First, I'd like to thank the House of Commons Standing Committee on Finance for inviting me to participate in this important pre-budget consultation hearing in Toronto.
As you may know, since the capital gains tax on gifts of listed securities was removed in the 2006 budget, charities have received over $1 billion in gifts of stock virtually every year since 2006. We have another proposal that would unlock more private wealth for public good.
Our proposal is that the government should remove the capital gains tax on charitable donations of private company shares and real estate, the same tax treatment that applies to gifts of listed securities. This measure would stimulate a $200-million annual increase in charitable donations and is much more tax effective than direct government spending.
In summary, if the owner of private company shares or real estate sold his or her assets to an arm's-length party and donated all or a portion of the cash proceeds to a registered charity within 30 days, he or she would be exempt from capital gains taxes. The condition that the sale would have to be to an arm's-length party addresses any concern about valuation abuse. The forgone capital gains tax on these donations to the federal government is only $55 million to $60 million per annum, and the charitable donation tax credit is the same as for gifts of cash.
Before we focus on why this measure would help achieve your committee's objectives of enhancing our country's productivity and competitiveness, it is important to note that the middle class are the primary beneficiaries of this proposal. They would all benefit from the increased funding allotted to our hospitals, universities, social service agencies, and arts and cultural organizations across Canada. Other beneficiaries would include the 2.1 million Canadians who are employed by our not-for-profit sector, the majority of whom are members of the middle class.
This measure would certainly help Canadians be more productive. Education and training provided by our universities and colleges would help make our students live more productive lives. Medical treatment provided by our hospitals helps ensure that patients with health issues return to the workforce as quickly as possible and be more productive. Research divisions in our universities and hospitals play an important role in innovation and help us be more competitive. There is a limit to which the federal and provincial governments can provide research support. Private sector donations play a key role in the purchase of cutting-edge technology equipment and provide funding for research support so that we can attract and retain the brightest talent.
These research programs often lead to the creation of new products that strengthen Canada's competitive position internationally. Entrepreneurs play an important role in growing our economy, with a focus on innovation, creating new products, and strengthening our competitive position.
The Canadian Federation of Independent Business, CFIB, which represents 109,000 private companies, is strongly supportive of this proposal.
Our main competitor for attracting the best talent is the United States, where gifts of appreciated capital property are exempt from capital gains taxes. These include donations of listed securities, private company shares, and real estate.
We urge your committee to recommend to the House of Commons that this measure be introduced as soon as possible. Millions of Canadians across Canada would be very grateful. It would be a great legacy for your government to leave for current and future generations.
That concludes my remarks. I'd be happy to respond to any questions.
Thank you.