Mr. Speaker, I am rising on a different point of order. I want to recognize and commend my colleague from Skeena—Bulkley Valley on a very well referenced and articulated point of order. I hope I can only match that. I assure the House I will surpass him on the aspect of brevity.
I rise on a point of order with respect to Bill C-377, an act to amend the income tax act (requirements for labour organizations). Although my colleagues from the NDP have also risen on this matter, I am not convinced the arguments they put forward have been complete in terms of substance. As such, I want to offer further points on this matter for your consideration, Mr. Speaker.
I submit that Bill C-377's provisions to provide for reporting and public disclosure of certain financial transactions and administrative practices of labour organizations envisages a new function and purpose within the Canada Revenue Agency, or CRA. As such, the terms and conditions of the royal recommendation that authorizes CRA's current spending are being altered so that a new and distinct authorization for spending is being permanently created, which will therefore require a royal recommendation.
Past Speakers have ruled that legislation imposing additional functions on bodies funded by public money, if the functions are substantially different from their existing functions, will require a royal recommendation.
I believe that Bill C-377 will require royal recommendation for two reasons. First, the bill creates a new purpose for CRA in terms of a public reporting function that has no obligatory ties to taxation under the Income Tax Act. The bill would follow up on this additional purpose by creating what the CRA characterizes as “a comprehensive system that includes electronic processing, validations, and automatic posting to the CRA Web site”.
The Income Tax Act is concerned with the taxation of individuals, organizations and businesses. Any reporting requirements imposed on individuals and organizations are directly tied to their tax obligation or the exemption of these obligations. For example, charities can only keep their tax exempt status and donors only receive a tax receipt if the charity meets reporting requirements.
The Canada Revenue Agency is responsible for applying and interpreting the Income Tax Act in this regard. The primary goal of the agency, as Canada's tax administrator, is to ensure that taxpayers comply with their tax obligations and that Canada's tax base is protected. I want to stress that again: tax obligation.
Bill C-377 is strictly a function of publicly reporting information on one specific group of individuals, in this case labour organizations and labour trusts, outside of any direct obligations that those organizations or their members must have under the Income Tax Act. Given that it would create an additional purpose and new program requirements that would amend the Income Tax Act and modify the purpose of the CRA, the result is a new expenditure. The bill should be accompanied by a royal recommendation.
Mr. Speaker, I want to draw your attention to a Speaker's ruling in the other place on February 27, 1991 on pages 2262 through 2264 of the Journals regarding Bill S-18, an act to further the aspirations of the aboriginal peoples of Canada. The Speaker found that provisions imposing additional functions on bodies funded by public money, if the functions are substantially different from their existing functions, require royal recommendation.
The member for South Surrey—White Rock—Cloverdale and the government will no doubt argue that because labour organizations receive a public benefit, as charities do, they should be required to report as charities do.
The simple rebuttal to this argument is the fact that the reporting requirement for charities is based on a tax obligation. A charity must publicly report information in order to keep the tax exempt status it receives and the preferential tax treatment its donors enjoy. This will simply not be the case with labour organizations under Bill C-377.
To further disprove this counter-argument, I think we need to look no further than the first incarnation of Bill C-377, which was Bill C-317. The bill tied the reporting function of labour organizations to the enjoyment of the tax exempt status offered to them in paragraph (k) of subsection 149(1) of the Income Tax Act. Labour organizations not in compliance with the financial disclosure requirements outlined in Bill C-317 would lose their tax exempt status. Bill C-317 also sought to effect the tax treatment of union members if their union did not comply with its requirements by not allowing union dues to be tax deductible.
In your ruling, Mr. Speaker, on Bill C-317, which was delivered on my birthday of November 4, 2011, and found on pages 2984 to 2986 of the Debates, you said that Bill C-317 had not respected the rules of the Standing Orders because to remove a tax exemption was in effect to raise taxes, which would require a ways and means motion, which the bill did not have.
Your ruling, Mr. Speaker, disallowed that and forced the member for South Surrey—White Rock—Cloverdale to remove the parts of the bill that tied the reporting requirements to the enjoyment of tax exempt status by labour organizations and tax deductibility of dues by their members. In doing so, there is no longer any direct tie or connection to taxation or benefits received by labour organizations or their members. Labour organizations or trusts who fail to comply with the requirements of Bill C-377 will not lose their tax exempt status and their members will not lose the tax deductibility of their dues.
Bill C-377 solely becomes a simple public reporting function, which is a new function of the Income Tax Act and a new purpose for the CRA in its capacity to administer the act. As such, it should require a royal recommendation.
The second issue I want to bring to your attention, Mr. Speaker, has to do with how Bill C-377 regulates the internal affairs of unions and their relationships with their members. In essence, this is a de facto labour relations function that is completely new for CRA and duplicates the function of the Canada Industrial Relations Board.
Bill C-377 is modelled on a United States reporting regulation for American unions that falls under the Labor-Management Reporting and Disclosure Act of 1959. This act legislates labour relations. It promotes labour union and labour management transparency through reporting and disclosure requirements for labour unions and their officials. This act is administered by the Office of Labor-Management Standards within the United States Department of Labor, not the Internal Revenue Service.
The reporting requirements in Bill C-377 were copied from the reporting requirements of the most detailed and onerous reporting form from the Office of Labor-Management Standards, Form LM-2. Specifically, the bill copies the revisions to the reporting regulations that were introduced on January 21, 2009, by the U.S. Department of Labor and later rescinded on October 13, 2009.
Mr. Speaker, I will provide you with a copy of the final rule for both actions, which was posted on the U.S. Federal Register, so you can see how this legislation is a copy of the U.S. labour relations regulations.
The Disclosure Act of 1959 requires the public disclosure of union financial reports. In fact, the public disclosure is through an online, searchable database known as the electronic labor organization reporting system, the same type of electronic system proposed by the bill.
Bill C-377 is, in effect, a replication of U.S. labor relations law and regulations, specifically the department of labor regulations for the labor-management reporting and disclosure act of 1959.
The Canada Labour Code currently includes a section that deals with union financial transparency and accountability. It requires unions to disclose financial statements to members on request, or to the Industrial Relations Board to enable members to view that information. Part of their function is to regulate labour organizations.
The finance committee received a number of submissions on this bill. One submission was from Le Syndicat de professionnelles et professionnels du gouvernement du Québec. It included a legal opinion that argued that the bill was concerning labour relations. Although the argument was for an entirely different matter, I believe the substance concerning labour relations was sound, and it would be of assistance to you, Mr. Speaker, in your decision.
The predominant purpose of this bill, as promoted by the member for South Surrey—White Rock—Cloverdale, is to increase the transparency and accountability of labour organizations. During second reading, the member stated:
With the passage of the bill, the public would be empowered to gauge the effectiveness, financial integrity and health of any labour union.
The bill's summary states:
This enactment amends the Income Tax Act to require that labour organizations provide financial information to the Minister for public disclosure.
The degree of detailed information this bill requires is far broader in scope than any other requirement on any other entity that is publicly disclosed by the government. This is clearly an attempt to monitor and regulate the activities of labour organizations. This is especially clear when the bill requires the detailed time and expenditures that labour organizations spend on non-labour relations activities, such as political activities and lobbying.
Mr. Speaker, I want to draw your attention to a previous Speaker's ruling on October 20, 2006, and found on page 4039 of the Debates regarding Bill C-286, An Act to amend the Witness Protection Program Act (protection of spouses whose life is in danger) The bill proposed to expand the witness protection program to include persons whose lives were in danger because of acts committed against them by their spouses. The Speaker explained that the bill proposed:
...a protection that does not currently exist under the witness protection program. In doing so, the bill proposes to carry out an entirely new function.
As a new function, such an activity is not covered by the terms of any existing appropriation. ... New functions or activities must be accompanied by a new royal recommendation.
The government and the member for South Surrey—White Rock—Cloverdale may argue that the function proposed by Bill C-377 is the same function the CRA performs with respect to Charities Directorate or other tax exempt organizations. Although it is true that the processes and infrastructure required may be similar, the function and purpose for those processes are very much different.
Mr. Speaker, I draw your attention to the Speaker's ruling on November 8, 2006, and found on pages 4905 and 4906 of the Debates regarding Bill C-279, An Act to amend the DNA Identification Act (establishment of indexes). I believe the particulars on this issue have a lot of similarities in the case at hand and would deny this counter-argument.
Bill C-279 would have created a new purpose for the DNA Identification Act and established new indices in the DNA data bank, similar in context to the new database that would be created under this bill for unions. The Speaker explained there was an addition of a new purpose to the DNA Identification Act which was to identify missing persons via their DNA profiles. Again, this is similar to Bill C-377 that wishes to impose reporting requirements on another tax exempt organization under section 114 of the Income Tax Act.
In that ruling, the Speaker stated, “Amending legislation that proposes a distinctly new purpose must be accompanied by a further royal recommendation”. The Speaker's ruling on Bill C-279 clearly shows that just because a process, in that case the collecting of the DNA, and the infrastructure needed, meaning a database, are the same as the current function of an act, it is still considered a new function and purpose that gives rise to the requirement of a royal recommendation.
Mr. Speaker, whether you look at the detailed requirements of the bill, its summary, the testimony of government witnesses who spoke about how this would regulate unions or just read the statements made by the member for South Surrey—White Rock—Cloverdale, clearly regulating labour relations is the dominant nature of this bill. No such labour relations function exists at the CRA currently. Therefore, this bill would create a new purpose, a new function and/or an activity at CRA that would require a royal recommendation.
Unlike its failed predecessor Bill C-317, the reporting requirements and the public disclosure imposed by Bill C-377 in no way is linked to the imposition or levitation of taxes, levies or tariffs. Instead, this bill seeks to use the powers of the Income Tax Act to solely provide public information that would constitute a new function or activity. In addition, the bill would clearly create a new labour relations function at the CRA that not only does not exist presently but duplicates this function that is already happening at the Canada Industrial Relations Board.
Because this bill would create a new function and purpose at the CRA, I respectfully submit that Bill C-377 should require a royal recommendation.