Good afternoon, ladies and gentlemen. Thank you for providing me with an opportunity to participate in this important hearing on tax incentives for charitable donations. l'm appearing today in my capacity as a volunteer board member of four not-for-profit organizations in each area of the charitable sector—health care, education, social services, and the arts. In this capacity, my responsibility is not only to provide oversight and guidance to the management of these organizations, but I am also actively involved in fundraising from the private sector and donating personally.
The fiscal challenges facing the federal, provincial, and municipal governments are also creating fiscal challenges for our vital not-for-profit sector. With governments at all levels reducing their deficits by focusing on spending cuts and restraint, our charities desperately need additional funding as the demand for their vital services continues to grow, especially for health care and education.
The removal of the capital gains tax on gifts of listed securities has been an enormous success. The initiative began with the Liberal government in 1997 and was completed by the Conservative government in 2006, with the support of the NDP, as well as the Liberals and the Bloc Québécois. Since 2006, our charities have received over $1 billion every year in the form of stock donations.
You now have an opportunity to capitalize on this success by expanding the capital gains tax exemption to include gifts of two other appreciated capital assets: private company shares and real estate. Both are exempt in the United States, and it is estimated that removal of this tax barrier to charitable giving would result in an additional $200 million per annum of incremental donations, at a cost to the federal government of only $50 million to $65 million.
Concern about valuation abuse can be addressed very simply. The charity could not issue a tax receipt to the donor until the charity has received the cash proceeds from the sale of the asset. Furthermore, if the purchaser of the asset is not at arm's length from the donor, the charity, not the donor, would have to obtain two independent professional appraisals to confirm that the value received by the charity for the sale was fair market value.
These measures would help level the playing field for our hospitals, universities, arts and culture organizations, and social service agencies who are competing with their U.S. counterparts for the best and brightest talent. In addition, entrepreneurs who create and build companies and keep their companies private would have the same tax treatment for donating shares in their companies as entrepreneurs who take their companies public.
Understandably, many of the 107,000 members of the Canadian Federation for Independent Business would be supportive of this change. Also, because municipalities derive their revenues from property taxes, not income taxes, members of the Federation of Canadian Municipalities would also be supportive. Not-for-profit organizations in each of their communities would benefit from these increased donations. We urge your committee to recommend that Finance Minister Jim Flaherty include these proposals in his upcoming budget.
Thank you for this opportunity.