Wars are enormously expensive, not only in resources and lives, but economically. War gluts on a country’s finances like an insatiable parasite. Even after the last shots have been fired and the war is over, a society can take a very long time to recover from the economic ravages of war.
When Canada became a belligerent in the First World War – the Great War, as it was called then – the Canadian government had to find ways to pay the monumental costs it involved. One way was through the sale of war bonds, which were quickly dubbed “Victory Bonds.” Another way was through the implementation of a “temporary” income tax. Yet another method of raising money, and one that reached into the pockets of Canadians of all income brackets, was the sale of war tax stamps.
Guelph resident Eric Huber owns some of those relics of over a century ago.
The idea of selling tax stamps to help pay the costs of war dates back to Spain in the 1870s. But it was not until the First World War that it was used as a source of revenue in Canada. Its principal purpose was to help replace the revenue the country lost due to the reduction in trade caused by the war. The federal government passed the Special War Revenue Act in February of 1915, and other countries in the British Empire such as New Zealand and Australia soon followed suit.
The war tax stamps were postage stamps bearing the image of King George V, and came in denominations from one cent to 50 cents. Initially they had the words “War Tax,” “War Stamp,” or just “War” applied with a hand stamp, but later the words “War Tax” were part of the stamp’s design.
The war tax stamps had to be affixed to a wide range of items. If you mailed a letter, it would not be delivered unless it had a three-cent war tax stamp on it. A postcard only required a two-cent stamp. Postal orders and notes also had to be stamped. All bank-related documents required stamps: cheques, bills of exchange, bank drafts and bank receipts. Among the other things that had to bear the stamps were telegrams, patent medicines, railway and steamship tickets, perfumes and bottles of wine.
“EVERYBODY IS HIT BY SPECIAL TAXES” said a headline in the Toronto Globe. “TARIFF IS DRASTIC, BUT MUST BE FACED.”
“We are partners, not mere onlookers,” said Sir Frederick Williams-Taylor, vice-president of the Canadian Bankers’ Association. “The Empire is engaged in the greatest struggle the world has ever known, and we must cheerfully do our share in the way of taxation.”
William Thomas White of Montreal, the Minister of Finance for Conservative Prime Minister Sir Robert Borden, had previously been against raising taxes to pay for the war, but now defended the war tax stamps as a measure that kept taxes “to the minimum amount regarded by the government as necessary.” He claimed the new tax targeted “those members of the community who are best able to sustain it.”
However, the Liberal leader of the opposition, John Gillanders Turriff of Saskatchewan, believed the war tax stamps were just a cash grab, an opportunity for the government to take money away from the Canadian people under false pretenses. “Not a dollar of what the minister proposes … is for the purposes of the war,” he stated in Parliament.
The new war tax was front page news in the Guelph Mercury. John M. Taylor, president of Guelph’s Taylor Forbes Company, was not at all pleased with the tax.
“There are some things I don’t like about it,” he told the newspaper. “The principal one is that it lets the farmer out again, and it’s not fair, because he’s the man who is benefitting by the war conditions. As far as our business is concerned, it is going to cost us a lot of money … which will have to be met by us and our customers. I’m not kicking on that, but it’s not fair to let the farmer out the way it has been done.”
While some of the items affected by the tax would not be hit for a few weeks, the tax on wine went into effect immediately, causing concern among the proprietors of Guelph’s drug stores, who were the retailers of alcoholic beverages at that time. For most wines, the war tax was five cents a bottle, but for champagne it was 25 cents. One Guelph druggist didn’t think the tax would discourage sales to those who “are partial to champagne,” but he considered it an inconvenience that on the label of every bottle in his shop he would have to put a stamp, his name, and the date on which the bottle was sold. Hotel keepers also had to put the stamps on every bottle of wine in their bars.
Since most of the patent medicines sold in Guelph drug stores were manufactured in the United States or the United Kingdom, and already had import duties on them, druggists feared the war tax would hurt sales of those items. A mother with a sickly child might go back to the old standbys of chicken soup and hot lemon tea rather than pay even more money for a bottle of a ready-made cure or a tonic.
One Guelph druggist complained profits were already very small on patent medicines, and there was confusion over just what bottled or boxed preparations the government actually considered to be patent medicines. He argued a great injustice had been done to druggists; that they had been singled out and “that there was no class affected as the druggists were.”
The costs of the war lasted well after the Armistice of Nov. 11, 1918, and so the war tax stamps were in use into the 1920s. Today, the stamps are collectors’ items.
