Bill C-472 (Historical)

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

Points of Order

[The Speaker]

I am now prepared to rule on the point of order raised on February 26, 2004, by the hon. Parliamentary Secretary to the Leader of the Government of the House of Commons concerning Bill C-472, an act to amend the Income Tax Act (deductibility of fines), introduced by the hon. member for Winnipeg Centre. I would like to thank the Parliamentary Secretary to the Leader of the Government in the House of Commons for having raised this matter.

The parliamentary secretary pointed out that Bill C-472 proposes an amendment to the Income Tax Act that would have the effect of eliminating from the act an existing deduction from taxation for fines or penalties imposed by law. The net result of the elimination of this exemption would be an increase in the level of taxation for affected taxpayers.

As stated in a ruling on October 24, 2002, dealing with an earlier version of this bill introduced by the hon. member for Winnipeg Centre, a bill of this nature can only be brought before the House if it is preceded by the adoption of a motion of ways and means.

As House of Commons Procedure and Practice states at pages 758 and 759:

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.

...Before taxation legislation can be read a first time, a notice of a Ways and Means motion must first be tabled in the House by a Minister of the Crown--

Furthermore, it goes on, at page 898, to state:

With respect to the raising of revenue, a private Member cannot introduce bills which impose taxes. The power to initiate taxation rests solely with the government and any legislation which seeks an increase in taxation must be preceded by a Ways and Means motion.

Bill C-472, introduced on February 5, 2004, by the hon. member for Winnipeg Centre, seeks to eliminate an existing tax deduction. If adopted, the bill would result in an increase of the tax payable by a certain group of taxpayers. Our practice in these matters is clear.

Since the bill has not been preceded by the necessary ways and means motion, the proceedings related to its introduction and first reading that took place on February 5, 2004, are null and void. The Chair therefore rules that the order for second reading of the bill be discharged and the bill withdrawn from the Order Paper.

I thank the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons for bringing this matter to the attention of the Chair.

(Order discharged and Bill C-472 withdrawn)

[Roger Gallaway, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order. On February 5 a private member's bill, Bill C-472, was introduced in the name of the member for Winnipeg Centre. At that time you invited comments to be made.

Bill C-472 is entitled an act to amend the Income Tax Act with regard to the deductibility of fines. It proposes to amend the Income Tax Act by removing provisions for the deductibility of fines or penalties imposed by law. I suggest that this private member's bill should be dropped from the Order Paper for the following reason.

The 2000 edition of Marleau and Montpetit House of Commons Procedure and Practice on page 898 speaks to a private member's bill of this nature on this point. It states:

With respect to the raising of revenue, a private Member cannot introduce bills which impose taxes. The power to initiate taxation rests solely with the government and any legislation which seeks an increase in taxation must be preceded by a Ways and Means motion. Only a Minister can bring in a Ways and Means motion.

This is laid out in Standing Order 83.

Bill C-472 was not preceded by a ways and means motion.

On the same page, Marleau and Montpetit cites the following exceptions:

--private Members' bills which reduce taxes, reduce the incidence of a tax, or impose or increase an exemption from taxation are acceptable.

If Bill C-472 is passed, it purports to remove deductions from the Income Tax Act thereby decreasing or eliminating an exemption from taxation. This would increase revenue to the consolidated fund. Therefore it does not fall under the exceptions outlined by Marleau and Montpetit.

I would point out that on April 10, 1997, a very similar private member's bill, Bill C-324, calling for the removal of a tax deduction, was before the House. Upon a point of order raised at that time, the then acting Speaker read the following quote from page 821 of Erskine May's 20th edition:

Matters which are covered by the term 'charges upon the people' may be briefly summarized as... (2) the repeal or reduction of existing alleviations of taxation such as exemptions or drawbacks.

Before Bill C-324 at that time was summarily dropped from the Order Paper, the Speaker again at line 9581 of that day's Hansard stated:

--where there are such changes [to the Income Tax Act] it would appear that ways and means proceedings are necessary and the full scope, that is a resolution, would have to be introduced first, followed by the bill.

I would say that Bill C-472 crosses the bounds set for private member's bills and should be ruled out of order and dropped from the Order Paper.

Income Tax Act

[Pat Martin, NDP, Winnipeg Centre, MB]

moved for leave to introduce Bill C-472, an act to amend the Income Tax Act (deductibility of fines).

Mr. Speaker, I am happy to introduce for first reading today this bill which calls for an amendment to the Income Tax Act to put an end to what I believe is an outrageous situation where fines, penalties and levies can be written off income tax by businesses as legitimate business expenses.

I believe that the public is shocked at this situation. Parliament should act because the Supreme Court directed in fact that if Parliament does not intend to allow fines to be business deductions, then Parliament should clarify the Income Tax Act to put an end to this situation.

By the same logic no one should benefit from a wrongdoing and it undermines the deterrent value of a fine if a business can write it off as a legitimate business expense.

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