As the Canadian war expenditure increased, additional taxes were imposed. Tin: new taxes of 1916 took the form of a levy on exceptional profits, mc of which were naturally due to the production of army supplies. The tax consisted of one-fourth of all profits in excess of 7 per cent from incorporated companies, and in ex cess of 10 per cent in other cases. Naturally in the administration of such a tax a good deal of discretion had to be allowed to the officials of the Department of Finance.
One of the most interesting questions which arises in connection with the new departures now being made, both as to methods of taxation and sources of loans, is as to whether and how far these experimental may perma nently affect the future financial practice and policy of Canada.
Provincial Finance.— We may now take a brief survey of the leading features of Cana dian provincial finance. As already indicated the provincial subsidies of the Dominion treas ury constituted the original basis of provincial revenue. The Dominion having assumed, up to a certain specified amount, the debts of the four original provinces of Ontario, Quebec, Nova Scotia and New Brunswick, found it necessary to make corresponding allowances for the other provinces as they entered Confederation, or were created out of the vast western territories held by the Dominion government, on much the same basis' as those territories out of which have been created the Western States of the American Union were held by the Federal gov ernment at Washington. In view of the reasons for granting them, these were known as °debt allowances, D and interest is paid on them at special rates. The object of the debt allow ance was, of course, to enable the new prov inces to equip themselves with such provincial public works and buildings as would place them on a fairly equitable footing with the older provinces when they entered Confederation. In the case of the two last provinces to be created, Alberta and Saskatchewan, no definite debt allowances were fixed, but they were granted specific annual subsidies in lieu of the interest upon fixed capital sums.
The details of the frequent agitations for readjustment of the original financial arrange ments with the provinces, either at the time of Confederation or on their subsequent entrance or creation, and the actual changes effected from time to time, are quite beyond the scope of this article. Suffice it to say that the grounds on which these relations at present stand, though still subject to demands for revision, are as follows: 1. A fixed grant according to population.
2. A per capita grant of 80 cents per head up to a population of 2,500,000, and at the rate of 60 cents per head above that number.
3. Special grants for buildings, in lieu of public lands.
4. Interest upon debt allowances, or annual grants in lieu thereof.
In raising the remainder of their revenues, the provinces, especially of recent years, have devised many new taxes. As in the case of the Dominion, however, their budgets combine purely revenue taxes and incomes from various forms of provincial service, and these incomes are either wholly or partially offset by the cost of rendering these services. For a considerable
time, as already indicated,, the taxes on real estate and provincial income were exclusively assigned to the municipalities for the support of their local requirements. Up to 1915 only two provinces had departed from this policy, British Columbia and Prince Edward Island. Both levy a tax upon real estate and income, while British Columbia alone has resorted to that old standby of the American States, the personal property tax.
It is impossible to go into details with ref erence to the very varied financial arrangements, and classifications of revenue and expenditure, of the different provinces. In their provincial accounts, the combinations of items in some provinces and the separation of them in others render it very difficult to make any detailed comparisons of their budgets. Certain broad facts, however, stand out as indicative at once of those features common to the majority of the nine provinces and those which are peculiar to individual provinces owing to their special historic or physical conditions, though some times due also to special lines of policy. Tak ing the last available returns for all the prov inces up to 1914, we find that beyond the Dominion subsidies, the most common sources of provincial revenue are succession duties, taxes on corporations and various special fees. In these all the provinces share. In some cases the returns from certain fees and licenses are set forth separately. Thus licenses for the sale of liquor, for motor vehicles, moving pictures, hunting and fishing, etc., are listed separately in a number of accounts. Six provinces derive revenues from Crown lands, timber and mines, and from interest on investments. Most of them derive a certain revenue from hospitals and public charities which tends to offset the cost of these institutions. Revenues come also from certain public works, and from activities in aid of agriculture. Certain revenues, as re gards their relative importance at least, are peculiar to individual provinces. Among these are the tax on fok farms in Prince Edward Island, royalties on coal mines in Nova Scotia and British Columbia and to a lesser degree in Alberta, also on other mines in Ontario, Que bec and British Columbia. The income from the Timiskaming and Northern Railway, and the investments of the Hydro-Electric Com mission, are characteristic of Ontario. Revenues from provincial telegraph and telephone lines are important in Manitoba, and from Chinese restriction in British Columbia. On the side of expediture there is more uniformity. All of the provinces have large outlays for interest and sinking funds, the administration of justice, for legislation, the civil service, education, public charities, agriculture and public works. Five of them expend considerable sums on colonization and immigration, several on mines, lands and forests. Ontario spends much on its Hydro-Electric Commission; Manitoba on tele graphs and telephones and British Columbia on its fisheries.