An Act to amend the Income Tax Act (deductibility of remuneration)

This bill was last introduced in the 39th Parliament, 2nd Session, which ended in September 2008.

This bill was previously introduced in the 39th Parliament, 1st Session.

Sponsor

Chris Charlton  NDP

Introduced as a private member’s bill. (These don’t often become law.)

Status

Not active, as of March 27, 2007
(This bill did not become law.)

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Bill C-317—Income Tax Act—Speaker's Ruling
Points of Order
Routine Proceedings

November 4th, 2011 / 12:10 p.m.
See context

Conservative

The Speaker Andrew Scheer

I am now prepared to rule on the point of order raised by the hon. member for Windsor—Tecumseh concerning ways and means proceedings on Bill C-317, An Act to amend the Income Tax Act (labour organizations) standing in the name of the hon. member for South Surrey—White Rock—Cloverdale.

I would like to thank the hon. member for Windsor—Tecumseh for having raised this matter, as well as the bill's sponsor, the hon. member for South Surrey—White Rock—Cloverdale, for their interventions and the hon. member for Kitchener—Conestoga for his comments.

The hon. member for Windsor—Tecumseh pointed out in his remarks that the purpose of Bill C-317 is to require that labour organizations provide specific financial information to the minister for public disclosure. The member also pointed out that failure of a labour organization to comply with this new requirement could result in a labour organization losing its tax exempt status, noting, as well, the subsequent impact this would have on dues-paying members of that organization.

He characterized the effect of Bill C-317 in the Debates, on October 18, 2011, page 2171, as follows:

—the income tax exemptions that apply to labour organizations and the reduction of taxable income as a result of writing off the dues paid by their members would easily qualify as alleviations of taxation. Further, the provisions of Bill C-317 would repeal those alleviations by terminating the labour organization's Income Tax Act exempt status.

The member for Windsor—Tecumseh explained that any labour organization not in compliance with the financial disclosure requirements outlined in the bill would no longer enjoy the tax exempt status as provided for in section 149(1)(k) of the Income tax Act. He argued that this would have the effect of taxing a person, or in this case an organization, that was not already a taxpayer. He concluded therefore that Bill C-317 should have been preceded by the adoption of a ways and means motion.

In his submission, the hon. member for South Surrey—White Rock—Cloverdale in the Debates, on October 25, 2011, page 2438, contended that the purpose of Bill C-317 was limited simply to providing a mechanism for the public disclosure of union finances and only augmented the existing types of information that the Canada Revenue Agency was already empowered by its mandate to compel organizations or taxpayers to provide.

He also referred to a ruling from the 40th Parliament on Bill C-470, An Act to amend the Income Tax Act (revocation of registration). He found a parallel between Bill C-317 and Bill C-470. Where it had been argued that charitable donations were discretionary so that Bill C-470 did not affect any existing alleviation of tax, the hon. member argued that in the case of Bill C-317 payers of union dues could exercise their discretion by opting to join a union or labour organization that adhered to the financial disclosure provisions of Bill C-317 and, thus, maintain the tax exempt status of their dues.

Before analyzing the arguments presented, it is important to take into consideration the context of this discussion as it is worth noting that the financial procedures of the House are based on long-established and strictly observed rules of procedure, procedures that are based on the concept of the financial initiative of the Crown. This concept is clearly presented in Erskine May’s Parliamentary Practice, 23rd edition, at page 848:

—it is for the Commons, acting on the sole initiative of Ministers, first to authorize the relevant expenditure (or 'Supply') and, second, to provide through taxes and other sources of public revenue the 'Ways and Means' deemed necessary to meet the Supply so granted.

The role of the Speaker in the present situation is to determine if Bill C-317 is a legislative initiative which imposes a tax or other charge on the taxpayer and therefore would have required the prior adoption of a ways and means motion by the House.

In order to respond to that question, it may be useful to examine more closely the different precedents cited by the members who intervened on the present case.

During his initial point of order, the member for Windsor—Tecumseh referred the Chair to the ruling of November 28, 2007, on Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration). In that ruling, at pages 1463 and 1464 of the Debates, the Chair made reference to Erskine May's Parliamentary Practice, 23rd edition at page 896, where it explains, “the repeal or reduction of existing alleviations of taxation” must be preceded by a ways and means motion.

The Chair concluded that Bill C-418 removed an existing tax exemption which then resulted in an increase in the tax payable by certain corporations. In the Chair's view, this constituted a reduction of an alleviation of taxation and therefore required that it be preceded by a ways and means motion. I would ask hon. members to retain the phrase, “alleviation of taxation”, as I will return to that concept shortly.

First, let me address the differing interpretations of how an individual union member’s rights are affected by Bill C-317. The member for Windsor—Tecumseh argued that union members do not have the automatic individual right to stop paying dues to an organization that no longer enjoys a tax exempt status. The member for South Surrey—White Rock—Cloverdale countered that, in his estimation, union members would have the ability to select a labour organization that complies with the provisions of C-317 to ensure that they maintain their tax exemption. While this is more a question of labour law than procedure, the Chair is aware that members of a labour organization cannot easily change which union they belong to nor can they simply withhold paying their union dues except in extremely limited situations provided for in the law. As pointed out by the member for Windsor—Tecumseh, this is in stark contrast to donors to a charity who may choose whether they wish to contribute, the organization they wish to contribute to and the timing of any such contribution.

The Chair must agree with the hon. member for Windsor—Tecumseh that the non-compliance of the labour organization would also remove a current income tax deduction for the dues-paying members of the union. For the Chair, there can be no doubt that this also can be characterized as the removal of an existing alleviation. For this reason alone, Bill C-317 would need to be preceded by a ways and means motion.

Let us return to the larger context. The Chair appreciates the point made by the member for South Surrey—White Rock—Cloverdale that the Canada Revenue Agency already enjoys the authority to compel the financial disclosure of certain financial information. However, it is not the power of the CRA to require the disclosure of certain information that is at issue.

It is true, as the member for South Surrey—White Rock—Cloverdale claims, that Bill C-317 changes the reporting requirements for labour organizations. However, contrary to what the member asserted, that is not all it does. In stating that non-compliance with these new requirements makes a labour organization ineligible for tax deductions available to labour organizations, Bill C-317 potentially removes an alleviation of taxation and in so doing, the bill potentially creates a new statutory authority that removes what is currently an unqualified exemption.

Perhaps the distinction can be better understood by looking again at the example offered by Bill C-470 in the third session of the 40th Parliament. That bill changed the definition of a class of taxpayers, specifically registered charities, but the alleviation of tax for registered charities as a class of taxpayer remained unchanged. By contrast, Bill C-317 does not change the definition of a labour organization. It demands disclosure of certain types of information, failing which disclosure, the bill provides that the tax alleviation in place for labour organizations will no longer apply to non-complying labour organizations.

This is a subtle difference, but it is a crucial distinction for the Chair.

The ruling on Bill C-470 determined that the bill altered the conditions and requirements for an organization to be classified by the minister as a registered charity but did not alter the class of taxpayer. In more basic terms, Bill C-470 proposed to alter the definition of what constituted a registered charity but did not change the tax exemptions for registered charities. In the ruling on C-470, delivered on March 15, 2010, and found on pages 419 and 420 of the Debates, I stated:

It seems to me that the bill instead seeks to provide a new criterion that would allow the minister to determine into which existing class of taxpayer an organization falls. The existing tax regimes and the existing tax rates are not affected.

However, unlike Bill C-470, Bill C-317 does not attempt to alter the conditions or requirements for an organization to be classified as a labour organization.

According to the provisions of Bill C-317, under the Income Tax Act, a labour organization would remain a labour organization, whether it complied with the proposed disclosure requirements or not. If enacted, Bill C-317 would thus create a situation whereby labour organizations can be differentiated into two distinct categories, those that comply with the financial reporting mechanism and those that do not.

In the Chair's opinion, this new category of labour organization would constitute a class of taxpayer that does not currently exist. Labour organizations in the newly created class, that is those that do not meet the financial reporting requirements outlined in the bill, would see the removal of their current tax-exempt status. Put simply, Bill C-470 did not alter the tax-exempt status of registered charities, whereas, in contrast, Bill C-317 proposes to alter the current tax-exempt status of labour organizations.

As a result of this determination, I find that Bill C-317, by distinguishing between certain labour organizations, creates a new class of taxpayer and that this new class of taxpayer would then be subject to a removal of an alleviation of taxation.

For the reasons stated, I must, therefore, rule that Bill C-317 should have been preceded by a ways and means motion. Consequently, I also rule that all proceedings on the bill to date, namely introduction and first reading, have not respected the provisions of our Standing Orders and are, therefore, null and void. Accordingly, the Chair directs that the order for second reading of the bill be discharged and the bill be withdrawn from the order paper.

However, I am reluctant to deny the member what is likely his only opportunity in this Parliament to have an item on the order of precedence.

As members are well aware, Standing Order 94(1) provides the Speaker with the authority to “make all arrangements necessary to ensure the orderly conduct of Private Members' Business”.

In light of the unique nature of this particular situation, the member for South Surrey—White Rock—Cloverdale will be permitted to substitute another item onto the order of precedence. The substitution shall be done pursuant to the spirit of Standing Order 92.1, which allows a member 20 sitting days to substitute another item of private members' business for the item that has been discharged and withdrawn. Should the member choose not to replace the item within the next 20 sitting days, his name will then be dropped from the order paper.

I thank the House for its attention.

Income Tax Act
Private Members' Business

March 15th, 2010 / 11:05 a.m.
See context

Conservative

The Deputy Speaker Andrew Scheer

I am now prepared to rule on the point of order raised by the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons, concerning the requirement for a ways and means motion for Bill C-470, An Act to amend the Income Tax Act (revocation of registration), standing in the name of the hon. member for Mississauga East—Cooksville.

I would like to thank the hon. parliamentary secretary for having raised this matter, as well as the hon. member for Mississauga East—Cooksville, the hon. member for Mississauga South, the hon. member for Scarborough--Rouge River, the hon. Parliamentary Secretary to the Minister of International Cooperation, the hon. member for Algoma—Manitoulin—Kapuskasing, the hon. member for Eglinton—Lawrence, and the hon. member for Brampton West for their comments.

The parliamentary secretary pointed out in his remarks that the purpose of Bill C-470 is to allow for the revocation of the registration of a charitable organization, public foundation or private foundation, if it provides annual compensation in excess of $250,000 to any of its executives or employees. On this point, he and the member for Mississauga East—Cooksville agreed.

Beyond that, however, the parliamentary secretary contended that such a revocation would extend the incidence of a tax to organizations which are not currently subject to it. Specifically, he noted that such organizations, on losing their registration, would be subject to the revocation tax imposed by subsection 188(1.1) of the Income Tax Act, since the revocation tax is a tax imposed on a charitable organization which loses its official registration under the act.

He further characterized the effect of the bill as follows in the House of Commons Debates of December 1, 2009, at pages 7410 and 7411:

Upon deregistration of an entity in the circumstances proposed by Bill C-470, that entity loses its tax exempt status as a registered charity and, assuming it remains a charity, it will not be able to benefit from the other exemptions from tax provided for in subsection 149.1.

In other words, Bill C-470 would result in an extension of the incidence of a tax by including entities that are not already paying the revocation tax, or potentially, a tax on their income.

Finally, the parliamentary secretary noted that the issue of ways and means is one which the Chair takes very seriously. He referred to a November 28, 2007, Speaker's ruling regarding the case of Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration), introduced in the second session of the 39th Parliament. That bill had the effect of removing an existing deduction, and hence of increasing the amount of tax payable by certain corporations. It was clear that the bill, in removing a tax exemption, effectively increased the tax payable and therefore required that it be preceded by a notice of ways and means.

In her submission, the member for Mississauga East—Cooksville, in Debates of December 1, 2009, page 7,458, contended that the purpose of Bill C-470 is simply to add another reason that would allow the minister to revoke the registration of a charitable organization.

Bills involving provisions of the Income Tax Act can be complex and confusing. However, after careful examination of Bill C-470, as well as the authorities cited and the provisions of the Income Tax Act referred to by the parliamentary secretary, I have found the following reference from House of Commons Procedure and Practice, 2nd edition, page 900, particularly relevant. It states:

The House must first adopt a ways and means motion before a bill which imposes a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of a tax to a new class of taxpayers.

It seems clear to the Chair that Bill C-470 does not propose a new tax, nor does it seek the continuation of an expiring tax, nor does it attempt to increase the rate of an existing tax.

The question which remains to be asked is the following: Does the bill extend a tax to a new class of taxpayer?

A close examination of the provisions of Bill C-470 indicates that the bill targets all registered charitable organizations, public foundations and private foundations, and seeks to introduce consequences for those within that class which pay to a single executive or employee annual compensation that exceeds $250,000.

I have difficulty in regarding organizations finding themselves in that situation as constituting unto themselves a “class of taxpayer”.

In the Chair's view, class of taxpayer refers in this case to registered charitable organizations, public foundations and private foundations, and Bill C-470 does not seek to alter that class.

It seems to me that the bill instead seeks to provide a new criterion that would allow the minister to determine into which existing class of taxpayer an organization falls. The existing tax regimes and the existing tax rates are not affected.

Accordingly, I rule that Bill C-470 does not extend the incidence of a tax to a new class of taxpayer and therefore need not be preceded by a ways and means motion.

I thank the House for its attention.

Bill C-470
Points of Order
Routine Proceedings

December 1st, 2009 / 10:05 a.m.
See context

Regina—Lumsden—Lake Centre
Saskatchewan

Conservative

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, I rise on a point of order with respect to Bill C-470, standing in the name of the member for Mississauga East—Cooksville.

Without commenting on the merits of Bill C-470, An Act to amend the Income Tax Act (revocation of registration), I submit that the bill would extend the incidence of a tax and therefore should have been preceded by House concurrence in a ways and means motion for the bill.

The second edition of House of Commons Procedure and Practice states on page 900 that:

The House must first adopt a ways and mean motion before a bill which imposes a tax or other charge on the taxpayer can be introduced.

In addition, citation 980 of the sixth edition of Beauchesne's Parliamentary Rules and Forms states:

A ways and means motion is a necessary preliminary to the imposition of a new tax, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of the incidence of a tax so as to include persons not already payers.

I would further note that on page 898 of the 23rd edition of Erskine May, it states:

A Ways and Means motion resolution is required to authorize extension of the scope of a tax, for example, to cover new classes of tax-payers.... The requirement for a Ways and Means resolution also applies to any proposal for a change in tax law or the administration of tax collection which may lead, albeit incidentally, to an increased or accelerated tax burden for any class of taxpayers.

By way of precedent, on November 28, 2007, the Speaker ruled in the case of Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration) that:

If adopted, this measure would therefore have the effect of increasing the tax payable by certain corporations.... In other words, the bill deals with an issue of ways and means....

In my view, Bill C-418 imposes a charge on the taxpayer, but it was not preceded by a ways and means motion....

Accordingly, the Chair must now direct that the order for second reading of the bill be discharged and the bill withdrawn from the order paper.

The purpose of Bill C-470 is to allow the revocation of the registration of a charitable organization, public foundation or private foundation, if a particular entity is paying an annual compensation that exceeds $250,000 to any of its executives or employees.

Let me explain why the bill would result in the extension of a tax. For the information of members, subsections 149.1(2) to 149.1(4) of the Income Tax Act provide rules upon which the Minister of National Revenue can deregister a charity. Bill C-470 would amend the Income Tax Act by adding paragraph (c) to subsection 149.1(2) of the act, adding paragraph (f) to subsection 149.1(3) and adding paragraph (e) to subsection 149.1(4). This would add a new condition where the Minister of National Revenue can deregister a charity. Let me explain in detail, if I may, how that may work.

At present, upon the issuance of a notice of revocation of its registration under any of the current subsections from 149.1(2) to 149.1(4), an entity is facing an additional tax burden. Subsection 188(1.1) of the Income Tax Act, read in conjunction with subsection 188(1), provides that such an entity is liable to a tax calculated in accordance with the formula found in subsection 188(1.1). This additional tax liability is known as the revocation tax.

Bill C-470 would add the new circumstances described in subsections 149.1(2) to 149.1(4) for deregistration of charities by providing that the Minister of National Revenue can, in addition to the current circumstances described in the Income Tax Act, deregister an entity on the basis that it pays more than $250,000 in compensation to one of its executives or employees.

Charities that would be deregistered under the new circumstances in Bill C-470 would be liable to pay the revocation tax imposed under subsection 188(1.1).

In addition, paragraph 149(1)(f) of the Income Tax Act provides that registered charities are exempt from taxation. Upon deregistration of an entity in the circumstances proposed by Bill C-470, that entity loses its tax exempt status as a registered charity and, assuming it remains a charity, it will not be able to benefit from the other exemptions from tax provided for in subsection 149.1(1).

In other words, Bill C-470 would result in an extension of the incidence of a tax by including entities that are not already paying the revocation tax or, potentially, a tax on their income. This means that the bill should have been preceded by the concurrence of the House in a ways and means motion for the bill.

As a result, I submit that the order for second reading of the bill should be discharged and the bill be withdrawn from the order paper.

Bill C-219
Points of Order
Routine Proceedings

January 31st, 2008 / 1:15 p.m.
See context

Regina—Lumsden—Lake Centre
Saskatchewan

Conservative

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform

Mr. Speaker, I rise on a point of order respecting the procedural acceptability of Bill C-219, An Act to amend the Income Tax Act (deduction for volunteer emergency service), which is currently on the order of precedence in the name of the hon. for Malpeque.

Without commenting on the merits of the bill, I would ask the Speaker to rule on whether the bill conforms to the procedural requirements for tax legislation.

Briefly stated, the Income Tax Act has been amended since the introduction of Bill C-219, so that the bill now has the unintended effect of increasing taxes.

Although the bill was in order when it was first introduced, I will be arguing that the bill should have been preceded by a ways and means motion when it was reinstated in the current session of Parliament.

I will therefore be arguing that the bill should be withdrawn from the order paper.

Bill C-219 proposes to amend the Income Tax Act to allow volunteer emergency workers to deduct $1,000 from their taxable income if they performed at least 100 hours of volunteer service and $2,000 if they performed at least 200 hours of volunteer service.

Bill C-219 was first introduced in the House during the previous session of Parliament on April 10, 2006.

On October 16, 2007 the bill was deemed to have been introduced and read a first time in the current session of Parliament pursuant to Standing Order 86.1 which provides for the reinstatement of private members' business following a prorogation.

As the Speaker knows, bills that increase the level of taxation must first be preceded by the adoption of a ways and means motion. The 22nd edition of Erskine May states at pages 777 and 778 that matters requiring authorization by a ways and means resolution include “the repeal or reduction of existing alleviations of taxation, such as exemptions or drawbacks”.

Bill C-219 proposes to amend the Income Tax Act to provide a tax deduction for voluntary emergency workers. Erskine May makes clear at page 781 that bills that alleviate taxation do not require a ways and means motion.

I therefore recognize that the bill was properly before the House when it was first introduced in the previous session of this Parliament. However, since Bill C-219 was first introduced, the Income Tax Act has been amended and as a consequence Bill C-219 will now have the unintended effect of increasing levels of taxation.

Let me take a moment to explain why.

Bill C-219 would add proposed paragraphs 60(y) and 60(z), and proposed sections 60.03 and 60.04 to the Income Tax Act. As I noted earlier, after Bill C-219 was introduced, the Income Tax Act was amended by Parliament in ways which affect Bill C-219.

First, paragraph 60(y) of the Income Tax Act was added by subsection 174(1) of the Budget Implementation Act, 2006, which received royal assent on June 22, 2006.

The effect of this new paragraph is to provide a deduction equal to the amount of any universal child care benefit that a taxpayer is required to pay. The deduction is necessary because when the taxpayer initially received the universal child care benefit the amount is required to be treated as income. As such, it is taxable.

However, if the benefit is to be repaid, taxes would be paid on an amount the taxpayer did not get to keep. That is why the deduction is required. Without it, more taxes are paid. Therefore, removing the deduction would have the effect of increasing the taxes paid.

Proposed paragraph 60(y) contained in Bill C-219 would set out the new tax deduction proposed in the bill but would also have the effect of replacing existing paragraph 60(y) in the Income Tax Act. Therefore, as currently drafted, Bill C-219 would result in a greater tax burden.

The same could also be said for proposed paragraph 60(z), contained in Bill C-219. Section 105 of the Budget and Economic Statement Implementation Act, 2007, which received royal assent on December 14, 2007, has already added paragraph 60(z) to the Income Tax Act.

Paragraph 60(z) provides for the deduction of any repayment of any grants or bonds paid under the Canada Disability Savings Act. Bill C-219 would remove that deduction.

The third change to the Income Tax Act to which I wish to draw attention is proposed section 60.03 which was added by section 5(1) of the Budget Implementation Act, 2007, which received royal assent on June 22, 2007.

Section 60.03 of the Income Tax Act allows a couple to split their pension income to permit them to take advantage of a lower effective marginal tax rate.

The proposed section 60.03 of Bill C-219 sets out the evidence taxpayers are required to submit to be eligible for the new tax deduction proposed in the bill, but would also have the effect of replacing the existing section 60.03 in the Income Tax Act. In other words, Bill C-219 would repeal the pension splitting provisions and therefore result in a greater tax burden for seniors.

We have with Bill C-219 an unusual circumstance. A ways and means motion was not required when the bill was introduced in the previous session because the bill did not have the effect of increasing taxes at that time.

However, Bill C-219 amends the Income Tax Act, which has since been amended. The provisions of the Income Tax Act, which are being repealed by Bill C-219, were for the benefit of taxpayers. By removing these provisions, we would be adding to the tax burden. Consequently, I would suggest that the bill should have been preceded by an adoption of a ways of means motion at the time of reintroduction in this session and that the bill is therefore now improperly before the House.

I note that in this session the government tabled ways and means motions and had them adopted by the House before the reinstatement of two government tax increase bills from the previous session, namely Bill C-10, the income tax bill, and Bill C-12, the bankruptcy and wage earner protection bill. The government would have tabled a ways and means motion for any new government bill to increase taxes which would remove provisions added in previous budget bills.

In addition, I suggest that the requirement for a ways and means motion is not limited to the introduction of a bill, but also to any motion that would increase taxation. For example, it is clear that motions to amend bills that have the effect of increasing taxation require a ways and means motion. Citation 982 of the sixth edition of Beauchesne's states that, “No motion can therefore be made to impose a tax”.

It could therefore be argued that the motion for second reading of Bill C-219 is out of order, as the bill would have the effect of increasing the levels of taxation.

Finally, Mr. Speaker, if you were to find that Bill C-219 is now improperly before the House, as I argue, I believe you would be obliged to direct that the order for second reading of the bill be discharged and the bill be withdrawn from the order paper, as you did in the case of Bill C-418 earlier in the session, on November 28, 2007.

(Bill C-418. On the Order: Private Members' Bills:)

Second reading and reference to the Standing Committee on Finance of Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration)--Ms. Charlton (Hamilton Mountain).

(Order discharged and bill withdrawn)

The House resumed from November 27, consideration of the motion that Bill C-2, An Act to amend the Criminal Code and to make consequential amendments to other Acts, be read the third time and passed.

Bill C-418--Speaker's Ruling
Private Members' Business
Routine Proceedings

November 28th, 2007 / 3:20 p.m.
See context

Liberal

The Speaker Peter Milliken

Before we proceed to orders of the day, I wish to give a ruling on a matter before the House.

Members will recall that on October 16, 2007, the Chair made a statement reminding members that our Standing Orders provide for the continuance of private members' business from session to session within a Parliament.

In discharging its usual responsibilities regarding the orderly conduct of private members' business, the Chair reviewed all private members' business items eligible to continue from the first session into this new one. I need to bring to the attention of the House an issue that was noted with regard to Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration), standing in the name of the hon. member for Hamilton Mountain.

Bill C-418 proposes to amend the Income Tax Act to provide that a corporation may not deduct as a business expense more than $1 million per year in respect of remuneration paid to an employee or officer of the corporation in that year. If adopted, this measure would therefore have the effect of increasing the tax payable by certain corporations. In essence, this constitutes a reduction of an alleviation of taxation. In other words, the bill deals with an issue of ways and means.

As indicated at page 748 of House of Commons Procedure and Practice, there are two types of Ways and Means proceedings. The budgetary policy of the government is the first of these. The second type refers to “the consideration of legislation (bills based on Ways and Means motions already approved by the House) which imposes a tax or other charge on the taxpayer”.

Furthermore, at page 896 of Erskine May’s Parliamentary Practice, 23rd edition, it states that “the repeal or reduction of existing alleviations of taxation” must be preceded by a Ways and Means motion.

In my view, Bill C-418 imposes a charge on the taxpayer, but it was not preceded by a ways and means motion, which, as hon. members know, can only be proposed by a minister of the crown. I realize that this is a difficulty that ought to have been noticed earlier. In fact, it should have been noted when the member for Hamilton Mountain introduced the bill.

Accordingly, I have asked legislative drafters and procedural staff, working together, to provide early advice to members on their legislative initiatives so that members have ample opportunity to make the necessary adjustments to ensure their draft legislation does not offend House rules.

In conclusion, for the reasons stated above, proceedings on the bill to date, namely, introduction and first reading, have not respected the provisions of our Standing Orders and are therefore null and void. Accordingly, the Chair must now direct that the order for second reading of the bill be discharged and the bill withdrawn from the order paper.

I thank hon. members for their attention.

Income Tax Act
Routine Proceedings

March 27th, 2007 / 10:05 a.m.
See context

NDP

Chris Charlton Hamilton Mountain, ON

moved for leave to introduce Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration).

Mr. Speaker, in my riding of Hamilton Mountain, and indeed right across this country, hard-working families are increasingly recognizing the existence of a prosperity gap. They do not feel that they are benefiting from the economic growth they keep hearing about. They are right. The numbers back them up. Not only is there a growing gap between the rich and the poor, there is also an alarming erosion of economic security for middle class families.

In 2005 Canada's top 100 CEOs were earning 240 times the salary of the average Canadian worker. By 10 a.m. on New Year's Day, the top CEOs have earned more than most Canadians make in a year. A recent poll showed that 82% of Canadians believe that one of the ways to narrow that prosperity gap is to close the tax loopholes that allow wealthy Canadians and corporations to pay less than their fair share of taxes. That is precisely what my bill does.

This legislation will no longer allow companies to write off against their business taxes the salaries of their CEOs and corporate officers in excess of $1 million. This is particularly important in communities like Hamilton, where companies that are seeking CCAA protection from the courts are protecting the multi-million dollar salaries of their key executives through court-supported KERPs while they are exacting wage, pension and benefit concessions from their workers.

I want to thank my colleague, the member for Winnipeg North, for her support. I hope the House will recognize the inherent fairness of this legislation and pass it quickly.

(Motions deemed adopted, bill read the first time and printed)