Thank you, Mr. Chair.
I would like to present our submission's objectives.
First, we address incorrect statements made by labour leaders and critics of Bill C-377. Our comprehensive submission provides other examples and factual evidence to correct the record.
Second, an existing section of the Income Tax Act addresses when union dues are not deductible. The only interpretations we could find underscore our position: a significant percentage of union dues levied by unions don't qualify for deduction.
Are Canadians forgoing $1 million, $100 million, or more in tax revenue?
The bill's specific, detailed line item schedules and its $5,000 threshold are critical to putting an end to what is going on. If the act was effectively enforced, unionized Canadians would pay less in dues and government tax expenditures would be reduced.
Two prominent union presidents, CAW's Ken Lewenza and CEP's Dave Coles, wrote: “Most jurisdictions in Canada require annual financial statements to be filed by all certified unions, where they can be inspected by the public.” This is not true.
Appendix C of our submission contains a one-page table of all 14 tax jurisdictions, based on laws outlined in appendix D. We've spoken with several labour board chairs to confirm that no labour board or any government body anywhere in Canada keeps such statements for public access.
Yes, eight jurisdictions enable actual union members only to ask for a financial statement for their union only. None of the eight entitles dues-paying non-members to any information at all about how their dues are used. These two groups of dues payers are a very distinct subset of who Bill C-377 serves, the Canadian public.
Appendix A contains one gutsy union member's experience at CUPE local meetings and national conventions. He publicly contradicts the internal transparency claims of labour leaders. Appendix D contains accurate facts about the British Columbia cases discussed here last month. Mr. Georgetti's responses to Ms. Glover's questions were simply not accurate. Whether or not members have disclosure is a red herring when it comes to enabling Canadians to assess the full extent of the lack of efficacy of the current tax situation.
This is not the only example. Others include grossly inflated claims about potential compliance costs that are contradicted by actual U.S. experience, unsupportable statements about Canadian privacy law, weak attempts to equate unions with professional associations, and false claims that no U.S. labour trusts must report; some must still report, even after President Obama used executive powers to help some trusts in the United States hide their activities again.
We encourage every member of the finance committee to carefully review our submission and question virtually everything labour leaders and critics are stating when amending this bill.
Regarding the non-deductibility of dues, paragraph 8(5)(c) of the Income Tax Act at its core says that dues are not deductible to the extent levied “for any purpose not directly related to the ordinary operating expenses” of the union.
Our submission quotes from the only CRA documents we could find. They demonstrate that the Income Tax Act has been carefully constructed and consistently interpreted. Even the very limited knowledge we have today about the broad range of expenses for which union dues are levied suggests that hundreds of millions in union dues are deducted and tax revenues forgone when they should not be.
With regard to the public policy problem, no one appears to have the information with which to ensure this section of the act can be properly applied. If unionized Canadians even know this, it is not in their interests to bring to the surface labour organization expenses that do not meet the act's requirements, because their taxes might go up if their union does not stop spending forced dues on non-qualifying purposes.
Similarly, tax-exempt labour organizations that levy dues for non-qualifying purposes have no interest in advising government or the people they represent of non-qualifying dues. Something has to be done to ensure that union dues for deductible versus non-deductible purposes become a part of labour organization accounting and separated out of the T4 slips of Canadians who must pay dues or be fired.
Paragraph 8(5)(c) is entirely consistent with the Rand formula. Supreme Court Justice Rand's 1946 arbitration award has a core finding: all unionized employees, whether or not they are actual union members,
...should be required to shoulder their portion of the burden of expense for administering the law of their employment, the union contract.
What is going on today with billions of dollars in dues deducted annually is inconsistent with the act and inconsistent with Justice Rand.
Finally, the union corruption experiences of countries such as America and Germany have led to disclosure schemes that have returned massive amounts of money and led to a cleanup of unions.
All Canadians, including unionized Canadians, deserve better than the status quo.
Thank you.