Suggestions were 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, 
 was necessarily thrown down, and that, if operators were permitted to export these, the danger 
 of destruction of forests by tire 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 reconmiendation, since the question of policy involved does 
 not appear to lie within the scope of their instructions. 
 
 Recommendation. 
 
 On the whole, your Counnissioners 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 Government. 
 
 ig.) THE COAI,-LAND TAX. 
 
 One per cent, upon assessed value on worked mines ; 2 per cent, on unworked mines. 
 
 Importance or Industey. 
 
 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 
 in the coal-mining industry, but also of the general public as consumers. 
 
 Evidence. 
 
 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 receive 
 the attention of the Government. It was pointed out that the cost to the consumer was at lea.st 
 double the price of- the coal at the pit's mouth, and that even after deducting the cost of freight, 
 and the necessary loss of weight in handling the coal two or three times over between the pit's 
 mouth and the time it reached the consumer, there still remained a surplus of profit to the 
 retailer which aj^peared unduly excessive. The freight charges by the r:iilway companies was 
 in particular criticized. 
 
 There was a large quantity of evidence forthcoming from the representatives of mining 
 companies. Some suggestion was made that a differentiation in taxation should be made as 
 between the best class of coal and lignite, on the ground that the former was saleable at from 
 25 per cent, to 50 per cent, higher price than the latter. 
 
 On the whole, however, the tax of 10 cents per ton on coal was generally considered 
 equitable. 
 
 It was urged strongly on your Cominissioners in some (piarters lli:it the tax on coke should 
 be removed, on the gvoinid that it would enable the cnni conipiinies of the Province to compete 
 
2 Geo 5 Uoyal Co.m.mis.siu-\ on Taxation. B 2!) 
 
 sucressfully witli IIik.-o iicross the Inteniatioiiiil Boundary and elsewhere, and would stiunilate 
 
 the estalilisliMU'iil of iron and steel industries and hencfit the snu>lters^ thus advaminir The 
 material develupnicut of tlu' I'rovince. 
 
 Recommendations. 
 
 Having regard to all the circumstances of the case, your Commissioners — 
 
 (1.) liefer the (luestiou of the price of coal to the consideration of the Government. 
 (2.) Jlecomnicnd that the tax on ( oke should he reduced from 1'> <-<'nts ti» Hi < cuts 
 per ton. 
 
 (h.) THE MI N I ;i J A I. -TAX. 
 
 Revenue for llic year cndin'.; ^larch 31 st, T.tll. .*fl)1.03.S.43. at 2 per ci'ut. on the asses.sed 
 value of the ore. 
 
 Gener.\l Considekations. 
 
 In approaching this suliject. your ComuiLssioners are conscious that the situation is a ditti- 
 cult one on account of the somewhat imusual conditions now obtaining in the mineral, and 
 particularly in the copper nnirket, 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 
 the scope of the Connnission to inquire. They proceed, therefore, simply to set forth the evidence 
 which came before them. 
 
 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 uj) to the mine's mouth. 
 
 Evidence. 
 
 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 jn'oducing high-grade ores, 
 ,vet it works a positive hardshij) 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 iieriod of years, and expressed their belief that such a policy would 
 stimulate the industry. As an alternative, it was proiwsed that either the ore should be taxed 
 at % of 1 per cent, on the recovered value of the ore. or else that the nnnes should iiay an 
 income-tax. 
 
 It was poinliMl 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. 
 
 Recommendations. 
 
 Your Conimissioners. on a careful review of all the evidence adduced, do not recommend 
 any alteration in the Aft imposed on minerals. 
 
 (/.) THE TAX (IX rXWOKKEI) CROWX-CiRAXTEI) MINERAL CLAIMS. 
 
 Revenue for the year ending March olst, l!»n, .$-12,020,.s4. at 2."> cents per acre. 
 
 Evidence. 
 
 Very scanty evidence on this tax was brought to the attention of your Connnissioners-, 
 Practically the only suggestion made was that the laud so held should be treated as wild land, 
 and assessed at 4 per cent, on its assesses! value. 
 
B 30 EoYAL Co.\i. MISSION ox Taxation. 1912 
 
 liECO-MMEXDATIOX. 
 
 Upon tlie evidence as adduced liefore theiu. your Commissioners are of opinion that this 
 tax is fair and reasonable. 
 
 ESTIMATE. 
 
 Financial Effect of RECOiiiiEXDATioNs re Taxation of Lands and of Natural Resources. 
 
 Having now takto under their survej' the laud-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 lleijort. 
 
 (1.) They are of opinion that a more complete and accurate reassessment of the land 
 in the Province b>' an increased staff of assessors might, so far from entailing 
 loss to the Treasury , bring in sutHcieut revenue not only to cover the expenditure 
 on the improved machinery employed, liut 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 ^^ of 1 per cent, on the 
 registration of all real-estate transactions would result in a large gain to the 
 Treasury. 
 (3.) They see no reason to estimate the loss to the Treasury liy the relief from 
 linancial burdens which they have proposed in the various classes of taxable 
 property to be greater than that arri\ed at in Table D. i.e.. .$2sy..S9U.T0 — say, in 
 round figures, .$.300,000. 
 
 PROBATE FEES AND SUCCESSION DUTY. 
 
 Revenue for probate fees for year ending March 31st. 1911. .?37.294.n. Revenue for 
 .succession duty for year ending ;March 31st, 1911, iS200,4.j9.SS. 
 
 Difference between the Two explained. 
 
 . Your Commissioners have thought it well that these two taxes should be treated together, 
 not only on the ground that they both atfeet estates at a specific period, viz.. on the decease 
 of the owners, but also because there lingers in some people's minds the idea that the two 
 together form a "' double tax." 
 
 By the "Finance Act" passed in 1S94 by the Mother-country, these two taxes, together 
 with the old " account duty," " legacy duty," and " estate duty," were merged into one new 
 *' estate duty." 
 
 Whether or not the time is ripe for a siniilar merging of the two in the Province of British 
 Columbia, your Commissioners are not prepared to advise. 
 
 Nor do they propose to offer any suggestion as regards the modification of the probate fees. 
 
 Succession Duty : its Characteristics. 
 
 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 fnmi such a source nuist be of an 
 e.xtreniely fluctuating character. 
 
 Nevertheless, as was pointed out Iiy 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, lias its imiiosition brought in its train any 
 obvious tendency "to drive aw.-iy caiiital 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. 
 
2 Geo. 5 
 
 .IJOVAL COAIMISSIOX ON TAXATION. 
 
 B 31 
 
 The followiii!^ is a taltle of the rates of succession duty iirevailiiij; at present in tliis 
 I'rovince, and it may l)e ohscrvcd tliat these rates are li-^lit eonijiarctl with those in otlier 
 I'rovinces : — 
 
 Tablk oi- It.vii:,s oi' Succkssion Duty. 
 
 Dutiable Vahie of Estate, Legacy, 
 or Bequest. 
 
 Father. Mother. Iliisband. 
 Wife. Child, (irand- 
 child. Son-in-law, 
 Daughter-in-law. 
 
 (Class A.) 
 
 (Irandf a ther. Grand- 
 mother, or any other 
 Lineal .Ancestor (except 
 Father or Mother), 
 Brother, Sister, Cousin, 
 Nephew, Niece, Uncle, 
 Aunt. 
 
 (Class P..) 
 
 Any other Relative, or 
 any .Stranger. 
 
 (Class C.) 
 
 $5,000 and under 
 
 Nil. 
 Nil. 
 
 11/2 % 
 21/2 % 
 
 5% 
 
 (7y2%)* 
 
 Nil. 
 5% 
 
 r. % 
 
 y% (7y2%)* 
 
 5% (10%)* 
 
 (10%)* 
 
 Nil. 
 
 .$5,001 to $25,000 
 
 10% 
 
 $25,001 to $100.000 
 
 10% 
 
 $100,001 to $200.000 
 
 10% (121/2%)* 
 
 10% (15%)* 
 
 (20%)* 
 
 $200,001 upwards' (to $400,000) 
 ($400,001 and upwards) 
 
 Your Conunissioners suggest the following increases : — 
 
 (1.) That in the case of an estate valued at hetween $100,001 and $2()l).0()(t. the rate 
 should' he increased from 5 per cent, to 7^/4 per cent, if the estate pass (or so 
 much thereof as so iiasses) to any person under Class B. and from 10 per eeut. 
 to 121,^ i)er cent, if the estate pass (or so nuich thereof as so passes) to any 
 I»erson under Class C : 
 
 (2.) That in the case of an estate valued- at between $200,001 and $400,000. the rate 
 should he 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 tliereof as so passes) to any person 
 under Class C : 
 
 (o.) That in the case of an e.state valued at between $400,001 and upwards, the rate 
 should be increased from 5 per cent, to 7i/4 per cent, if the estate pass (or so 
 nuich thereof as so passes) to any persoii under Class A. from 5 per cent, to 
 10 per cent, if the estate pass (or so much thereof as so ])asses) to any person 
 under Class B. and from 10 per cent, to 20 per cent, if the estate pa.ss (or so 
 nuich thereof as so passes) to any i)erson under Class C. 
 
 TAX OX I5AXKS. 
 
 GENKRAI. FrINCIPLKS ok T.VXIXO 1?AXKS COXSiniCRKl). 
 
 Before entering into the question of the taxation on banks in British Columbia, on which 
 question your Commissioners called for evidence during their progress through the Proviuce. 
 certain iirellminary remarks seem desirable. 
 
 It has been laid down by an eminent political economist that banking ni.iy be divided into 
 dealings with — 
 
 (1.) Money: 
 (2.) Capital: 
 and that it is from "money" that revenue may l>est l»e obtained: whereas the trade in cajtital 
 seems conii>aratively tnisnilable for intervention by Covernment with the view of raising 
 revenue. It is diflicult, indeed, to .see how any substantial revenue could l)e expected from bank 
 capital, unless there were Government insjiection. 
 
 Such inspection has been from time to time dcMuanded in Canada. 1 ur has not been 
 inaugurated, partly (it is said) on account of tlie ditliculty of arranging any practical iilan. 
 
 For eonvi'iiii'iiii', tin- proixisiil nltrr.itioiis arc put into l>rackets in the above tabli>. 
 
B 32 EoYAL Co:m MISSION ox Taxation. 1012 
 
 and partly because the Finance Department of the Dominion Government conld not see its: 
 way to undertalce the responsibility of banlv-examination. 
 
 It may be oljserved in this connection that the branch system of banking; prevalent in 
 Canada presents ])rolilems in their treatment by Governments for taxation purposes larjiely 
 distinct from those with which Governments are confronted, where there are a vast number 
 of (some) comparatively small banking institutions, as is the case in the T'nited States of 
 America (where there are more than 22,000 banks), or where there are State lianks. as is the 
 case in Russia or Sweden. 
 
 With these general oliservations, your Commissioners venture to direct the attention of 
 the Government to the practice prevailing in this Province, as compared with that in other 
 Provinces of the Dominion. 
 
 Banks in British Columbia. 
 
 Banks in British Columliia 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 I'rovince. This 
 is in addition to any taxes paid upon real estate within the municii)alities 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 i)aid to the Provincial (lovernment is more in the nature 
 of a licence fee than a tax, and it bears, of course, no relation whatever to the amount of 
 l)usiness 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 revenue than a bank doing 
 a large business. 
 
 In some of the other Provinces the banks are taxed either Provincially or Municipally upon 
 the amount of their business. From evidence submitted to them your Conunissiouers have 
 learned that : — 
 
 Banks in Halifax. 
 
 In Halifax, Nova Scotia, each bank pays a fee of .$1,000 yearly, and 1/10 of 1 per cent, 
 upon the average volume of business done, including all loans or investments and current 
 and savings deposits. The minimum so payable is $750, and a bank may conunute for its fee 
 and taxes by paying $3,000 yearly. 
 
 Banks in New Brunswick. 
 
 In New Brunswick the banks pay fees to the Provincial Government, which are graded, 
 but in no case exceed $1,400 a year. In St. John, N.B., a nmnlcipal tax of 1/12 of 1 per cent, 
 is imposed upon the average volume of business done, as in Halifax. 
 
 Banks in Prince Edward Island. 
 
 In I'rince Edward Island there is a Provincial tax upon the average volume of business 
 done, as in the case of Nova Scotia and New Brunswick, of 1/15 of 1 per cent., with a minimum 
 of $1,000; but if the average volume of business done exceeds $2,5(t0,000 the tax is 1/20 of 
 1 i)er cent., with a mininmm of $1,(>00. There is a munici]ial licence fee of $125 aniumlly in 
 this Province. 
 
 B.\NKs IN Quebec and Montreal. 
 
 In Quebec the Province collects .$100 on every $100,000 of paid-up capital up to $1,000,000. 
 and $50 on every $100,000 in excess of $1,000,000, and licence fees varying from $200 for each 
 head office to $80 for certain branches. 
 
 In Montreal a special licence of $000 is exacted from each head office and $100 from each 
 branch. In (Quebec City the municipal licence is $1,000, with $200 for each branch. Montreal 
 also imi)Oses a tax of 7iA per cent, on the rental value of the bank premises, and Quebec a 
 similar tax of 12i/.. These ta.xes are in addition to the real-estate taxes. 
 
2 Geo, 5 Eoval Commission ox Taxation". B 33 
 
 Banks in Ontario. 
 
 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 $2.j on every $100,000 of capital over .$200,000, and not in excess of $0,000,000. 
 A licence fee of $100 fur each head ofiice and $2") for each Iji-anch is exacted. 
 
 In Manitoba, .Saskatchewan, and Alberta the only I'rovincial 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. 
 
 Evidence. 
 
 The evidence derived by your Counuissioners from those representing banking interests 
 was not, as a rule, full or illuininating, but it appeared to be beyond dispute that the deposits 
 in the banks of British Columbia exceed the loans made within the Proviuce, and that the 
 surplus is loaned in Eastern Canada and elsewhere. In view of this, it seems not unreasonable 
 that the banks should be required to pay a tax bearing some relation to the volume of business 
 done, as is the case with oommeivial and industrial houses. Diiliculties 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 conununity 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). 
 
 riECOirilENDATIONS. , 
 
 After taking into consideration the practice prevailing in other Provinces of Canada and 
 the existing conditions of British Columbia, your Connnissioners recommend that, in addition 
 to the present annual flat rate of $1,000 on each head office and $12.") on each branch bank, 
 there should be imposed an additional rate of 1/15 of 1 per cent, on the gross average amount 
 of business done, including both loans and deposits, the gross average to be computed upon 
 the monthly totals (as expressed above). 
 
 SUMMARY, 
 
 Before bringing their Report to a conclusion, your Connnissioners desire to sum up the 
 general, and particularly the flnancial, effect of their recommendations. 
 
 General and Financiae Eefect of Recommendations. 
 
 (1.) They have been uniformly impressed with the rajudly increasing prosperity of 
 the people, and the potential and actual, explored and (indisputably vaster) 
 unexi)lored, 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 ye:ns to come be expanding in at least an equal 
 ratio. 
 
 (3.) In making the finanti.il reconuuendations set forth in the foregoing Report, they 
 have taken the above-mentioned factors into their serious consideration. 
 
 (4.) They have come to the deliberate oiiinion that a substantial remission from 
 taxation can safely be effected without imperilling the .solidity of the I'rovincial 
 Treasury, and they have proceeded on the principle that any "surplus not prove*! 
 to be needed by the Province should be left to fructify in the pocket.s of the 
 taxjiayer." more particularly when a balance so left is likely, in a new country, 
 to be used in some form or uther for the exploitation of the Province. 
 
IS M EoYAL Commission on Taxation. r. ...1912 
 
 (5.) They are of opinion that the abolition of the revenue or j)oll tax (which amounted 
 to $313,338.00 for the year ending March 31st, 1011) would represent, on sound 
 principles of political science, a substantial relief, and one which the Govern- 
 ment could best afford to remove. 
 
 (6.) They believe that the abolition of the personal-property tax and of the tax cm 
 improvements on land would be largely compensated for by the substitution 
 of income-tax for personal-property tax, aided by the natural increase of popula- 
 tion and the rapid accunmlation of wealth by the citizens of the Province. 
 
 (7.) They are further of opinion that the proposed extension of the limit of exemption 
 would be also largely counterbalanced by its readjustment in the case of the more 
 'rfJfiV,' -; -•• ; :;Prosperous citizens. 
 ...;•.; (8.) They desire to emphasize again very strongly the need of altering the phraseology 
 under Form 8 to suit the altered conditions through the abolition of the personal- 
 property tax, and not only the need of altering, but also of rendering the phrase- 
 olog}- more clear and comprehensive to the mind of the taxpayer, and they believe 
 that if this were done it would result in a substantial gain to the Treasury. 
 
 (9.) They are further of opinion that the proposed extension of the limit of exemption 
 
 in the income-tax would be at least counterbalanced by the heavier duties levied 
 
 on Class F and Class G under the proposed alterations. 
 
 (10.) They desire also to draw the attention of the Government to the fact that, if 
 
 their calculation under (6), (7), (8) as to the amount likely to accrue in 
 
 compensation for the loss of the revenue tax and personal-property tax is based 
 
 too high, there would still be, as a reserve fund, an increase of about $169,100 
 
 in the Dominion subsidy through the increase of population in British Columbia 
 
 (about 390,000* as against 178.6r)7 in 1901). 
 
 (11.) They are convinced that a gradual examination and a more efficient assessment 
 
 of certain sections of the lands of the Province (which can only be effected by 
 
 an increased number of assessors and a machinery more adapted to the present 
 
 and future development) would lead to such a solid adjustment of taxation 
 
 thereon as could not but be of economical advantage to the revenue of the Province. 
 
 All of which, together with a transcript of the Stenographer's notes of the proceedings of 
 
 the Commission, is respectfully submitted. 
 
 * The total returns of the census figures received from Ottawa up to date Decemher 23rd, 1911, were 
 389,897, but returns from one or two subdivisions bad yet to be made. 
 
 Dated at Victoria the 19th day of January, 1912. 
 
 (Signed) 
 
 PRICE ELLISON. 
 A. E. McPHILLIPS. 
 CHAS. H. LUGRIN. 
 W. H. MALKIN. 
 
 
2 Geo. 5 Koval Co.mmis.sion on Taxation. B 35 
 
 APPENDICES. 
 
 Prefatory Remarks. 
 
 In addition to the evidence adduced liefore Iheni on subjects which were strictly within 
 the terms of reference, and which are therefore included in the Iiody of the foreiroln,s; Kepor*^. 
 your Commissioners, in the course of their investigations, admitted evidence on the following 
 matters, which, though not directly connected with " the oi»eration of tlie ' .\ssessment Act, 
 1D03,' " yet may be considered to have a " bearing on the financial re(inirements of the I'rovince." 
 
 They beg leave, therefore, to submit the evidence received and their suggestions thereon in 
 four Appendices, together with the following prefatory remarks by way of explanation. 
 
 The " Companies Act " was brought before them in the lirst instance by witnesses at the 
 first session held in A'ancouver. but was more formally dealt with later on in the same city 
 by a representative of the Canadian Manufacturers' Association, who came from Toronto for 
 that purpose, and later on again by representatives of the Victoria Board of Trade at Victoria. 
 
 Certain phases of the "School Act" were mentioned by many ])ersons who gave te-stimony 
 before the Commission, .some of them attending exjtressly for that purpose. 
 
 The taxation of church-sites within municipalities was dealt with by numerous witnesses, 
 and especially by a delegation representing nearly all the religious denominations. 
 
 APPENDIX A. 
 
 "COMPANIES ACT." 
 
 Evidence. 
 
 There was some criticism adduced as to the working of the " Companies Act." Some 
 witnesses held that it acted as a restraint of trade, and some evidence was brought to show 
 that firms operating outside the Province had withdrawn their agencie.^. Part IV.. sections 
 100-111 ; I'art VI., sections 139-170. making provision for the licensing and registration of extra- 
 provincial companies; and Part VII.. sections 171-177. making provision for process against 
 unregistered extra-provincial companies were chiefly animadverted njjon. 
 
 It was alleged by the legal representative of the Canadian Manufacturers" Association 
 that the legislation of no other Province was so drastic as that of British Columbia, and that 
 clause 166 not only penalizes an extra-provincial company if a mail order be sent to stores in 
 this Province, but also disables an unlicensed or unregistered extra-provincial company from 
 collecting money due on such a mail order. 
 
 The Government was urged through your Conunissioners to modify the clauses complained 
 of. so that there should be reciprocity in company legislation between the different Provinces 
 of the Dominion and between tliem and other i)arts of the Empire, and it was contended that 
 the alternative nuist be an app(>al to the Courts on some particular case to test the (piestion 
 whether the Act was constitutional or not. and that one result might be a retaliatory policy. 
 
 Representations of a .somewhat similar character were made by the A'ictoria Board of 
 Trade. It was pointed out by a special connnittee aiipointed by the Board that the restrictions 
 alluded to above, while they were placed on extra-provincial companies desirous of trading in 
 
B 36 ■ Royal Commission ON Taxation. 1912 
 
 British Coliimhia, were not placed on inclivitluals, partnersliips, or unincorporated associations. 
 Tlieir conunittee had recommended as follows, and passed on the recommendations to your 
 Commissioners : — 
 
 "(1.) That the British Columbia 'Companies Act' should be amended so that its 
 provisions should not go further than the British Act of 1908, 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 
 agents : 
 " (2.) That a company domiciled in the Province should be required to tile 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 
 Columbia: 
 " (4.) That no obsta,cles should be placed in the way of extra-provincial companies recover- 
 ing just debts in the Courts of British Columbia." 
 
 Remarks. 
 
 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. 
 
 APPENDIX B. 
 
 " SCHOOL ACT." 
 
 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 them- 
 selves 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 
 Commission. 
 
 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 
 authorities. 
 
 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, etc. 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. 
 
 Remarks. 
 
 Your Commissioners do not regard it as within the scope of their incpiiry 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. 
 
2 Geo. 5 Royal Com mission on Taxation'. B 37 
 
 APPENDIX C. 
 
 " RAILWAY ASSESSMENT ACT, 1007." 
 (Amended 1908.) 
 
 A somewhat important point ai-ose in the interpretation of section G of this Act, in connection 
 witli district assessments under school law. 
 
 Section G provides tliat " tlio land oceu])ied 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 {h) 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 improve- 
 ments 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 asse.ssed therein." 
 
 Evidence. 
 
 According to evidence received by them, your Commissioners were informed that, notwith- 
 standing the i)rinciple of assessment as laid down in section G of the "Railway Act." which 
 treats " railway land, and the railway with the personal property derived from its railway, and 
 its rolling-stock," as an organic and neces.sary part of the whole railway system, yet assessment 
 of railway property in various school districts (through some interpretation or misinterpretation 
 of section G5 (b) 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 wei'e "so much scrap-iron." 
 
 Suggestion. 
 
 Your Commissionei's do not regard it as within the scope of their inquiry to make any 
 recommendations with regard to the above-mentioned evidence, but draw the attention of the 
 Government to this alleged di.screpancy, with the view of inquiry into the matter and (having 
 regard to the loss of revenue to the school district) .some amendment or authoritative ruling 
 on the point, possibly with the view of fixing by Statute a flat rate per mile for school puri)oses. 
 
 APPENDIX D. 
 
 CHURCH-SITE LANDS IN MUNICIPALITIES. 
 
 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 buryiug-grounds 
 or cemeteries not exceeding five acres, and the personal property and income of such public 
 buryiug-grounds and cemeteries, when such personal property and income are used wholly for 
 burial purposes, Init not otherwise." 
 
 The "Municipal (^'lauses Act, ISOG," section 170, exempts: "(1.) Every building set apart 
 and in use for Ihe public worshij) of God. (2.) Every burying-ground in actual use as such, 
 and every cemetery." 
 
 Certain municipalities have now exempted buildings from taxation, throwing all taxation 
 on laud, thereby increasing the rate of taxation upon the land upon which churches stand. 
 
B 38 EoYAL Commission on Taxation. 1912 
 
 Evidence. 
 
 This question was raised in several places jdLuring your Commissioners' progress through 
 the Province, and the evidence as adduced ^yas 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 sucli 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. 
 
 Remarks. 
 
 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. 
 
 VICTORIA, B.C. : 
 rriuted by William H. Ccllin, Printer to the King's Most Excellent Majesty. 
 
 1912. 
 
 
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Gaylord Bros 
 
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 Syracuse, N. V. 
 
 PAT. JAN. 21, 1908 
 
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