Mr. Speaker, I am pleased to speak to Motion No. 259 which states that the government should give consideration to exempting up to $30,000 of income from income tax as a gesture of support for those artists, writers and performers who work in Canada's cultural industry. The motion has been brought forward by the member for Kamloops—Thompson and Highland Valleys.
On the surface it seems to be a proposal which is very much in harmony with the government's stand on the arts. The government recognizes the importance of providing continued support to individuals engaged in the arts. However, this is not the way to do it.
The government is committed to ensuring that Canadians have Canadian choices and that they are connected to other Canadians and to the very diverse Canadian culture. This means focusing on the creation of Canadian content and supporting creators, artists and innovators. It means enhancing the capacity of cultural organizations, cultural industries and cultural institutions to build and retain audiences and to seize both the opportunities and the challenges created by the globalization and new technologies which are unfolding. It means finding ways to build connections among Canadians across communities, to connect Canadians to the world, and to engage young Canadians in all that we do.
Our government's commitment also means taking into account the uniqueness and the distinct character of Quebec culture and the needs and circumstances of French language communities in other parts of Canada as well.
Taken at a glance, the proposed tax exemption for artists, writers and performers could be seen to be very consistent with these stated objectives. However on closer inspection, it becomes less clear that such a tax exemption is warranted.
Since 1997 I have been a member of the Standing Committee on Finance. It is interesting that this motion has come forward for consideration by the government, yet creators have come to the finance committee and asked us to look at initiatives such as income averaging or indeed some of the aspects of the Irish model.
Income earned by artists, writers, composers and sculptors from the sale of their work is exempt from tax in Ireland only under certain circumstances. In Ireland, section 195 of the Taxes Consolidation Act, 1997, empowers revenue to determine that artistic works which are original and creative are recognized as having cultural or artistic merit and may have an exemption from tax within the year in which the claim is made.
It is done through the minister of finance. It is determined in consultation with a board or body of persons that are knowledgeable in this area of art. It looks at the sale of artistic endeavours such as a book or other writing, a play, a musical composition, a painting or other like picture, and a sculpture. It also has a proviso that claimants for artists exemption must be resident or ordinarily reside and be domiciled in Ireland.
These are initiatives the government has been encouraged to look at and I believe there is merit in doing so. However the motion before us is simply a tax exemption of up to $30,000 for artists who reside in Canada. I would emphasize that the tax system already has features, several unique measures as a matter of fact, that support our artistic and cultural sectors.
Certified Canadian film productions produced by qualified corporations have a special refundable tax credit which covers up to 12% of the cost of the eligible production. It replaces a previous system of capital cost allowance deductions for certain investors that was in place until 1995 and it maximises a benefit for the eligible productions.
As well, Canadian art objects purchased by businesses for display purposes are eligible for a generous depreciation allowance, notwithstanding the fact that such art objects may retain their value or indeed appreciate in value over time. This provision enhances the exposure given to Canadian art.
The designation of the national arts service organization provides national not for profit art groups with the same tax treatment as charities. This has done much to enhance that sector. Artists may deduct the cost of creating a work of art in the year incurred even though the work may not be sold until a later date. This provision recognizes the difficulty that many artists face when attributing costs to a particular work and carrying inventory over long periods of time.
Employed artists and musicians may deduct certain expenses against income from that employment notwithstanding that most employment expenses are non-deductible. Specifically, employed artists may deduct expenses related to their artistic endeavours up to an annual limit.
Employed musicians are able to claim the cost of maintenance, rental, insurance and capital cost allowance on musical instruments. The special deductions recognize that these expenses are required in order to carry on employment in these fields.
Artists may also elect to value charitable gifts from their inventory at any amount up to their fair market value. This provision removes an obstacle for artists donating their works to charities, museums and other public institutions.
Certain objects certified to be of cultural importance to Canada are exempt from capital gains tax if donated to a designated museum or art gallery. This provision helps to ensure that artistic works of cultural significance are retained in Canada.
These are important provisions. They demonstrate that the government has taken steps to ensure that the tax system does not form a barrier to engaging in artistic endeavours. However the proposal before us today does not seek to address a specified problem faced by artists. Rather, the proposal is for a substantial tax exemption for all individuals recognized as artists. Such a tax exemption would raise significant concerns in the context of the income tax policy and administration.
From the perspective of equity I am sure we would all agree that the tax system should as much as possible treat individuals in similar circumstances in a similar manner. This means that individuals with comparable incomes and needs should pay comparable amounts of tax. However under the proposed exemption an eligible artist would pay substantially less tax than another individual in a comparable position who is not an artist. This would seem to me to be highly unfair.
I am certain that other taxpayers would also see this issue in the same light. It would be very difficult to explain to a hard working taxpayer why she should be faced with a tax liability while another individual at the same income did not pay any tax whatsoever simply because she was an artist. For this reason alone I find the proposal before us today to be flawed.
Moreover, the proposal is overly vague in several crucial aspects. First, the proposed exemption would require that some definition of eligible artists be developed. However the motion makes no reference to this definition.
It is true that some definitions already exist. For example, in the Status of the Artist Act and in the guidelines used by the Canada Council for the Arts there are definitions, but these definitions were not created with the income tax system in mind and would likely have to be revised.
It is difficult to imagine that any definition could be developed that would satisfactorily address all needs of interested parties. Without a doubt any definition that excluded a given group or artistic activity would be subject to dispute and would be very difficult both to administer and to control.
The motion before us does not specify whether the proposed exemption is to apply to the income from the artists' endeavours only or to all income earned by eligible individuals no matter how they are defined.
Limiting the exemption to artistic income would seem to be too restrictive, especially by part time artists and performers. However extending the exemption to all sources of income seems to be overly generous and would encapture people that perhaps do art as a hobby or simply as a sideline. These are just a few of the things that make the motion before us so problematic.
In conclusion, while encouraging our arts and cultural industries has been and will continue to be an important priority for Canadians, I do not believe the proposed tax exemption would be an appropriate policy tool and I do not support it.