business is carried on, such tax to be in lieu of taxes on personal property. For this purpose, the annual value of the premises in which the business is carried on is fixed at 7 per cent of the assessed real value. This permissive provision for a business tax has not, thus far, been used to any considerable extent.

There seems, however, to be a strong and positive sentiment among business classes in the city of Toronto, the principal city of the Province, in favor of the substitution of this business tax for personal property assessments, the latter being regarded by many as an embargo upon expansion and growth. It is alleged that the effect of personal property assessments is to place business institutions of that city at a disadvantage with those of other cities in the Dominion where the business tax is in Vogue. Efforts have been made to substitute this business tax for personal property assessments, but have thus far failed; the argument used against its adoption being that a business tax was in favor of the wealthy classes and of accumulated wealth, and that it would result in a still greater burden upon real estate.

The liberal exemptions referred to, including the provision which exempts so much of the personal property of any person as equals the debts owed by him, together with the provision exempting from taxation the personal property of companies having the greater portion of their capital invested in real estate, practically destroy equality of assessment and taxation, and render the taxation of personal property ineffective.

Money deposited in banks, supposed to be assessable under the assessment act, is not in practice assessed, this fact being due to indifference and inadequate assessing machinery. It has been stated on good authority that there is now deposited in the banks of Ontario a total sum of $118,000,000, and that of this sum not more than half a million is taxed.

It has been stated that the total assessed valuation of the city of Toronto is less than one-tenth of its actual total wealth. Toronto contains about one-fourth of the wealth of the Province.

TAXATION OF CORPORATIONS.

There is substantially no distinction between the taxation of corporations and individuals for local purposes, both classes being taxable on real and personal property and incomes in the municipalities where located.

Aside from the provincial tax upon companies, under the supplementary revenue act above set forth, substantially no attempt has been made to subject the property or income of corporations to methods of taxation different from those applied to individuals.

The crude method of measuring ability to pay taxes by real estate valuations is applied to corporations as to individuals, and substantially no attempt is made to tax corporations, domestic or public, in accordance with their ability to pay, as measured by the real value of their property or by their earning capacity.

"New methods" for "new forms of property" have, as yet, no place in the Ontario system of municipal taxation, and unit valuation of the property of corporations is practically unknown. The real property of corporations, within the broad definition referred to, is valued and assessed in the districts where it is located.

The personal property of incorporated companies, other than those referred to in the following paragraph, is assessed against the companies in the same manner as if they were unincorporated or partnerships-that is, at their usual places of business; or where a company has more than one place of business, each branch is assessed, so far as may be, in the locality where it is situated; but if this can not be done the company may elect at which place it shall be assessed for its whole personal property. The personal property of a bank, or of a company which invests the whole or the principal part of its means in gas works, waterworks, plank or gravel roads, railway and tramroads, harbors, or other works, requiring the investment of the whole or the principal part of its means in real estate, is exempt from assessment; but the shareholders are assessable on the income derived from such companies. This provision is obviously made without regard to the equitable taxation of the classes of companies named therein, and permits great discrimination and escape of property from the rolls.

With respect to the "personal property of a bank," it is argued that it is the property of the bank's customers, and simply held by way of security; but other companies can escape taxation on all personalty by making a showing that the whole or the principal part of their capital is invested in real estate. For instance, telegraph and telephone companies contend that they have invested nearly all their means in real estate, and under the broad rules of valuation applicable to real estate largely escape taxation.

Nor does it appear from the results that the additional taxation of resident shareholders in such companies, upon the income derived (at property valuation rates), subjects the companies and their shareholders to adequate taxation as compared with the taxation of individuals generally.

Some effort is made by assessors, aided by a liberal construction of the law on the part of the courts, to extend the real estate valuation of such companies and make it include buildings, fixtures, and appurtenances in a broad sense, but such efforts are obviously inadequate, and do not attain anything like just taxation of such property. For instance, it has been held that the mains and pipes of a gas company laid under the public streets are assessable as appurtenant to the land owned by the company for the purpose of its business, but the practice seems to be to base assessment valuations of such property upon the "scrap" value of constituent elements rather than upon their value in operation.

The equitable taxation of these classes of property, including plants, equipments, buildings, franchises, etc., is obviously unattainable through local real estate valuations, and the inadequate taxation resulting is not compensated by the taxation of the income of resident shareholders at property valuation rates. The exemption of the personal property of such companies impliedly extends to franchise values, which constitute a very large part of the actual value of their property.

Every corporation whose dividends are taxable against its shareholders is required, at the written request of the assessor of any municipality in which there is any stockholder liable to assessment on dividends, to deliver a certified statement in writing, setting forth the names of shareholders resident in such municipality, the amount of stock held by each, the dividends, and the bonuses declared during the preceding year. These statements are not binding upon the assessors, who may, notwithstanding, assess such persons for such amounts of real and personal property as they believe to be just.

A corporation having income taxable under the law is taxed locally only upon so much of its income as is earned in the municipality where its principal office is located. The income earned outside of that municipality is taxable for provincial purposes under the supplementary revenue act.

RAILROADS.

A striking example of the crudity and inadequacy of the property tax of Ontario, without supplementary modern methods for the taxation of corporate forms of wealth, is found in the taxation of railroad property.

Aside from the provincial tax of $5 per mile of track already referred to, the taxation of such property may briefly be designated as a property tax based upon real estate valuation, assessed by estimate of local assessors in the various taxing districts in which the roads are located.

The assessment act especially provides that the real estate of a railway company in any district shall be considered as land of a resident, although the company has not an office in the municipality, except in cases where the company ceases to exercise its corporate powers through insolvency or other cause. Railway lands are assessable in the various local taxing districts in which they are located at the same valuations placed upon other lands in the same localities, regardless of their value in combination with improvements and structures thereon for railroad purposes. It is only the land occupied by the road that is liable to assessment, and it is held that the assessment must be according to the average value of land in the locality.

Every railway company is required to make annual statements showing

(1) The quantity of land occupied by the roadway and the actual value thereof according to the average value of land in the locality as rated on the assessment rolls of the previous year.

(2) Other real property in actual use and occupation by the company, and its value.

(3) The vacant land not in actual use by the company, and the value thereof, as if held for farming or gardening purposes.

It will thus be seen that the assessed valuation of railway property is what may be included as land. It does not include the superstructure, is not based upon cost, earning power, or actual value of elements in combination for railroad purposes, while the rolling stock and other personalty and franchise values are not included or taxed at all. The valuation in cities is especially inadequate, being made upon a "scrap iron" basis, so called. Up to a recent date this law required the property of railway and other transportation and transmission companies to be assessed in the separate wards in which it was located, and, under the construction placed thereon, required a valuation of the constituent elements included in the term "real estate"

at what they would be worth if separated and sold, regardless of their combined value in actual operation.

A recent amendment, however, permits the assessors to assess in one ward the entire property of a company in a municipality, at a valuation based upon its "fair value," the term "fair value" being interpreted to mean the value of its real estate together with what it would cost to erect poles, wires, etc., and the value of rails and other fixtures less their depreciation for wear and tear; or, in other words, permits them to assess the property of a company in the whole city on the same basis as they assess buildings in connection with the land of individuals.

Dividends on shares of stock in railway companies held by resident owners are assessable in the municipality where they reside.

We are unable to give the assessed values or taxes of railways in the Province, but a statement of the Grand Trunk Railway Company shows the assessed valuation of its property in the 397 townships, villages, towns, and cities of the Province of Ontario, through which it runs, for the year 1899 to be $6,525,504.14, and the total amount of municipal taxes paid in that year, $120,359.74. The amount of taxes paid to the Province was $13, 193.15, being $5 per mile of track.

The taxes paid by the same company upon the gross earnings of its road in the State of Michigan for the year 1900 was substantially $165,000.

TAX UPON INCOMES.

In this Province income has always been recognized as a proper subject for state and municipal taxation, and has formed a part of the assessment law for a great many years. The income tax apparently meets with general approval, and is regarded as a just and practical tax, although it does not appear to be vigorously and effectively administered.

The statutes give certain rights (municipal, provincial, and federal), to the man who pays income tax. The right of "manhood suffrage,' or the right to vote at municipal elections, is given only to those who appear on the assessment roll of the municipality, upon which the voters' list is based, as freeholders, tenants, income taxpayers, or farmers' sons.

We have seen that "personal estate" for purposes of taxation includes interest on mortgages, dividends on bank stock, shares in other incorporated companies, and income. In levying municipal, local, or direct taxes generally upon the rateable property, real and personal, of the municipality or other locality according to the assessed value of such property, income, subject to certain exemptions, is included as assessable property and taxed at uniform rates with other property.

As we have seen, the annual income of any person, derived from his personal earnings, to the amount of $700, and the annual income to the amount of $400 from any other sources, is exempt, the combined exemption in any case, however, not to exceed $700. It is made a part of the duty of tax assessors to put the names of taxpayers upon the rolls as voters, and it is provided that where any person derives from some trade, office, calling, or profession an income which is entitled by law to exemption from assessment, he is not bound to avail himself of such right, but may require his name to be entered on the assessment roll for such income for the purpose of being entitled to vote at elections for municipal councils; and in such case the income is liable to taxation like other assessable income or property.

The personal and official income of the Governor-General of the Dominion of Canada, the official income of the Lieutenant-Governor of the Province, and the pay of army and navy officers and privates are exempt, but the salaries or incomes of persons holding public offices generally are assessable. The income of farmers derived from their farms, and of merchants, mechanics, or others derived from capital liable to assessment, is exempt.

The assessment for income is made on the ratepayer's income for the year preceding the assessm ́ nt. The taxable income of a person is added to the valuation of other personal property, and the whole constitutes his personal property liable to assessment. The tax imposed upon business income is levied upon the balance of gain over loss, if any.

The income from mortgages, shares of stock, and other securities is taxable as so much property.

The income of companies not derived from capital assessed is taxable, subject to the provisions of the supplementary revenue act.

Income is assessed by local assessors by estimate, the assessors being guided by the statements of persons taxed and such other information as they may acquire. If the assessor questions the statement of a taxpayer as to his income, he may call for a statement in writing not under oath. The taxpayer may appeal from the

arbitrary assessment of the assessors to a court of revision composed of official arbitrators, one of which is appointed by the government, one by the mayor of the city, and one by the municipal council. From this board appeal lies to the senior county judge, whose decision is final.

The personal income tax by reason of the exemptions and indifferent administration, is substantially limited to the cities and towns. In 1899 the total taxable income of the Province was $9,265,771, apportioned as follows:

Cities
Towns
Villages.
Townships.

$7,307, 948

1,492, 136

256, 622

209, 065

The average rate imposed for all municipal purposes was 15.3 mills on the dollar. The taxable income in the city of Toronto for 1901 was $4,892,182, and the rate 19 mills on the dollar.

The total number of income assessments in the city of Toronto for the year 1900 was 4,527, of which 463 were of $2,000 or over, 519 over $1,000 and under $2,000, 816 over 500 and under $1,000, and 2,729 $500 and under.

Among the larger assessments for 1901 may be noted an investment company, $24,000; a mortgage association, $47,569; a life assurance company $100,000 (for income earned within the municipality); another for $60,000; a trustee of a single estate, $110,500; partnerships, $15,400, $32,300, $49,600, respectively; the Independent Order of Foresters, $84,000; a trust company, $33,500, and another $20,000; the Bradstreet Company, $7,000; individual assessments, $19,300, $34,300, $100,000, $13,283, $14,645, $15,000, $20,332; the whole list ranging from these sums down to $2,000, and including both men and women.

Tax officials and citizens generally commend the income tax of Ontario as correct in principle and successful in practice. It is generally represented that this tax might easily yield a very much larger revenue by more vigorous and progressive administrative methods. It seems, under present administrative methods, to be largely confined to salaries and other fixed incomes, and those easily and definitely ascertainable by the assessor. It will be observed that the rates of taxation on income are comparatively low, being the same as on full property valuations.

Many prominent business men and tax officials favor the abolition of personal assessments (which, as such assessments are now made, would not involve a serious loss of revenue), and the substitution of an enlarged and extended income tax with improved administrative methods. Several of the leading merchants of the larger cities of the Province, before the assessment commission a few months ago, expressed themselves as being entirely in accord with the business tax in lieu of personal property assessments, and advocated, in addition to the business tax, the assessment of income derived from their business, and more vigorous and aggressive administration of the personal income tax.

·PROVINCE OF QUEBEC.

In the Province of Quebec there is not only an entire separation of state and municipal taxation, but each municipality of importance is practically permitted to adopt its own method of raising its local revenues, without regard to uniformity with other municipalities.

The provincial revenues are derived from Dominion subsidies, lands and forests, certain stamps and fees, licenses, direct taxes on commercial corporations, duties on successions, and minor sources.

There is a general law for the taxation of parishes or country districts, which embodies a simple property tax for each, while for the municipalities containing towns or cities, special acts or charters are passed by the provincial legislature, giving each the power to assess and levy taxes independently, through such methods as it may adopt. Hence, there is substantially no uniformity in the methods of taxation in such municipalities for local purposes. The system in Quebec is unlike the one in Montreal, and that, in turn, has features different from the systems of other cities.

PROVINCIAL TAXES.

The Province has adopted an elaborate and extensive system of direct license taxes or duties on the sale of liquors, and on hotels, restaurants, and shops; and fixed taxes on auctioneers, pawnbrokers, and various kinds of business, from which sources it derives an annual revenue of about $600,000.

TAX ON COMMERCIAL CORPORATIONS.

Annual taxes are imposed upon commercial corporations and companies as follows: Upon every incorporated company carrying on any labor, trade, or business within the Province of Quebec:

(a) One-tenth of 1 per cent upon the amount of the paid-up capital to $1,000,000, inclusive, and $25 for each $100,000 or fraction thereof for all sums over $1,000,000. (b) An additional tax of $50 for each place of business, factory, or workshop in the cities of Montreal and Quebec, and of $20 for each place of business, factory, or workshop in any other place,

(c) The lieutenant-governor in council may allow these companies such reduction of taxes as he may deem just, in proportion to the nature and importance of their operations in the Province, when their principal place of business is beyond the limits of the Province, or when, their chief office being within the limits of the Province, they employ therein only part of their paid-up capital, and the larger portion of capital is employed without the Province; but the tax must be at least one-tenth of 1 per cent on the amount of the capital employed in the Province. The amount realized from this source in 1900 was $71,682.30.

BANKS.

A tax is levied on banks doing business in the Province at the rate of $100 for every $100,000 or fraction thereof of the paid-up capital up to $1,000,000, inclusive; $50 for each $100,000 or fraction thereof from $1,000,000 to $3,000,000; $25 for each $100,000 or fraction thereof from $3,000,000 to $6,000,000, and $15 for each $100,000 or portion thereof over $6,000,000, except on banks organized outside the Province having branches or agencies in the Province, which banks pay a principal tax of one-tenth of 1 per cent upon the amount of paid-up capital if not over $1,000,000, of $1,000 if the paid-up capital exceeds $1,000,000 but does not exceed $2,000,000, and of $1,500 if the paid-up capital exceeds $2,000,000.

These banks also pay an additional tax of $100 for each office or place of business in the cities of Montreal and Quebec, and of $20 for each office or place of business in any other place.

The amount of such taxes paid by banks in 1900 was as follows:

Every life insurance company is required to pay a tax of 1 per cent, and every other insurance company, except mutual and marine companies, a tax of two-thirds of 1 per cent, calculated in both instances upon the gross amount of premiums for insurance effected or renewed in the Province during the preceding year, the tax in no case, however, to be less than $250.

Every person, firm, or company engaged in carrying on the business of marine insurance as principal, agent, or broker pays a tax of $250.

A tax of 3 per cent is levied on the gross premiums on fire insurance effected on property in the Province of Quebec with companies not having representatives or agents therein, and not paying any tax under other provisions.

The amount of insurance taxes in 1900 was $49,266.05.

LOAN COMPANIES.

(a) A loan company with a fixed capital exceeding $500,000 pays a tax of $400, and an additional sum of $50 for each $1,000,000 or fraction thereof of paid-up capital over $1,000,000.

If the fixed capital exceeds $400,000 but does not exceed $500,000, the tax is $300; if it exceeds $300,000 but not $400,000, $250; if it exceeds $200,000 but does not exceed $300,000, $200; if it exceeds $100,000 but not $200,000, $150; if the capital is $100,000 or less, one-tenth of 1 per cent upon the amount of capital.

(b) A company without a fixed capital pays $100.

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