Evidence of meeting #83 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was unions.
A video is available from Parliament.
4:40 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
The question is for Mr. Mazzuca, because I want a legal opinion. My apologies, Mr. Blakely.
4:40 p.m.
Chair, National Pensions and Benefits Law Section, Canadian Bar Association
When it comes to those issues, I think we're getting confused between items that are under provincial jurisdiction and those that are under federal jurisdiction. What we heard from Mr. Kelly is a concern that's addressed in provincial legislation. Provinces, as we know, will have legislation impacting trade unions, and that's within their mandate. I don't think the federal government gets to bootstrap into that area of jurisdiction through the Income Tax Act.
4:40 p.m.
Conservative
4:40 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thank you, Chair.
Thank you all for appearing before the committee today. This is obviously a very contentious bill, and we certainly have heard some concern.
Mr. Thomas, it's interesting, At first I was somewhat taken aback or surprised that you would appear before the committee in this regard. You really don't have any skin in the game, I don't think, as some might argue the Canadian Federation of Independent Business or some of the labour unions do.
It's clear to everybody who reads the Income Tax Act that the two major groups that really benefit most directly from special tax breaks within the act are registered charities and labour unions. They receive very generous taxpayer-backed subsidies worth millions of dollars. That's becoming quite evident. While the charities have to publicly disclose things like compensation for their executives and the way they use funds, unions have to disclose nothing. I think you pointed that out as well. From the perspective of the taxpayer, why should the rules and regulations around disclosure be any different for the two groups, or why not?
October 25th, 2012 / 4:45 p.m.
Federal and Ontario Director, Canadian Taxpayers Federation
Thank you, Mr. Chair.
I think you're correct, sir, in observing that our interest as the Taxpayers Federation is more general than that of the other parties around the table. We take a principled stance against boutique tax credits—special writeoffs for children's hockey, political parties, oil and gas exploration, for example. If it were up to us, we would have more of an Alberta solution. We'd throw most of the Income Tax Act into the trash heap, and bang it right down as low as possible. Treat everyone equally. That's been our long-standing view.
In fact, political parties have the richest tax credit treatment. I won't take too much time to say this. I'll just say it quickly and let you know it's a scandal that political parties have far richer tax treatment on contributions than the Diabetes Association, the Heart Foundation, or the Cancer Society. It's a scandal, and it shows you that the politicians, not the charities, are running the tax system.
We believe there ought to be treatment for labour organizations analogous to charities. To pick up on what Dan Kelly of the CFIB mentioned, if Parliament wishes to extend the Rand formula.... The average donation to the Canadian Taxpayers Federation was $140 last year. We had over 20,000 donations, in rough numbers, so if you wish to enrol the other 24 million Canadian tax filers into our organization and expand our revenue to $3.5 billion, a thousandfold expansion in our revenues, we could get around this whole problem of having to get people to voluntarily give us money. For $3.5 billion we might have a look at buying into the disclosure requirements that are being discussed here.
We don't believe in compulsion. We wouldn't want to force people to give us money; that's why we don't accept government funds, that's why our donations are not tax-deductible, and that's why we enjoy the freedom to let our arguments speak for themselves and to conduct our business as a voluntary organization.
4:45 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
I have to get this off my chest, Mr. Georgetti.
We've been doing a number of budget consultations. Of course, the implementation of the fall budget is coming up, and I can tell you that one of the things that we have not heard from the unions was a reduction in red tape. As a matter of fact, what we've heard from them more than anything else is that there's a real need for it, so I'm curious. I suppose there's a little confusion there. Why wouldn't your members want to see more red tape—more work, quite frankly—in the public sector?
4:45 p.m.
Conservative
4:45 p.m.
President, Canadian Labour Congress
I'll just point out the hypocrisy of Mr. Hiebert's bill as a Conservative, because you are anti-red tape—
4:45 p.m.
President, Canadian Labour Congress
—and yet you don't mind putting red tape on us. That's what I'm pointing out.
If you want to talk about regulation, I don't hear this guy volunteering to disclose his books because he's non-profit.
4:45 p.m.
President, Canadian Labour Congress
I don't hear him telling you that the head of LabourWatch sits on his board, which is very anti-union.
I think it is hypocritical to single out one group and say they have to disclose because you can make an argument for it. If you want to put red tape into the system that makes sense, and regulation that makes sense and that protects people, we're in favour of it. If you want to put it in to punish people, as you're doing with this bill, we're not.
4:45 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
I will just remind all colleagues and all witnesses to direct their comments through the chair, please.
We will go to you, Mr. Cuzner, for your five-minute round.
4:45 p.m.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
Thanks very much, Mr. Chair.
Mr. Logan, you're an expert on labour laws and labour transparency. Obviously the rules have been in place for quite some time in the United States. You cited Cornell and Pennsylvania, and the studies that were done through those credible institutions.
Perhaps you could take about two minutes to continue on and highlight some of that experience. What's deemed to be the essence of the effectiveness of this, and who really benefits?
4:50 p.m.
Professor, Labour and Employment Relations, San Francisco State University
The study was a very large-scale study of union administrative practices in general. As I said, one of the main findings with regard to reporting and disclosure was overwhelmingly that unions were spending more time on compliance and less time on other duties.
Of them 38%, for example, had to significantly change their accounting practices, 29% had to hire external consultants to comply with the new requirements, and 19% had to hire additional staff to comply with the new requirements. The cost involved for these organizations was very substantial.
This, keep in mind, was simply the cost of compliance with the new Bush regulations that were introduced only for organizations with revenues above $250,000 per year. They would apply to all Canadian labour organizations regardless the level of their revenues. This is time and money paid for by ordinary union members.
As I said, there was never any evidence presented that union members were pushing for this in the first place. There was never any evidence to demonstrate that they received any benefit whatsoever from it afterwards.
We do know something about what union members want from their unions. Harvard economist Richard Freeman has written a very good book called What Workers Want. They want information in very broad terms. They want to know that the union has more money coming in than it has going out. They want to know broadly where it comes from and where it goes to.
The types of revisions instituted during the Bush administration and now being proposed in Canada do not provide them with the kind of information they want. It's not in a useful form. There has never been any evidence that it has actually been used by ordinary union members in the United States.
However, as I said, there is very substantial evidence that it has been used by organizations who have an agenda, who want to weaken unions politically and in other ways. One of the organizations that has used this information most in the United States is the Center for Union Facts, a right-wing organization that lobbies against unions in general and has an agenda to try to undermine unions, politically and otherwise. If it—
4:50 p.m.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
Mr. Logan, I only get five minutes here, and I want to get another question in, but I really appreciate your insight.
Mr. Kelly, your organization is a member organization that charges dues ranging up to $3,500 per year. You advertise on your website that these dues are tax deductible. Your organization's also non-profit, and you do not have to pay tax.
Can you tell us approximately how much benefit you and your 100,000 members receive from Canadian taxpayers through tax exemptions and tax deductions?
4:50 p.m.
President and Chief Executive Officer, Canadian Federation of Independent Business
I couldn't tell you how much in total the tax deduction would benefit our members. I will point out that for a business to make use of this deduction on their income tax, they have to have an income. About half of businesses at any given time have none, so it does cost them money to belong to CFIB in those instances.
We don't have—
4:50 p.m.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
I only have 30 seconds left, so in the spirit of transparency, would you be willing to provide the committee with the information required by this particular bill? Would you be able to provide that to this committee from your organization?
4:50 p.m.
President and Chief Executive Officer, Canadian Federation of Independent Business
I'm sure we would be...able...to provide it. I do think—
4:50 p.m.
Voices
Oh, oh!
4:50 p.m.
President and Chief Executive Officer, Canadian Federation of Independent Business
—that if the government were to make CFIB membership mandatory for all small businesses, which is actually something we have been offered by some provincial governments, then I think we would have an obligation to provide that information to government in the same way.
However, at the moment, if anyone's discomfited by how we spend our money, and if, when I'm walking back to economy class and passing the union leaders in business class on every flight.... If our members were uncomfortable with how we were spending our members' dollars, they could quit the next day; in unions, they can't. I think that's the important difference.