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HANDBOUND AT THE

UNIVERSITY OF TORONTO PRESS

Covernmenl publication*

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Govern meni JPublications

PUBLIC ACCOUNTS

of

CANADA

' - for the FISCAL YEAR ENDED MARCH 31

1949

and

REPORT OF THE AUDITOR GENERAL

OTTAWA

EDMOND CLOUTIER, C.M.G., B.A., L.Ph.,

PRINTER TO THE KING'S MOST EXCELLENT MAJESTY

CONTROLLER OF STATIONERY

1949

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To His Excellency Field Marshal the Right Honourable Viscount Alexander of Tunis, K.G., G.C.B., G.C.M.G., C.S.I., D.S.O., M.C., LL.D., A.D.C., Governor General and Commander-in-Chief of Canada.

May it Please Youb Excellency:

The undersigned has the honour to present to Your Excellency the Public Accounts of Canada for the Fiscal Year ended March 31, 1949.

All of which is respectfully submitted.

D. C. ABBOTT,

Minister of Finance.

Ottawa, September 14, 1949.

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TABLE OF CONTENTS

INTRODUCTION

ANALYSIS OF THE PUBLIC ACCOUNTS

Page

Introductory Remarks l i .'i/i'.' xii

1. Highlights of Governmental Financial Operations during the Year xii

2. Summary of the 1948-49 Revenue and Expenditure Statement ,„ ,-.^,^.,»j. , . v,-^f.- *■ •^y •• xiv

3. Analysis of Revenues

(1) Direct Taxes on Income '

(a) Taxes on Personal Incomes iijiiluuii!... I JtJuiA .' . .d. xvi

(b) Corporation Income and Excess Profits Taxes xvi

(c) Taxes on Interest, Dividends, Rents and Royalties xvi

(2) Succession Duties '.'",''?V'i^V; V .';; . . rl"i xvi

(3) Customs Import Duties xvi

(4) Excise Duties xvi

(5) Excise Taxes xvii

(6) Miscellaneous Indirect Taxes xviii

(7) Non-Tax Revenues xviii

(8) Special Receipts and Credits xix

4. Analysis of Expenditures

(1) Ordinarv Expenditures .'.".';•. ; ;V xxi

< Jv

(2) Capital Expenditures xxii

(3) Demobilization and Reconversion Expenditure xxii

(4) Special Expenditure ,■ ._7av. ; xxiii

(5) Government Owned Enterprises xxiv

(6) Other Charges, including Write-down of Assets xxiv

5. Summary of the Government's Balance Sheet position as at March 31, 19-^9, and analysis of changes v^xLV i'

in the principal Assets and Liabilities during the year -Kjav

6. Summary of Security Issues and Redemptions during the year lifii^yiiiitH .■;»'. uywsfii!t.*i''. xxx

TABLE OF CONTENTS— Coniintied

PART I

THE BALANCE SHEET AND SUMMARY STATEMENTS

Page

Comparative Balance Sheet, 1948-49 with 1947-48 2

Comments on the Balance Sheet 4

Expenditure and Revenue Summary 8

Comparative Schedules to Balance Sheet, 1948-49 with 1947-48

Schedule A Cash Current and Special Deposits

B Departmental Working Capital Advances

C Working Capital Advances to Crown Corporations . Loans to, and Investments in

D Canadian Farm Loan Board

E Railway and Steamship Companies

F Miscellaneous Crown Agencies

G Loans to Provincial and Municipal Goverrunents . . . H Loans to United Kingdom and Other Governments .

I Other Loans and Investments Miscellaneous

J Sundry Suspense Accounts

K Capital Expenditure

L Other Non- Active Assets

M— Floating Debt

N Deposit and Trust Accounts Miscellaneous

O Insurance and Guaranty Funds

P Pension and Retirement Funds

Q Deferred Credits

R Sundry Suspense Accounts

S Province Debt Accounts

T Funded Debt Unmatured

Comparative Tables

Table of Expenditure, April 1, 1929, to March 31, 1949.

Table of Revenue, April 1, 1929, to March 31, 1949

Table of Debt of Canada

Classified Table of Revenues

Table of Expenditure, July 1, 1867, to March 31, 1935. . Table of Revenue, July 1, 1867, to March 31, 1935

Appendices

No. 1 Unmatured Funded Debt and Treasury Bills of Canada and Annual Interest Payable Thereon.

No. 2 Amortization of Bond Discount and Commission Account

No. 3 Statement of Superannuation Account

No. 4 Statement of National Harbours Board Pension Fund

No. 5 Halifax Pilots' Pension Fund

No. 6 Sydney Pilots' Pension Fund

No. 7 Saint John Pilots' Pension Fund

No. 8 Montreal Pilots' Pension Fund

No. 9 British Columbia Pilots' Pension Fund

No. 10 Recoinage Statement

No. 1 1 Coinage Issued

No. 12 Coinage and Bullion Accounts

No. 13 Sources and Application of Cash Funds, 1948-49

No. 14— Contingent Liabilities

vi

TABLE OF CONTENTS— Continued

PART II , , ... . .

THE ACCOUNTS BY DEPARTMENTS

Page Summarized statements by Departments

Revenues and Credits 2

Ordinary Revenue by Main Classifications 4

Appropriations, Expenditures, etc 6

Reconciliation of Summarized Statements with the Net Debt Accounts of Canada 8

Details by Departments

Agriculture A

Agricultural Prices Support Accoimt A 43

Agricultural Products Accoimt A 43

Apple trees, assistance in the removal of. Nova Scotia A— 40

Cheese and cheese factories, improvements to A 36

Cold storage warehouses, subsidies for A 27

Experimental Farms Service A 14

Fairs and Exhibitions, grants to A 23

Feed grains, Western, freight assistance on A 40

Hog carcasses, premiums on A 39

Prairie Farm Assistance Act A 35

Prairie Farm Emergency Fund A 43

Prairie Farm Rehabilitation Act and Water Storage A 31

St. Mary River Dam Project A 34

Auditor Greneral's Office B

Canadian Broadcasting Corporation P 44

Canadian Maritime Commission Z 89

Chief Electoral Officer C

Civil Service Commission D

External Affairs E

International Joint Commission E 13

Finance F

Bank of Canada F 25, 26

Canadian Farm Loan Board F 26

Canadian Sugar StabiUzation Corporation, Ltd F 28

Canadian Wheat Board F 6, 23, 30

Commodity Prices Stabilization Corporation, Ltd F 21, 26

Comptroller of the Treasiu-y's Office F 14

Cost of Loan Flotations F 13

Debt, Public- Charges F— 12

Interest F— 12

Matured F— 28

Unmatured F— 32

Export Credits Insurance Corporation F 26, 27

Foreign Exchange Control Board F 16, 26

International Bank for Reconstruction and Development F 27

International Monetary Fund F 27

Millers, drawback payments to F 24

National Battlefields Commission F 14, 23

Premium, discoimt and exchange F 13, 31

Provinces

Compensation to F 13

Subsidies to F— 13

Reserve, provision for losses (Active Assets) F 25

Royal Canadian Mint F— 5, 10, 26

Superannuation and retirement benefits F 11, 30

Tariff Board F— 14

United Kingdom General Settlement Accoimt F 31

Wartime Prices and Trade Board F— 6, 20

Fisheries G

TABLE OF CONTENTS— Con^inwed

Page

Governor General and Lieutenant-Governors H

Insurance I

Justice J

Office of the Commissioner of Penitentiaries J 12

I abour K

Government Annuities K 6, 17

Unemployment Insurance Act, 1940 K 3, 9, 15, 17

Legislation L

House of Commons L 3, 6

Library of Parliament L 10

The Senate L— 2, 5

Mines and Resources M

Eastern Rockies Forest Conservation Board M 14

Emergency Gold Mining Assistance Act M 22

International Boundary Commission M 38

National Museiun of Canada M 21

Northwest Territories M 25, 56

Northwest Territories Power Commission M 55

Yukon Territory M— 29

National Defence Army, Naval and Air Services N

Defence Research and Development N 4, 25

Pay and Allowances N 8

Pensions, Permanent Services N 14, 27

National Fihn Board VA— 9

National Harbours Board Z 96

National Health and Welfare O

Family Allowance Payments O 33

General Health Grants O— 20

Old Age Pensions, (including Pensions to the Blind) O 35

National Research Covmcil Y 40

National Revenue P

Canadian Broadcasting Corporation P 44

Customs and Excise Divisions P 3, 7

Government Office Economies Control Division P 11

Taxation Division P 3, 9

Post Office Q

Air and Land Mail Services Q 12

Post Office Savings Bank Q 14

Railway Mail Service Q 11

Prime Minister's Office ; Q VW^i'l , R

Privy Council Office S

Federal District Commission S 4

National Capital Planning Committee S 4

Public Archives T

Public Printing and Stationery U

Pubhc Works V

Architectural Branch V 19

Construction, Repairs and Improvements

Dominion Public Buildings V 19

Harbours and Rivers V 48

Engineering Branch V 40

National Gallery of Canada V 68, 72

Reconstruction and Supply ,. , VA

Royal Canadian Mounted Police W

Policing of Provinces and Municipalities W 3

The Secretary of State X

Bureau for Translations X 5

Laurentian Terrace Hostel X 8

Patent and Copyright Office X 3, 6

TABLE OF CONTENTS— ConcZua'ed

Page

Trade and Commerce Y

Atomic Energy Control Board Y 43

Balance Sheets Crown Companies Y 55

Departmental Y 56

Canada Grain Act

Board of Grain Commissioners for Canada Y 18

Canadian Government Elevators Y 18

Canadian Arsenals, Limited Y 24

Canadian Commercial Corporation Y 20, 67

Chalk River Project Y— 43

Contracts, Liquidation of Y 22

Dominion Bureau of Statistics Y 16

Dommion Coal Board Y 19

Export Credits Insurance Corporation Y 78

Foreign Trade Services Y 9

Eraser Valley Floods Y— 21

Jet Engines and Aircraft Y 23

Standards Division Y 13

War Assets Corporation Y 6, 25, 90

Transport Z

Air Service Z 37

Air Transport Board Z 37

Board of Transport Commissioners Z 14

Canadian Broadcasting Corporation Funds Z 72

Canadian Government Merchant Marine Ltd Z 72

Canadian Maritime Commission Z 89

Canadian National Railways Z 68, 70

Canals Service Z 15

Civil Aviation Division Z 38

Government Employees' Compensation Z 34

Hudson Bay Railway Z 32

Mail Subsidies and Steamship Subventions Z 90

Marine Service Z 20

Maritime Freight Rates Act Z 33

Meteorological Division Z 60

National Harbours Board Z 96

Park Steamship Co. Ltd Z— 7, 94

Pilots' Pension Funds Z— 72

Prince FIdward Island Car Ferry and Terminals Z 32, 68

Radio Division Z 61

Railway FJmployees' Provident Fund Z 37, 72

Railway Grade Crossing Fund Z— 14

Railway and Steamship Service Z 31

Royal Commission on Transportation Z 67

St. Lawrence River Ship Channel Contract Dredging Z 30

Steep Rock Mines, Dock and Rail Facilities Z 34, 71

Telegraph Branch Z 64

Trans-Canada Air Lines Z 68, 71

Transport Stores Account Z 70

Veterans Affairs ZA

Canadian Pension Commission ZA 9

Hospitals ZA— 18

Insurance ZA 11, 26

Land Settlement ZA— 14, 26

Pensions— World War 1 and 2 ZA— 11

Post-Discharge Re-establishment Rehabilitation Benefits ZA 17

Re-establishment Credits ZA 23

Treatment Services ZA— 7

War Service Gratuities ZA 23

PART III Appendix Assistance to Railways since Confederation 3

REPORT OF THE AUDITOR GENERAL

39882— A— 2

PUBLIC ACCOUNTS

Introduction

ANALYSIS OF THE PUBLIC ACCOUNTS

39882— A— 2

DEPARTMENT OF FINANCE

Department of Finance,

Ottawa, September 14, 1949. The Honourable D. C, Abbott,

Minister of Finance, Ottawa, Canada.

Sir:

In accordance with Section 38 of the Consolidated Revenue and Audit Act, 1931, I have the honour to submit herewith the Public Accounts of the Government of Canada for the fiscal year ended March 31, 1949. These accounts are arranged in three sections as follows:

Part I The Government's Balance Sheet as at March 31, 1949, and Statement of Revenue and Expenditure for the year ended on that date, together with various supporting schedules, statistical tables and appendices.

Part II Details of Revenue and Expenditure and Balance Sheet transactions, by Departments.

Part III ^^Statement of Government Assistance to Railways,

The Auditor General's Report to the House of Commons on his examination of Government accounts for the year is also appended to the present volume.

q

INTRODUCTORY ANALYSIS

Following the practice of former years this introduction will endeavour to summarize the Government's financial transactions for the fiscal year 1948-49 in such a way as to assist the reader to grasp the significance of the voluminous details to be found in Parts I and II of this report.

The following pages present, with comments upon the more significant aspects of each item:

1 . A brief summary of the highlights of Governmental financial operations during the year.

2. A summary of the 1948-49 revenue and expenditure statement.

3 . An analysis of revenues,

4. An analysis of expenditures.

5. A summary of the Government's balance sheet position as at March 31, 1949, and a brief analysis of the changes that have taken place in the principal assets and liabilities dm'ing the year.

6. A summary of security issues and redemptions during the year.

1. HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

DURING THE YEAR

For the third year in succession since the end of the war the Government's financial operations for the fiscal year 1948-49 resulted in a substantial budgetary surplus. Total revenues of $2,771-4 millions exceeded total expenditures by $595-5 millions. This surplus was exceeded only by the all-time record surplus of $676-1 millions recorded for the preceding fiscal year.

As was the case during the preceding year, the size of the 1948-49 surplus is a reflection both of prevailing business economic activity and of the Government's budgetary policies. During the fiscal year under review the pace of economic activity quickened and new levels of incomes and employment were achieved. With this background of an economy straining at its resources, the Government's announced budgetary policy involved the endeavour to achieve economy in expenditures, the deferring of all construction projects of a less urgent nature, and the maintenance of tax rates at levels as high as reasonably practicable in the circumstances, in order to produce a surplus that could be used to make the loans and advances that the Government is required to make and also to provide funds for the redemption of some of the huge governmental debt which had been accumulated during the war period.

PUBLIC ACCOUNTS Jdu

The manner in which the funds provided by the budgetary surplus were •actually utilized can best be understood by taking an over-all view of the Government's financial operations for the year. For this purpose it is necessary to note that the Government's financial operations are not confined merely to collecting revenues and making expenditures in the narrow accounting or budgetary sense of those terms. Very substantial amounts of cash are received and disbursed in other ways, and these receipts and disbursements must also be taken into account when considering the impact of the financial operations of the Government on the nation's economy.

These other receipts and disbursements relate to transactions which give rise to increases or decreases in the Government's assets and liabilities and they do not, therefore, appear in what might be called the Government's income account for the year nor do they enter into the calculation of the Government's annual surplus or deficit. In 1948-49 the total of these other disbursements greatly exceeded the total of other receipts, and a large part of the cash provided by the 1948-49 budgetary surplus had to be used to finance the difference. The balance of cash available for the reduction of funded debt was, therefore, considerably reduced.

The following summary, supported by a more detailed statement appearing in Appendix No. 13 on Page 47 of Part I of this Report, shows the nature and extent of these non-income transactions and their effect upon the Government's net cash position.

(millions of dollars) /.

Net cash balance remaining out of the current year's budgetary surplus (i.e. budgetary ")(>

surplus adjusted for non-cash items) - . .,.-,, , 668-4 ■"*

Add other receipts: ■'•,

Increases in. annuity, pension, insurance and guaranty accounts 107-3

Increases in deferred credits, deposit and trust and sundry suspense accounts 34-4

Repayments of loans to provincial and municipal governments and repayments of working capital advances to departments and crown corporations (net) 9-1

1 ^rf^! i50-8

819-2

Deduct other disbursements:

Advances to Foreign Exchange Control Board 450-0

Advances to Central Mortgage and Housing Corporation 68-0

Loans to U.K. and other governments (net) 59-4

Loans to veterans under the Soldier Settlement and Veterans Land Acts (net) .... 22-9

Advances to C.N.R. (net) 4-1 . . ,

Increases in other loaas and investments (net) 2-8

Reduction in floating debt 7-9

Cost of loan flotations (portion to be amortized) 1-6 616-7

Cash surplus, i.e. balance available for debt reduction and/or increase in cash balances 202-5

The figures indicate that although a total cash sum of 1668-4 millions became available to the Government as a result of the current year's budgetary surplus, the "cash surplus" was only $202-5 millions because of the large cash disbursements required on non-income account.

As the table shows the total of other receipts during the year amounted to $150-8 millions, made up of $107-3 millions from increases in annuity, pension, insurance and guaranty accounts; $34-4 millions from increases in deposit and trust and sundry suspense accounts, and $9-1 millions from repayments of sundry loans and working capital advances. The total of other disburse- ments on the other hand amounted to no less than $616-7 millions, consisting of $450-0 millions by way of advances to the Foreign Exchange Control Board to finance increases in Canada's exchange reserves; $68-0 millions by way of advances to Central Mortgage and Housing Corporation for housing construction and housing loans; $59-4 millions by way of loans to the United Kingdom and other countries for use in purchasing Canadian exports, and a further net amount of $29-8 millions by Avay of miscellaneous loans and investments, including loans to veterans and the Canadian National Railways. In addition floating debt was reduced by $7-9 millions and the eost of loan flotations remaining to be amortized and consisting mainly of commissions paid on sales of Canada Savings Bonds amounted to $1-6 millions.

Although total receipts from all sources exceeded total, disbursements by only $202-5 millions, the Government nevertheless reduced its outstanding funded debt by a net amount of $372-3 millions. This greater amount of reduction in funded debt was made possible through sales of bonds out of Securities Investment Account. This account is the one used to record temporary holdings by the Government of its own securities. Such securities are held either as temporary investments of surplus cash balances or until the securities themselves mature or are cancelled.

xiv DEPARTMENT OF FINANCE

A reconciliiation between the "cash surplus" of $202-5 millions, the net reduction in funded debt of $372-3 miHions, and the net change in the Government's cash position during the year, is shown below:

(millions)

Cash surplus i.e. excess of total receipts from adl sources over total disbursements $202-5

Add: Net sales of securities from Securities Investment Account 222-4

$424-9 Deduct :

Reduction in funded debt payable in Canada and London $472-3

Less increase in funded debt payable in New York 100-0

Net reduction in funded debt 372-3

Net increase in cash balances during the year $52-6

In spite therefore of the substantial budgetary surplus which prevailing prosperity and a relatively austere fiscal policy produced during the fiscal year 1948-49, it was only possible, after increasing cash balances by $52-6 millions, to reduce total outstanding funded debt by $372-3 millions. This reduction, moreover, was not wholly a reduction of funded debt held by the public. If we take account of the net sales of securities from Securities Investment Account we find that the Government's funded debt outstanding in the hands of the public decreased by only $149-9 millions during the year under review.

2. SUMMARY OF THE 1948-49 REVENUE AND EXPENDITURE STATEMENT

Table I which follows gives a summarized statement of revenue and expenditure for the fiscal year ended March 31, 1949, together with comparable figures for the preceding fiscal year.

TABLE I

SuBfMART OF ReVENXJES AND EXPENDITUKES FOR THE YeARS EnDED MaRCH 31, 1949 AND MaRCH 31, 1948

(In miUions of dollars)

Fiscal Year Ended March 31

1949

1948

Increase

or

Decrease ( )

Revenues

Ordinary Revenues

Capital Refunds

Special Receipts and Other Credits

Total Revenues

Expenditures

Ordinary Expenditure

Capital Expenditure

Demobilization and Reconversion Expenditm-e

Special Expenditure

Government Owned Enterprises

Other Charges, including the write-down of assets

Total Expenditures

Excess of Revenues over Exi}enditures (Budgetary Surplus)

2,649-1

01

122-2

2,771-4

1,573-4 18-5 425-6 34-8 39-7 83-9

2,175-9

695-5

2,629-8

01

241-9

2,871-7

1,380-0 15-7 634-4 63-1 18-7 83-7

2,196-6

676-1

19-3 119-7

-100-3

193-4

2-8

-208-8

-28-3

21 0

0-2

-19-7

-80-6

Note: Due to roimding oflf, the columns may not add exactly to the totals shown.

PUBLIC ACCOUNTS

xt

Ordinary revenues for the fiscal year ended March 31, 1949, totalled $2,649-1 millions which represents an increase of $19 3 millions over the total for the previous year. This increase was more than offset, however, by a decrease in special receipts and credits which totalled $122-2 millions during the year as compared with a total of $241-9 millions received during 1947-48. The reduction in these receipts, which consist largely of refunds of previous years' war, demobilization and reconversion expenditures and sales of surplus war assets is a normal decline which was to be expected in revenues from this source.

Of special interest on the expenditure side is the decrease in demobilization and reconversion expenditures from a total of $634-4 millions in 1947-48 to a total of $425-6 millions for the current year. Special expenditures also show a decrease from $63-1 millions in 1947-48 to $34-8 millions in 1948-49. These reductions were offset, however, by an increase of $193-4 millions in ordinary expenditures ($1,573-4 millions in 1948-49 as compared with $1,380 millions in 1947-48) , and by an increase of $21 millions in expenditures connected with government-owned enterprises ($39-7 millions in 1948-49 as compared wuth $18-7 millions in 1947-48). To some extent the increase in ordinary expenditures and the decrease in demobilization and reconversion expenditures resulted from a change in method of classifying expenditure as between the two years. Owing to their continuing nature, for exanitple, all costs relating to pensions and treatment of World War II veterans are now classed as ordinary expenditure, whereas in previous years they were included under the heading of Demobilzation and Reconversion Expenditure.

More detailed explanations regarding these various increases and decreases in revenues and expenditures will be found in the pages that follow.

The budgetary surplus of $595-5 millions brings to a total of $1,645-2 millions the amount by which the Government of Canada has been able to reduce its net debt during the last three fiscal years.

3. ANALYSIS OF REVENUES

Revenues for the year 1948-49 classified according to major categories are presented in Table II below, along with corresponding figures for the previous fiscal year.

TABLE II

Statement op Revenues, by Majoe Classifications, for the Years Ended March 31, 1949 and

March 31, 1948

(In millions of dollars)

Fiscal Year Ended March 31

Increase

1949

1948

Decrease ( )

Amoimt

Per cent

Amount

Per cent

Amount

Tax Revenue Direct Taxes

Direct Taxes on Incomes

1,342-8 25-5

48-5 0-9

1,286-9 30-8

44-8 1-1

55-9

Succession Duties

-5-3

Total Direct Taxes

1,368-3

49-4

1,317-7

45-9

50-6

Indirect Taxes

Customs Import Duties

223-0

204-6

636-1

41

8-0. 7-4^ 22-9 0-2

, 293-0

196-8

640-8

3-8

10-2 6-9

22-3 0-1

-70 0

Excise Duties

7-8

Excise Taxes

-4-7

Other Taxes

0-3

Total Indirect Taxes

1,067-8

38-5

1,134-4

39-5

-66-6

Total Tax Revenue

2,436-1 212-9

87-9

7-7

2,452-1

177-8

85-4 6-2

-16-0

Non-Tax Revenue

35- 1

Total Ordinary Revenue

2,649-1 122-3

95-6

4-4

2,629-8 241-9

91-6

8-4

19-3

Special Receipts and Credits

-119-7

Grand Total Revenue

2,771-4

100-0

2,871-7

100-0

-100-3

Note: Due to roimding off, the columns may not add exactly to totals shown.

^w?

DEPARTMENT OF FINANCE

(1) Direct Taxes on Income

Direct taxes on income again constituted the largest single source of revenue, accounting for $1,342-8 millions or 48-5 per cent of the Government's total revenue for the year. A further breakdown of receipts from these particular taxes appears below.

TABLE III

Analysis of Direct Taxes on Income for the Years Ended March 31, 1949 and March 31, 1948

(In thousands of dollars)

Fiscal Year Ended March 31

1949

1948

Increase or

Decrease ( )

Personal Income Tax

Tax on Interest and Dividends ,

Taxes on Rents and Royalties

Corporation Income Tax ,

Excess Profits Tax

Total Direct Taxes on Incomes

762,563

40,965

2.480

491,990 44,792

669,828

33,928

1,960

364.131

227,030

1,342,790

1,286,877

102,736

7.037

520

127,869

182,238

+56,913

(a) Taxes on Personal Incomes

The personal income tax, which yielded a total of $762-6 millions, retained its position as the largest single source of revenue. Although tax rates on personal incomes remained unchanged since July 1, 1947, total collections from this tax showed an increase of some $102-7 millions over the 1947-48 total. This increase is a reflection of the high levels of incomes and employment which prevailed throughout the year. The tax reductions announced in the Budget Speech of March 22, 1949, effective from January 1, 1949 are not of course reflected in Govern- ment revenues for 1948-49.

(6) Corporation Income and Excess Profits Taxes

Corporation income taxes yielded a total of $492-0 millions, an increase of $127-8 millions over the previous year's total. This very large increase is attributable not only to the high level of 'business profits being earned during this period, but also to the fact that the effect of the increase in corporation income tax rates (from 18 per cent to 30 per cent) which took place on January 1, 1947, was more fully reflected in 1948-49 revenues than it was in the revenues of the preceding year.

The yield from excess profits taxes totalled only $44-8 millions during the year as compared with a total of $227-0 millions in 1947-48. These taxes were repealed as of December 31, 1947, so that collections during the year 1948-49 were largely in the nature of "clean-up" payments.

(c) Taxes on Interest, Dividends, Rents and Royalties

Revenues under this heading represent withholding taxes on certain payments going to non-residents. The 1948-49 total of $43-4 millions represents an increase of $7-5 millions over that for the previous year. This increase is due largely to a higher level of dividend payments during the year.

(2) Succession Duties

Revenue from succession duties totalled $25-5 millions for the year. The decline of $5*3 millions below the previous year's total is attributable largely to the raising from $5,000 to $50,000 of the exemption on estates subject to duty. This change, which was announced in the 1948 Budget Speech, became effective as of January 1, 1948.

^i-y, PUBLIC ACCOUNTS M\ xvii

(3) Customs Import Duties

Net revenues from customs duties for the current year totalled $223-0 millions. This represents a reduction of $70 miUions below the 1947-48 total, a decrease which is attributable almost entirely to the import restrictions put into effect in November 1947, as part of Canada's exchange conservation program.

(4) Excise Duties

Excise duties, which are levied exclusively on alcoholic beverages and tobacco products, brought in a total revenue of $204-6 millons during 1948-49, representing an increase of $7-8 millions over the total for the previous year. The table which follows shows the distribution of this revenue as between alcoholic beverages and tobacco products.

TABLE IV Excise Duty Collections for the Years Ended March 31, 1949 and March 31, 1948

(In thousands of dollars)

Fiscal Year Ended March 31

Increase

or

Decrease ( )

1949

1948

Spirits, malt, etc '

101 , 105

106,241

39

-2,733

97,675

102,116

37

-3,034

3,430 4 125

Cigars, cigarettes and tobacco. .

Licences

2

301

Less refunds

Total Excise Duties

204,652

196,794

7 858

(5) Excise Taxes

Excise taxes constituted the second largest source of governmental revenues, with net collections for the year of $636-1 millions ($640-8 millions in 1947-48). Included here are a wide variety of taxes on commodities and services levied under the provisions of the Excise Tax Act.

The most important of these taxes from the point of view of revenue is the sales tax which yielded a gross revenue of $390-2 millions during 1948-49, or an increase of $7-2 millions over the total for the previous year. This increase, which reflects a somewhat higher level of prices and volume of transactions, took place despite the fact that the majority of prepared food products not previously exempt from sales tax were placed on the exempt list in May, 1948.

The second largest revenue source among the excise taxes is the tax on tobacco products, which yielded $77-7 millions. This represents an increase of 13 per cent over the previous year's total, and indicates an upward trend in tobacco consumption.

The tevenue from^ several other excise taxes also showed a substantial increase during the year. The revenue from soft drinks, for example, reached a new high of $27-7 millions, representing an increase of 17 per cent over the total for the previous year. At the same time tax revenue from candy and chewing gum rose to $19-9 millions, or an increase of 9 per cent during the year. Excise tax revenues from automobiles, rubber tires and tubes totalled $36-9 millions for 1948-49, this increase of approximately 16 per cent over 1947-48 revenues being attributable partly to the high rates of temporary taxes which were in effect until July 1948, and partly to the increased production and higher prices of automobiles.

Despite these increases, however, the over-all revenue from excise taxes was slightly lower in 1948-49 than in the preceding year because a number of previously important taxes no longer apply. For example, the excise taxes on amusements, pari-mutuel bets, places of entertainment, and the special tax on importations, were repealed in May, 1948 and yielded only small amounts of revenue during the year. Moreover, excise taxes on gasoline and sugar, and the sales tax on gas and electricity, which were repealed in 1947, yielded no revenue in 1948-49, although considerable amounts were received from these sources in 1947-48.

To some extent the revenue from excise taxes for the year reflects the temporary tax levies or temporary tax increases which were imposed in November 1947, in connection with the exchange conservation program. These temporary levies or increases were all removed over a period of nine months following that date with the last and most important group being removed on July 31, 1948.

DEPARTMENT OP PINANCE

Table V showing details of excise tax collections follows:

TABLE V

Excise Tax Collections for the Years Ended March 31, 1949 and March 31, 1948

(In thousands of dollars)

Taxes on Commodities

Sales tax

Automobiles, rubber tires and tubes.

Beverages

Candy and chewing gum

Cigars, cigarettes and tobacco

Cigarette papers and tubes

Electric and gas appliances

Furs

Gasoline

Matches and lighters

Phonographs, radios and tubes

Special excise on importations

Sugar

Toilet preparations and soaps

Trunks, bags, luggage, etc

Wines

Sundry

Taxes on Amusements and Services

Amusements

Tax on pari-mutuel bets

Transportation and communication

. Stamps, including payment of taxes on jewellery, chinaware, cabaret

attendance, etc

Licences, interest and miscellaneous

Fiscal Year Ended March 31

1949

Less refunds . Total Excise Taxes

390,174

36,943

27,689

19,888

77,665

6,999

3,894

3,693

3,412

3,562

279

7,757 5,565 2,060 4,700

2,483

105

29,034

22,725 382

849,009 -12,871

636,138

1948

383,012

31,949

23,767

18,279

68,606

6,419

2,824

3,139

2,208

3,967

5,325

2,113

10,572

7,146

4,962

2,342

4,716

15,369

2,519

27,531

24,300 376

Increase

or

Decrease ( )

651.441 -10;683

640,758

7,162

4.994

3.922

1,609

9,059

580

1,070

554

-2,208

-555

-1,763

-1,834

-10,572

611

603

-282

-16

-12,886

-2,414

1,503

-1,575 6

-2,432

-2.188

-4,620

(6) Miscellaneous Indirect Taxes

Table VI which follows shows the amounts received from a number of miscellaneous indirect taxes for the year ended March 31, 1949, and for the preceding fiscal year.

TABLE VI

Analysis of Miscellaneous Indirect Taxes for the Years Ended March 31, 1949 and March 31, 1948

(In thousands of dollars)

Fiscal Year Ended March 31

Increase

or

Decrease ( )

1949

1948

Chartered bank note circulation

166

3,339

96

435

188

3,004

141

471

-22

Insurance companies

335

Fur Export Tax

-45

Duty on the export of electric power and natural gas.

-36

Total Miscellaneous Indirect Taxes

4,036

3,804

232

PUBLIC ACCOUNTS

xbc

(7) Non-Tax Revenues

Non-tax revenues for 1948-49 totalled $212-9 millions, an increase of $35-2 millions over the corresponding figure for 1947-48. The greater part of this increase took place in the revenue classification entitled "Return on Investments". This revenue source yielded $107-9 millions in 1948-49 as compared with $75-8 millions in 1947-48. The larger items entering into total receipts under this classification are: interest on advances to the Canadian National Railways, $21-6 millions; Bank of Canada profits, $19-1 millions; interest on loans to, and operating profits of, the Foreign Exchange Control Board, $13-4 millions; interest on honds held in the Securities Investment Account, $17-2 millions; interest on loans to foreign governments under Part II of The Export Credits Insurance Act, $26-2 millions; and interest on advances under the Soldier Settlement and Veterans' Land Acts, $3-6 millions.

Post Office receipts which were formerly the most important item in this category totalled $80-6 millions, $2-8 millions above the figure for the previous year.

Table VII, giving details of Non-tax Revenues follows:

TABLE VII

Analysis of Non-Tax Revenues fob the Years Ended March 31, 1949 and March 31, 1948

(In thousands of dollars)

Fiscal Year Ended March 31

1949

1948

Increase

or

Decrease ( )

Post Office

Return on Investments

Bullion and Coinage

Privileges, Licences and Permits

Proceeds from Sales

Services and Service Fees

Refunds of Previous Years' Expenditure.

Premiimi, Discount and Exchange

Miscellaneous

80 107 3 6 2 8 1

,604 ,889 ,253 ,436 ,632 ,606 ,687

1,841

Total Non-Tax Revenue.

212,948

77,758 75,800 1,731 4,872 2,294 8,497 1,202 3,736 1,880

177,770

2,846

32,089

1,522

1,564

338

109

485

-3,736

-39

35,178

(8) Special Receipts and Credits

The total of special receipts and other credits for the fiscal year 1948-49 was $122-3 millions compared with a total of $241*9 millions for the previous year. Table VIII which follows •summarizes the principal sources of special receipts and other credits for the two years in question.

TABLE VIII

Analysis of Special Receipts and Credits for the Years Ended March 31, 1949 and March 31, 1948

(In thousands of dollars)

Fiscal Year Ended March 31

1949

1948

Increase

or

Decrease ( )

Refunds of previous years' war, demobilization and reconversion expend- itures

Sale of surplus war assets

Miscellaneous war, demobilization and reconversion revenue

Adjustment of Saskatchewan Seed Grain Loans, 1936 and 1937

Investments in Crown Companies, classified as expenditure in prior years, now transferred to active assets

Sundry special receipts and credits

82,453 25,840

8,828

2,528 2,656

122,305

132,566

63,381

29,809

9,773

3,704 2,666

241,899

-50,113

-37,541

-20,981

-9,773

-1,176 -10

-119,594

jEz " DEPARTMENT OP FINANCE

Receipts on war, demobilization and reconversion account again constituted by far the largest source of these special revenues. The total of such receipts during the fiscal year 1948-49 was $117-0 millions, consisting of $82-4 millions from refunds of previous years' war, demobiliza- tion and reconversion expenditures ; $25 8 millions from the sale of surplus war assets, and $8 8 millions from miscellaneous war, demobilization and reconversion revenues.

The