Finance Committee on May 3rd, 2012

[Randy Hoback, Conservative, Prince Albert, SK]

You're just like the other chair.

[The Vice-Chair, NDP, Peggy Nash]

Mr. Eyking, we'll go over to you.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thanks, Chair.

I thank the witnesses for coming here. I don't sit on this committee very often, but I'm very interested in where the committee is going in looking for creative ways of helping donors and recipients, and being fair to taxpayers.

On creative ways of helping donors and recipients, you can comment on other countries if you want, but I'm just reading here that the United Kingdom has the Gift Aid program. I don't know if you're familiar with it. If you give an organization £10, then £2.50 is added to it from the government and the donor's tax credit is then based on the £12.50, if I understand it properly. It's a pretty interesting incentive. It says here that over £1 billion was given because of this incentive program.

So my first question to anybody here is about the British system. Are there any other systems worldwide that you think we should be adopting here? Or are we competing with others that we should be adopting?

[Andrea McManus]

I can comment on the Gift Aid program. One of the reasons, and probably the essential reason, it has been very successful is that it's done through payroll tax giving in the U.K. It all comes off at source, so it's very different than the taxation system that we have here in Canada. In its concept of the big society, the current U.K. government is looking actively at ways to increase payroll tax giving.

On the other hand, the issue that they do have—

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Just on that, if you wanted to give to CARE, for instance, or some other group, you would mark down where your donation is going, I take it?

[Andrea McManus]

Yes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Okay, go ahead.

[Andrea McManus]

It's somewhat like the United Way, but at the government level.

One of the issues they do have in the U.K., though, is moving people beyond giving through payroll taxes to giving more and volunteering more. They don't have nearly the volunteer network in the U.K. that we have in Canada. That's my understanding, but you can correct me.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

So per capita, we're giving more in Canada because of our different system? Or are you saying, if I were giving the money off my payroll tax, it alleviates my conscience and I say to myself that, well, I have given at the office, so there's less of a connection?

[Andrea McManus]

Yes, it's a different environment.

Canadians are not as generous, for example, as Americans. Canadians on average give about 0.05% of their net income, I think it is, or close to 1% of their income, and in the U.S., it's more like 2.5%.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Is it because they're wealthier or do they have a better system?

[Andrea McManus]

I think there's a greater understanding of philanthropy, for one reason, and I think there's also a greater understanding of the role the non-profit sector plays in civil society. It's more firmly rooted in the culture. Our culture has changed dramatically in the last 20 years, from one of being government-dependent to more of a balance between government and community working together. That has always been more apparent in the U.S.

Of course, there are different tax regimes....

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Are there any other models, in the G-20 for instance, that we should be using or looking at?

[Andrea McManus]

I don't know that I could answer that. I can certainly get back to you on that.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I was just curious because sometimes you've got to look at other countries to see if we're doing it right.

[Owen Charters]

Just very quickly, as I understand it the Gift Aid system has some complexities in terms of its incentives. It doesn't always incentivize the behaviours that they were expecting. There's some complexity in how it's delivered, and it's also delivered under a one-government system; there are no provincial jurisdiction, etc. I don't know a lot more about it. I just know it has created complications for both charities and the government in terms of administration.

In terms of tax incentives in other countries, Canada is one of the world leaders and there are not a lot of others with models that I think.... We've looked at the U.S., and at the U.K. We stand out in terms of our capacity to understand and incentivize giving around the world.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

My other question would be for you, Mr. Howlett. You're talking about people who, being fair, especially lower income people. Say for instance that if somebody made—

[The Vice-Chair, NDP, Peggy Nash]

You've got 15 seconds.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

What about a refundable tax credit for low-income people who are not paying taxes? If they give $500 to a hospital, for instance, should they get a refundable tax credit back?

[Dennis Howlett]

I think that is a good question to investigate. I don't know what the impact would be. Low-income people do give a larger portion of their income than higher income people, and a large percentage of low-income people who give donations don't claim tax credits, so there is a problem there that needs to be addressed and fixed. It's not fair as it is now.

[The Vice-Chair, NDP, Peggy Nash]

Thank you, Mr. Howlett. We can pursue that in further rounds of questioning.

Mr. Van Kesteren, you're up for five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Patrick, you have an interesting concept. Is there a danger that you'll possibly run into the situation that we see with credit cards, where it's easy credit? You'll find people who over-give. Is that something you've considered?

[Jim Patrick]

It's not something we've encountered. To protect against that, we have established a $30-a-month limit per donation or per phone number.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Now I'm wondering. I direct this question to Andrea McManus: Are they mowing your grass? Are you a little bit concerned maybe that—

[Voices]

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