Evidence of meeting #11 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was calgary.
11:10 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Before I allow Mr. St-Cyr to speak, people can put on the interpretation devices.
Mr. Saint-Cyr.
11:10 a.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Thank you all for coming this morning.
Mr. Legge, in your brief, you propose “[...] the elimination of capital gains on donations of real estate to registered charities that provide perpetually affordable housing [...]”. That is an issue I am concerned about for my riding, in Montreal. For starters, I would like to ask a somewhat technical question to gain a better understanding of the mechanics of your proposal.
Presently, if I donate land to an organization to build affordable housing, is it the market value of the land that will be considered? Technically, if I donate my land, it should not be a capital gain, but rather a capital loss. Am I to understand that at present, for tax purposes, the market value of this land is considered?
11:10 a.m.
Director, Research and Business Information, Calgary Economic Development, Poverty Reduction Coalition
I'll give my best interpretation of the situation.
My understanding is that yes, when you donate land, for the purposes of the donation, the land is assessed at fair market value. Then you are taxed on the capital gains between purchase and the donation, but you are given a tax credit for a portion of the value that you have donated to the charitable organization. In order to assess the value that you contributed, yes, it is my understanding that it is at a fair market value.
11:10 a.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
So the capital gain is taxed initially, and after that, the person is eligible for a general donation tax credit for the entire amount. If I understand correctly, you are proposing that there be no tax on the capital gain and that the person be eligible for a general donation tax credit.
11:10 a.m.
Director, Research and Business Information, Calgary Economic Development, Poverty Reduction Coalition
Correct.
11:10 a.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
In your brief, you say that a measure like that already exists for conservation societies, I believe. You gave the example of ducks.
Have those organizations seen a real increase? Do you have figures showing whether the measure has helped them reach their objectives? Have donations increased in real terms?
11:15 a.m.
Director, Research and Business Information, Calgary Economic Development, Poverty Reduction Coalition
I can't speak to whether there have been significant increases in the amount of land donated to conservation activities because of the tax benefit accrued to the donation of land, but I think anyone really considering the situation should examine it. The tax benefit as a result of donating land to a conservation society is greater than one donating to an organization that creates perpetually affordable housing. I don't know if the tax benefit actually created larger donations, pre-tax situations. I don't have that information.
11:15 a.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Your proposal is an interesting one. However, you are telling us that a program exists for animals, namely ducks, but not for affordable housing. As a committee, we want to know if, for animals, this measure is useless or, if on the contrary, it is helpful and should be applied to people who will live in affordable housing units.
I would recommend that you meet with the people who benefit from this measure, to obtain figures on this. You could then provide them to the committee through the clerk. As lawmakers, we implement measures when we have good reason to believe that they are effective.
Do I have any time left, Mr. Chairman?
11:15 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
No.
I was totally focused on the questions.
We'll have Mr. Dykstra for five minutes. Are you ready to go?
11:15 a.m.
Conservative
Lee Richardson Conservative Calgary Centre, AB
Before he starts, I know it's amusing, but it isn't about ducks so much as it's about the conservation of wetlands, the preservation of our water in Canada, and filtering water systems for most of the cities in Canada. It's not about ducks.
We do have $1.4 billion in new funding for the creation of affordable housing in Canada, in addition to the $2 billion CMHC provides to 630,000 low-income households across the country today. So we're a little ahead of the ducks in terms of federal contributions.
11:15 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
Thanks, Mr. Richardson.
Mr. Richardson, I wanted to get your thoughts. One of the things we had set up in the last budget was Canada's National Trust. I wondered if you were aware of it. What we've tried to do, at least over the next two years, is put some money aside so we can actually deal with the aspect of heritage, not just from a government perspective but from the perspective that you bring to the table, which is the private sector, which we need to include. I wanted to get your thoughts on that and on whether or not, specifically, the cities of Calgary and Edmonton, and to a larger extent the province, are participating in the program.
11:15 a.m.
President, Heritage Property Corporation, Simpson Roberts Architecture
I'm not very familiar with that particular program. My understanding is that most of the incentives have been focused on documenting the historic buildings we have--creating inventories--and on creating the groundwork and the systems necessary to get to the next stage of preservation.
For instance, on the federal CHPIF program, in order for it to even work, they had to generate a lot of infrastructure to have people able to inspect what type of project was done. I'm not familiar with the trust area, but my understanding has been focused more on creating the appropriate infrastructure necessary to do preservation.
11:15 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
I'll take a minute on this, because I think this is pretty important to point out. The United Kingdom went into a program such as this, and we're actually emulating that program. What it basically does is establish a new entity called Canada's National Trust, and its focus will be to protect lands, buildings, and national treasures. Once set up, it will be able to receive donations and contributions to ensure its long-term sustainability. It will be managed and directed by private sector individuals. The best part of it is that it will be at arm's length from the government.
The approach you're speaking of, and the importance of our heritage, isn't something that's been lost on this government. Over the next couple of years, the intent, as you mentioned, is to collate, collect, and have a clear understanding of the inventory of buildings, land, and treasures we have in this country, and we'll be able to address those issues.
I'm going to switch gears a little. Adam, I'll ask you a question or two.
Mr. Richardson touched on the focus and the huge number of dollars the federal government invested in affordable housing across this country. In the 2006 budget, we carried through on an $800 million commitment to provinces and territories to specifically deal with this issue on a short-term basis. In fact, our government's part of the funding was put into a third-party trust so that it was available immediately if the provinces were able to move on it as quickly as we hoped. This isn't an issue, of course, that doesn't come up at every hearing we hold. It's obviously a very important one.
We can talk about more dollars. We can always talk about more dollars. There virtually isn't an organization that doesn't come to pre-budget consultations to ask for more dollars. Very few of them come to say they're getting enough and can actually take a cut. Based on that, and the volume of federal dollars associated with this, should we not perhaps be looking at a better way of delivering the services?
In Victoria yesterday we heard very clearly that the government's involvement in affordable housing, whether it be at the local, provincial, or federal order of government, is ostensibly, in Victoria anyway, done at three dollars to one in terms of what the private sector can deliver on behalf of those who need affordable housing. They can produce it at a much more reasonable rate and therefore can do more with the dollars.
I wanted to get your thoughts on that. What I've sensed in the last two years sitting on the finance committee and talking about and learning about this issue from a federal perspective is that there are a lot of dollars being spent. Do we need to spend more? Perhaps. But certainly one of the important components of this is whether we are spending the money effectively now and whether we should be trying to manage it a little differently.
11:20 a.m.
Director, Research and Business Information, Calgary Economic Development, Poverty Reduction Coalition
I think that's an excellent point you raise. The approach we really proposed with the Poverty Reduction Coalition is what I would call a suite of solutions regarding affordable housing, because there isn't really one direct solution. It's not necessarily all about new building or new construction; it's not all about rental subsidies. It's contextual, based on whatever city it's in; it's contextual based on the individual.
So while more dollars are obviously better, we have to recognize that there are finite pools of dollars available. We're advocating looking at perhaps distributing things differently and looking at a package of options. Whether it is a way to increase the amount of land contributed to affordable housing organizations through an increase in the tax credit, a reduction to capital gains, or whether it is about creating a pool of dollars that can be drawn upon in individual cities....
In a city with a high rental vacancy, oftentimes it doesn't make a lot of financial sense to build a brand-new building, so why don't we put some of those people in some existing units, or why don't we purchase units in a complex that has already been developed?
So we can distribute the dollars in different ways instead of building a brand-new building that is solely affordable housing. Not only does that create a capital maintenance item, but it also, in some ways, can create social problems, with ghettoization of the affordable housing complex.
11:20 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Thank you, Mr. Dykstra.
Mr. Andrew, to get you into this debate, do you have any additional information regarding the tax leakage number that Finance was supposed to get your coalition? Has there been any luck?
11:20 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
There's been nothing? There's no additional information, or there's no...?
11:20 a.m.
Co-Chair, Coalition of Canadian Energy Trusts
Neither. There have been attempts, but there has been no additional information. We are being stonewalled.
11:20 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
Do you have any information in terms of whether that tax leakage number is correct?
11:20 a.m.
Co-Chair, Coalition of Canadian Energy Trusts
We absolutely do not believe it, and any analysis we've seen doesn't point to tax leakage. It points to other reasons for the decision, which were outside the world of tax leakage.
11:20 a.m.
Liberal
The Vice-Chair Liberal Massimo Pacetti
But some of the numbers you have, some of the additional information you have, have not convinced you otherwise that the tax leakage number was perhaps remotely correct?
11:25 a.m.
Liberal