Finance Committee on Feb. 2nd, 2012

[Mark Adler, Conservative, York Centre, ON]

Really?

[Prof. A. Abigail Payne]

It's an amazingly simple number that you would think you should be able to get.

Part of it, if you think about it, is that in tax return data, not everybody identifies that they have been giving to charity. Plus, not all giving is tax-receipted. If you attend a gala, is that a donation? It's not tax-receipted, but you are giving. You are supporting that charity. Or you give $5 to somebody in the subway who is collecting money for a charity. I think the better source is to actually look at the charities, the registered charities, and ask them how much they are bringing in. Even then, you're not able to value the volunteer time.

Nobody has really done anything to ask, if we look across all the charities in Canada, the U.S., and the U.K. for stuff like that, how we compare. In the U.S., if you're a religious organization, you don't have to file a tax return. If you're a charity that has a low level of revenue, you don't have to file a tax return. Canada is the only one that requires all charities that issue tax receipts to file. That's in part why Canada actually has really good data to study this. To make us comparable is very difficult.

[Mark Adler, Conservative, York Centre, ON]

If the Government of Canada did not issue credits at all and just had a total hands-off approach and left it up to individuals to choose to give to charity or not, what do you think the effect would be?

[Prof. A. Abigail Payne]

This is my gut.

[Mark Adler, Conservative, York Centre, ON]

Yes. I'm just curious.

[Prof. A. Abigail Payne]

My gut says that it would be disastrous, because—

[Mark Adler, Conservative, York Centre, ON]

Do people need to be incented to give?

[Prof. A. Abigail Payne]

It's just like you going out and deciding to buy something or not, right?

What tax credits do is reduce the price of giving. There are people out there who do react to that incentive. You can see that. What has bolstered the growth in giving? It's the giving from individuals who reside in high-income neighbourhoods. I suspect that's because of the tax credits that were given for publicly traded securities and other types of provisions over the last 15 years. I think it does have an impact.

[Mark Adler, Conservative, York Centre, ON]

In terms of religious denomination, which one would you say, relative to others, tends to be more charitable? Do you have any studies on that?

[Prof. Paul Reed]

Without question, it's Protestants. It's conservative Protestants, above all, markedly above mainline Protestants.

[Mark Adler, Conservative, York Centre, ON]

Really? Okay. Why is that, do you suppose?

[Prof. Paul Reed]

That would take more time than I would be allowed, but it has to do not so much with creed, what they believe, as it has to do with frequency of observance, how often they go to church or to synagogue, etc.

[Mark Adler, Conservative, York Centre, ON]

Protestants don't go to synagogues.

[Prof. Paul Reed]

I'm sorry. But it occurs right across the spectrum of religious affiliation. That's my point.

[Mark Adler, Conservative, York Centre, ON]

Okay. I get you.

[The Chair, Conservative, James Rajotte]

You have about 30 seconds.

[Mark Adler, Conservative, York Centre, ON]

Just sort of as an eyeball observation, when you go to the U.S., people seem to be very philanthropic. Buildings are named. People give big money to charity. Is that more cultural in the U.S. as opposed to Canadian culture? The Americans don't seem to need to be incented to give as much as Canadians do. Is that a correct observation?

Anyone can answer it.

[Prof. A. Abigail Payne]

We have a different tax system. We have a higher tax rate, so people have different positions.

Ultimately, you have to think about how charities behave. If you look at the U.S. and you look at Canada, what charities contribute towards fundraising and the dollars they get from private giving as a result of that is the same.

[Mark Adler, Conservative, York Centre, ON]

I have just a five-second question. Do you think an increase in taxes on individuals or on corporations would have a diminishing effect on the level of giving by individuals to charitable organizations?

Would that be a yes or a no? What do you think?

[Prof. A. Abigail Payne]

Maybe.

[The Chair, Conservative, James Rajotte]

We can come back to that on another round.

Monsieur Giguère, s'il vous plaît.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Good afternoon, Mr. Chair. Ladies and gentlemen, we are pleased to have you here.

According to my sources, the CMA, the organization of management accountants, and Mr. Papillon and Mr. Morin, two authors on tax matters, if I, Alain Giguère, donated $1,000, as a Quebecker I would be entitled to a tax refund of $494 according to current tax regulations, that is to say if I added up the federal and provincial tax returns. If we applied the improved tax credit regulation, according to these same sources, for a $1,000 donation I would receive a return of $574.

My question is quite simple. What is the point of giving to these charitable organizations, substituting ourselves for the government, if the administrative and funding costs of these campaigns to obtain charitable donations are over 50% or close to it?

The second obvious problem is the following. If, for instance, the government reduced its support for healthcare by a billion dollars, even if there were $1 billion dollars in gifts to charitable organizations, that amount would not necessarily be used to compensate the loss of health care services.

Indeed, that billion dollars could be allocated elsewhere, for instance to political or pseudo-political or religious organizations. It would not necessarily go to the sector where the government has withdrawn its support.

Ms. Laforest and Ms. Payne, could you answer that question?

[Rachel Laforest]

You come from Quebec. The Quebec reality and Quebeckers' perceptions regarding these matters are very different from those elsewhere in Canada.

I've had the opportunity to work with Paul. We interviewed people who make charitable donations. We asked them why they made those donations, what their thinking was, and the reason behind their gift. Often, Quebeckers replied that they preferred to give their money to the state, since they felt it was preferable that that decision be made by the state so that the resources would be well redistributed. They had a preference. They associated the idea of paying income tax with that of charitable donations. In Quebec, the percentage of charitable donations is considerably lower than elsewhere in Canada because Quebeckers prefer to give and get involved in the public sphere in an informal way and not through charitable organizations.

For my part, I am a Quebecker and I share that vision. In an ideal world, I would have preferred a strong state that would deal with the redistribution of wealth. However, since that is not the case, and since the federal government is cutting back on its support and funding for these organizations, and in the context of a resource and capacity shortage within the voluntary sector, one of the solutions in my opinion is to increase those donations. It is not the ideal solution, but I believe it is the most realistic one.

[Prof. Adam Parachin]

I'll just add that I do have some sensitivity for the perspective that at some point the income tax subsidy for charities becomes so extensive that the sector actually will become somewhat indistinguishable from government. That is a relevant policy consideration to take into account.

But I'll counter that with this observation. Just because it might be more efficient to provide a particular program through a direct state subsidy does not make it a preferred program. Nor does the fact that a particular tax subsidy is inefficient. For example, if each dollar of foregone tax revenue only generates 60¢ of donations that would not otherwise have been made, and if that's the case with a particular tax credit, it does not mean that the tax credit should be abandoned, for the very reasons Professor Reid referred to: that foregone revenue is an investment in a particular kind of society and a particular kind of program delivery. It fosters competition among charities to provide better services. People want to support it. It fosters a pluralism of services that might not otherwise exist. There's a wealth of literature that supports this.

So I would emphasize very, very strongly for the committee in deliberating on the various proposals that efficiency is not a predominant consideration. It's relevant, but it's not determinative.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Giguère.

We'll go to Mr. Van Kesteren, please.