Finance Committee on June 4th, 2012

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Clause 13.

[The Chair, Conservative, James Rajotte]

Okay. Let me deal with clauses 10 to 12.

Shall clauses 10 to 12 carry?

[An hon. member]

[Inaudible—Editor]

[The Chair, Conservative, James Rajotte]

On clause 11. Okay.

(Clause 10 agreed to)

(Clause 11 agreed to on division)

(Clause 12 agreed to)

(On clause 13)

[The Chair, Conservative, James Rajotte]

Monsieur Mai.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Again, in clause 13 we have close to an attack on charities. We have heard that charities play a very important role in our society. The government is attacking charities right now. We've seen it with the environmental organizations. In this case, we have the government attacking charities, and that is why we're going to vote against clause 13. There's too much power being given to the minister in this case. It is politicizing the issue, giving more power to the minister, and attacking charities, as they've been doing, and that's why we're going to vote against clause 13.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Ms. Glover and then Ms. McLeod.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

It is this government that actually put forward a number of measures to assist charities. We believe very strongly that charities are an important aspect of helping some of our most vulnerable. We'll continue to do things such as put measures forward to help charities.

For that reason, this is a very important measure in this bill and we will be supporting it.

[The Chair, Conservative, James Rajotte]

Go ahead, Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

My colleague articulated very clearly that we will be supporting this clause.

I think it is important that predominantly the rules are not changing. We are providing the opportunity to really educate the charities and move forward. I think there are some tools that are a normal, delegated process. Again, it is allowing charities to really understand the 10% rule and what's appropriate and what's not appropriate.

Again, we will support this clause.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Just to reinforce what my colleague on this side has said, we are very concerned, based on comments the ministers have made, that there is a chill being created among progressive charities and environmental charities. Because there is so much discretion in the hands of the minister, and it places increased power in the hands of the minister, our concern is that this change will have the impact of shutting down dissent and politicizing a process that is a normal advocacy role for many charities.

As my colleague said, we will be voting against this clause.

[The Chair, Conservative, James Rajotte]

Thank you.

(Clause 13 agreed to on division)

(Clauses 14 and 15 agreed to)

(On clause 16)

We have our first amendment, which is NDP-1.

I will ask Ms. Nash to speak to clause 16 and move her motion.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yes, Mr. Chair, I'd like to move that clause 16 be amended by replacing line 5 on page 14 with the following:

On January 1, 2013, a net salary of $137,000.

Our amendment is intended to give the Governor General the same net salary he now receives. Canadians are increasingly vulnerable in these economic times. Far too many people have lost their jobs. People are facing all-time-high personal debt levels. And there are several austerity measures in this budget that will in fact reduce the wages of the average Canadian. So while in no way disrespecting the work of the Governor General—we appreciate the work he does—we do not agree that he should enjoy a salary increase at a time when so many tens of thousands of public sector workers are losing their jobs. We don't think that's an appropriate use of our tax dollars.

[The Chair, Conservative, James Rajotte]

Thank you.

Mrs. Glover, and then Mr. Brison.

[Shelly Glover, Conservative, Saint Boniface, MB]

Mr. Chair, the proposed amendment would provide the Governor General with a net salary of $137,000, effective January 1, 2013, but actually would not change the proposal to make the Governor General's salary taxable.

There are a number of problems with the proposed amendment. First, it's not clear what “net salary” means. Is the proposal meant to provide that the salary is to be net of related expenses, but then be subject to income tax? If so, this change would have a material negative impact on the Governor General by significantly reducing the effective remuneration for holding that office. Even if we accept that this amendment is meant to refer to what the Governor General receives after applicable income taxes, it is contrary to the intention and the measure in this bill, which is to make the salary of the Governor General subject to the same exact rules as salaries received by other Canadians.

Other Canadians do not receive a certain salary after tax. They receive a salary and are taxed on it. That is what this measure does, and that is what we deem as being fair.

As a practical matter, an individual's tax liability is ultimately determined at the end of each year on the basis of income from all sources. Collecting the information necessary to be able to pay the Governor General the proper salary would be incredibly intrusive into the personal affairs of each and every Governor General. Every year the Governor General would have to disclose every aspect of his or her personal income tax situation, not to Canada Revenue Agency for tax purposes, but just to set the Governor General's salary in the first place.

These are the problems we see with the amendment.

Once again, I have to rebut what my colleague said about any suggestion that there is an increase in salary for the Governor General. This measure simply makes the salary of the Governor General taxable. There is absolutely no increase. It is just making it fair with what every other Canadian has, and that is a taxable income.

[The Chair, Conservative, James Rajotte]

Thank you, Mrs. Glover.

Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

I find myself oddly concurrent with Mrs. Glover on this point.

The reality is that the legislation unamended does not increase the post-tax earnings of the Governor General. This amendment would impose, not just a small pay cut, but a significant and punitive pay cut, which I don't think would be the intention of the legislation in the first case. It's important to reiterate that the increase is simply to reflect the fact that this legislation makes the Governor General's salary taxable.

I don't support the amendment, but I do support making his salary and the salaries of future governors general taxable in the interest of transparency.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

Mr. Mai, please.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

I do not agree with Ms. Glover that the Governor General's salary would not be changed. On the contrary, if it goes from $137,500 to $270,600, it practically doubles. If you do the calculations according to CRA rules, you see that the after-tax amount is about $175,474.47. That is an increase of about $40,000.

You have to be open and honest with Canadians when doing the calculations. When we asked the officials what the Governor General's salary would be after taxes, they told us that it was impossible to calculate at that stage because it depended on his other income. Be that as it may, the Governor General's after-tax salary is $175,474.47. So there is an increase already. It is more that he gets at the moment, before or after taxes, given that there were no taxes beforehand. So the proposed amendment is justified.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Mai.

The Conservatives have about three minutes left.

Mrs. Glover.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

To further explain, for the benefit of Mr. Mai, the calculations were done taking into consideration the Governor General's outside income and whatnot. This allows us to set what the rate would be, which then shows very clearly that there is no increase in his salary. This puts him wholly with other Canadians, and Mr. Mai, we hope we can see you support us on this wonderful clause.

Thanks.

[The Chair, Conservative, James Rajotte]

Okay. I had Mr. Brison.

Is there anyone else who wants to...?

Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

On this point, this legislation is not designed to apply to this Governor General. It's to apply to the role of the Governor General from now into the future. As such, based on the progressive tax system we have in Canada, I don't think we can determine the effect on this Governor General or future governors general.

We can do our best, and I think the legislation does that as it is. It's conceivable that various governors general in the future will have various levels of external income. The win in this, from a legislative and public policy perspective, is that we do have the Governor General's salary being taxed.

That is right, and it's no different from members of Parliament. When the changes were made 10 years ago, there was an allowance of I think $30,000. When I was first elected, the base pay was $60-some thousand. There was a $20-some thousand tax free allowance. It was changed, and the entire amount was made.... Some members of Parliament have external sources of income. We don't determine that based on trying to figure out what members of Parliament or governors general's external supports are, whether they receive dividend income or capital gains income or whatever else. That's not our job.

Our job on this is to do something that I think is a step forward in terms of achieving the transparency and accountability of taxing the Governor General's salary in a way that is as close to revenue neutral as we can design. I think that's....

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison. I have Mr. Marston and Mrs. Glover.

Please make brief points, and then I would like to call the vote.

Mr. Marston.