Debates of Oct. 24th, 1995

Cultural Property Export And Import Act

[Albina Guarnieri, Liberal, Parliamentary Secretary to Minister of Canadian Heritage]

Mr. Speaker, when the member referred to the gifts and income tax book he was rather selective in his reading. I wonder why the member did not bother to inform Canadians on how cultural property is actually certified. I wonder if he would be willing to read into the record exactly how they are certified, just so that he does not mislead Canadians into thinking that it is a free for all for everybody and anybody can give anything to any cultural institution.

Would he be willing to read the paragraph on page 18, so as not to mislead Canadians, and the first two paragraphs on page 19, so that Canadians are fully informed? As usual, I find that the Reform Party is rather selective in what it chooses to read out of transcripts.

I reassure the Reform Party that it will secure its place in museums beside the extinct species, with the dodo bird and the dinosaurs.

The member's discourse is somewhat limited in nature. When he was quoting from Mr. McAvity, who is executive director of the Canadian Museums Association, he was very limited in the quotes he chose. Mr. McAvity went on to say that they are the voice of 2,000 museums.

[Bill Gilmour, Reform, Comox—Alberni, BC]

Mr. Speaker, I rise on a point of order. The member opposite was asking a question. The whole purpose of interrupting the proceedings was to ask a question of my colleague. This is not a question. This is a statement.

[The Acting Speaker (Mr. Kilger)]

I thank the hon. member for Comox-Alberni for his intervention. It is certainly in the spirit of unanimous consent knowing that we do have some restriction given the statement by the member for Medicine Hat that he had other obligations when they accepted the unanimous consent.

Without further ado I would simply ask-

[Albina Guarnieri, Liberal, Mississauga East, ON]

I have a point of order, Mr. Speaker.

[The Acting Speaker (Mr. Kilger)]

All we are doing at this point is using up valuable time. I simply ask the parliamentary secretary if she could possibly put the question so I might allow a reasonable amount of time for the member to respond.

[Albina Guarnieri, Liberal, Mississauga East, ON]

Mr. Speaker, Mr. McAvity, who represents 2,000 not for profit museums in Canada, said: "We are very pleased to be here today in support of these amendments. The museum community has been patiently waiting for these amendments for several years". He went on to say: "This legislation was universally applauded by Canadian museums as it brought our community in line with those of many other western nations whose governments have been supporting the enrichment of public collections through similar legislation for years". Mr McAvity went on to say even more resoundingly that the Canadian Museums Association came before the committee to voice its wholehearted endorsement of these amendments.

Given all of the above, does the hon. member think he has more expertise than those individuals to judge what is good for Canadian museums? I thank the hon. member for his patience in allowing me to put the question.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I think the hon. member was taking advantage of my good nature a little bit, but that is okay.

I will acknowledge that there are a couple of paragraphs on pages 18 and 19 that do explain fairly specifically that the export review board has to judge an object to be of outstanding significance and national importance because of its close association with Canadian history or national life, aesthetic qualities and value in the study of the arts or sciences in order to be eligible to be designated for a tax deduction. The fact is that $60 million worth of those are designated every year. That is a tremendous amount of money, as the hon. parliamentary secretary would know.

The parliamentary secretary was asking me about Mr. McAvity and the museum association and was pointing out that the museums like the legislation. Of course they do. They have unfettered access to all kinds of things with no budget. They do not have a budget. The museums can basically say: "We would like that work of art or that artefact. We will take it to the review board and get it to tell us what it is worth and whether it is significant. When the board does that, then we get it". It is that easy.

The only one who pays is the taxpayer. It is certainly good for the artist or the person who is donating it because he or she gets that big tax credit. It is certainly good for the museums. Why would they have any problem with this? They probably love this stuff. It is profoundly not good for taxpayers who have to take it in the pocket every time one of these donations is made.

[The Acting Speaker (Mr. Kilger)]

I thank all members who participated in this extension of the debate for their co-operation.

[John Harvard, Liberal, Winnipeg—St. James, MB]

Mr. Speaker, before I get into the main body of my speech, I would like to proffer a couple of comments relative to what was said by the hon. member for Medicine Hat.

I did not listen to all of his speech but I did hear a chunk of it. On two different occasions he described the legislation as being horrible and innocuous. I would think the hon. member would find some disparity between those two adjectives, innocuous and horrible.

After listening to him I suspect he probably thinks the legislation is more horrible than it is innocuous despite the fact that this is anything but sweeping legislation. It really is what we might call a technical bill to put back into legislation a review and appeal mechanism, something that was inadvertently left out in 1991.

Again, in commenting on observations made by the hon. member for Medicine Hat, it is quite clear he believes that the free market system can do the job. At one point in his speech he said that we just do not need this kind of legislation at all. He was not only referring to providing an appeal mechanism or a review mechanism; he was talking about the entire system of public support for donations of Canadian heritage to museums.

We would have to be dreaming. We would have to be in full flight of fantasy to believe the museums would do as well without this legislation. Without this incentive, without this kind of legislation, many of the donations to the museums across the country, and we are talking about more than 2,000 institutions, would dry up. This was forcefully put to the committee of which I have the honour to chair by witnesses a few days back.

Let us not fool anybody. This legislation is absolutely necessary. The comments by the hon. member for Medicine Hat truly reveal what the so-called Reform Party feels about supporting cultural institutions and specifically museums. Reform members simply do not support public support at all which is wrong headed. It is a mistake and is not something that is shared by the Canadian public.

I listened to the hon. member and he seemed to plead on behalf of taxpayers, as if he spoke for all taxpayers. While many

taxpayers believe they are overburdened, and in some cases they are, most taxpayers are quite enlightened and support this kind of legislation. They appreciate museums. They appreciate cultural institutions. They support artists of all kinds. They want to reach out and help Canadians in the cultural field. They accept that this is what this legislation is doing.

This is certainly recognized by the museums. If it was not helpful the museums would be saying that, but that is not what their witnesses were saying. They came to the committee and said this legislation is needed and is supported.

This wanders perhaps a little off the bill, but this bill has something to do with preserving Canadian heritage. Everyone knows as well as I do the crisis this country is going through right now. We all know the crisis this country faces and we have a heritage. We have a tremendous history. On Monday we want all Canadians, not just Quebecers, to appreciate this heritage, this history, this land, this great nation. That is what this country is all about.

This cultural property bill is just an infinitesimal part of the efforts of preserving Canadian heritage. I feel very, very strongly that come Monday Quebecers will show that they are going to preserve Canadian heritage in a much greater way through the ballot box rather than through the mechanism of the cultural property bill.

The hon. member for Medicine Hat said he has no idea as to the tax expenditure involved in this kind of legislation. The tax expenditure is in the neighbourhood of about $60 million. Again, it is fully supported by Canadians.

Getting to the main body of my presentation today, we have debated the merits of the Cultural Property Export and Import Act long and hard.

Some time ago the hon. member from the official opposition clearly understood that the lack of an appeal process in relation to determinations of fair market value by the Canadian Cultural Property Export Review Board was the result of an unfortunate oversight. That is really what it is, an unfortunate oversight.

Bill C-93 is a technical bill. As such we must remember that its purpose is to restore a right that was lost when the determination of fair market value was transferred from Revenue Canada to the review board. We are correcting an error. We are removing a mistake that was made four years ago.

The act is even more important and necessary today than when it came into force in 1977. That is because it is fast becoming the only source, and I emphasize the only source, through which institutions can hope to continue acquiring cultural property for their collections. That has to be borne in mind throughout this entire debate.

With little or no acquisition funds, museums are now having to focus on donors to build their collections. Canada is therefore greatly in need of a means to encourage people to collect important examples of our national heritage with the ultimate aim of voluntarily donating to custodial institutions.

The Cultural Property Export and Import Act must be cherished and developed to ensure that the level of collecting of important examples of our heritage continues to increase, not to decrease. That is important.

In the 19th century the function of private collectors gained a new level of importance in the face of the spread of public galleries and museums throughout the world. While the impressionists and post-impressionists were to some extent barred from official public exhibitions, their work was nonetheless being bought by private collectors with or without the mediation of dealers. These works ultimately found their way into public collections only after their position had been established by the art market created by private collecting.

This collecting spirit was not relegated just to contemporary art, but also to the diversity of products created throughout the world. It is thanks to the collectors of the last century and continuing through to today that the public has ultimately been led to an appreciation and understanding of those objects that have come to embody the trends and symbols which define the psychology and history of our development as a civilization.

Collectors are the seers, the wise men of our times. They are the individuals who have foresight enough to recognize what is and what will continue to be of outstanding significance and national importance for generations to come. Custodial institutions for decades now have developed a strong rapport with collectors working alongside them as they collect, often with the ultimate intent to give to the public.

We are seeing in Canada today collectors who have built up strong collections who, rather than automatically giving to the public through public collecting institutions, are faced with the choice of selling those collections for a handsome capital gain or donating them to designated institutions in return for a cultural property tax certificate. However, knowing the limitations of the cultural property determination process and the fact that there is no recourse to appeal the Cultural Property Export Review Board determination, we have witnessed several cases already where collectors are opting to sell their collections rather than holding themselves hostage to the bureaucratic process. It is very important to keep that in mind. If we are to respect and encourage the intent of our collectors to give to the public domain, we must find ways to

ease that process. Establishing a system of appeal to the Tax Court of Canada would be a very important step toward encouraging the concept of making donations in our country, a step that the donors as much as the institutions are anxiously awaiting. That also has to be borne in mind. This is not only important to the institutions and the art community, it is important to the donors. In fact it is important to all Canadians.

Over the past few years, the Canadian Cultural Property Export Review Board has been the object of press articles focusing on the board's reduction of proposed fair market values in applications for certification of cultural property for income tax purposes. These stories, by the way, refer to a small proportion of all certification applications. The review board has responded by expressing the challenge of determining fair market value in these economic times where the markets in which cultural property circulates are extremely weak.

It is therefore crucial that the mandate for determining fair market value rests in the hands of experts who are knowledgeable about the twists and turns, the ups and downs of the marketplace and who know how to relate often conflicting trends in the marketplace to the cultural property applications it has before them. This is a very intricate business and it cannot be left to rank amateurs. If the job is going to be done properly it has to be left to knowledgeable people, people who are experts and people in whom we have confidence. This has been thought out and taken into account.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Integrity.

[John Harvard, Liberal, Winnipeg—St. James, MB]

Yes, as my good friend from Broadview-Greenwood pointed out, people of integrity are also important.

Speaking of people and integrity, the current review board consists of 10 members, the maximum number allowable under current legislation. These members represent the myriad of players who are actively involved in the process of preserving cultural property in institutions or public authorities who are designated to do so.

Let us go through this. Two of the members are contemporary art dealers. Four members are or were employees of designated institutions who have expertise in archival material, Canadiana, contemporary and Inuit art. One member is an accountant, another is a lawyer and the remaining two members are members of the public at large. Several of the members who sit on the board are also collectors who are fully aware of the dynamics that come into play between institutions that collect and collectors who become donors.

This not something that has been slapped together. This has been thought through very well. When we take into account the composition of the 10-member board we can appreciate the kind of thought that has gone into making up the board.

In my opening remarks I referred to comments made by the hon. member for Medicine Hat. That same member at second reading of the bill expressed concern that a board appointed by the government and consisting of members who represent the community it serves could be-to use his words-too cosy, leading to a scratch my back and I will scratch your back situation. That kind of assumption places subjectivity over expertise and suggests that human beings are by nature incapable of assessing their peers objectively. I think he has underestimated the capabilities of people and perhaps even their integrity.

We are not talking about amateurs, we are talking about professionals, professionals that value and wish to maintain their professional integrity. Further, as is the case with all professional organizations, the Cultural Property Export Review Board has a strict code of ethics to avoid any conflict of interest.

I might add that the transfer of determining fair market value to the board in 1991 was not an arbitrary move, but rather the result of the realization that such determinations can best be made only by individuals who are actively involved in the environment in which cultural property circulates.

The appeal process which the bill proposes will ensure the full use of the expertise available on the board. It is intended that given the thoroughness with which the first stage of the appeal process would be handled through a request for redetermination by a subcommittee, most issues with determinations of fair market value would be resolved and that requests for a further appeal to the Tax Court of Canada would be minimal. In other words, we do not see the two-stage review process being used on every occasion. We believe in most cases that all questions will be settled after the first go-around. Very few of these cases go to the Tax Court of Canada. It is important to keep that in mind. We are not interested in a prolonged process where both stages are used up on almost every occasion. We do not think that will happen.

The second stage of the appeal process necessitates that the donor make an irrevocable gift to the institution. Only the donor would be able to request an appeal to the tax court up to 90 days after the redetermination process is completed. Again we are not talking about people who are in the game for frivolous reasons. They are serious donors.

As with anything new, the first and second stages of the appeal process will be subject to trial and error before an efficient and workable system is developed. In other words, we can see this system, to some extent, maturing. One would hope that after the system has been used for a number of years, it will be more efficient and more mature. I believe that is a safe assumption. As with most processes, over a period of time after they have been used again and again, do get better.

The museum community, as have donors and potential donors, has been anxiously awaiting the appeal process since the original announcement was made by the Minister of Canadian Heritage in November 1994. It was looking for the announcement up until then. It was cheered by that announcement. It has been looking forward to the legislation. It has been looking forward to the passage of the legislation and it has been looking forward to this kind of debate. With a little luck it will be given royal assent in the very near future.

Over the past year and a half the review board has established positive working relationships with Revenue Canada and Justice Canada to ensure that donations of cultural property are made in the spirit of the act, that is, with a philanthropic end in mind. The board is to be highly commended for the effective action it has taken to discourage the use of the tax incentives under this act as a tax avoidance measure.

Let me point out the kind of regime that has been set up to prevent misuse of donations. Not any Tom, Dick and Harry can come along with any kind of alleged piece of art and give it to an institution and get a tax break. It is not as simple as that.

I want to draw attention to a couple of paragraphs from a pamphlet entitled "Gifts and Income Tax". The Canadian Cultural Property Export Review Board may rule that an object is of outstanding significance and national importance because of at least three criteria: close association with Canadian history or national life; aesthetic qualities and value in the study of the arts or sciences.

This is important. To be eligible to have cultural property certified, an institution or public authority has to be designated by the Minister of Canadian Heritage. The institution or public authority has to have this designation before formally accepting one's gift if one is to receive the maximum tax benefit.

The designation procedure ensures that the institutions and public authorities receiving cultural property are competent, classified, and maintain and preserve cultural property. Designated institutions are also required to make one's gift available to the general public for education, research or display purposes.

I point that out because when I was listening to the hon. member for Medicine Hat, he left the impression, at least with me, that this was a kind of loose set-up that could be exploited by people who really do not want to give pieces of Canadian heritage for philanthropic purposes but just to get a tax break.

I assure the hon. member for Medicine Hat and all Canadians that it is not as simple as that. There is a regime. There is a framework. It will have to be followed correctly and properly if pieces of art are to be accepted and where tax certificates are provided.

I am told that the board has implemented measures to target suspect donations and to make determinations so that supposed donations made with an anticipated profit are unable to receive substantial financial gains. The board has been working closely as well with the Professional Art Dealers Association of Canada to ensure that all appraisals coming before it are fully substantiated with demonstrable sales of comparable works.

As there are fewer tax incentives available to taxpayers today, the board is taking every measure possible to ensure that the tax incentive to donate under the Cultural Property Export and Import Act cannot be used as a loophole. The great importance of this act is the continuing development of our national heritage, and it merits extreme vigilance. The Canadian Cultural Property Review Board, I reiterate, is to be commended for its efforts thus far.

This brings me back to those people for whom the Cultural Property Export and Import Act is intended, the donors, the institutions and the public; three major groups in this equation and we should not forget that.

The purpose of the act is to encourage and ensure the preservation in Canada of important examples of our heritage in movable cultural property. Without acquisition funds to fulfil their mandates to collect cultural property, designated institutions must rely on donors.

As I said at the beginning of my remarks, as much as we respect the marketplace, it is a dynamic place and we would not want to be without it for one minute, sometimes it comes up a little short. When it comes up short we as politicians have to recognize that. In this case we have recognized it because the museums, the institutions, cannot rely on the marketplace through some magical process providing the donations that are so required by these institutions.

It would be nice to believe that the marketplace could wave a magic wand but it cannot, any more than the Leader of the Opposition can. We cannot rely on a magic wand in this case. We have to rely on well thought out legislation which will do the job for the institutions, for the donors and for the public at large. We think this legislation does it.

I remind Canadians that without an appeal process that ensures recourse for determinations of fair market value of cultural property for income tax purposes, donations to the country's public institutions will become paralyzed and so will our heritage. Canadians do not want that, not for one minute. That is why we have this legislation. We as Canadians, the public, would suffer if this were to happen, this paralysis I was referring to.

At a time when museum attendance has been steadily increasing and contributing to the economy of Canada through cultural tourism, we cannot afford to abandon our duty to continue to inspire our people to partake in the cultural harvest of our nation.

Museums are more popular today than ever before. Perhaps this has something to do with the fact that our country is getting older. It is 128 years old. We have a lot of heritage; heritage that has been captured by our artists, heritage that expresses Canada in all of its manifestations. We have a duty to encourage artists, to support donors, to support designated institutions so that this heritage in art form is preserved and protected because we will be a stronger country for it.

Imagine for a moment what future generations of Canadians would think of us if we were oblivious to these facts, if we ignored these facts, if we let these precious pieces of heritage slip through our fingers, allowing these precious pieces of heritage to be squandered. They would condemn us. They would assess us very harshly. However, we would not have to wait for the evaluation or the assessment of history. I think our contemporaries would treat us very harshly.

Canadians know what this country is all about. Canadians know what our heritage is all about. They also know what it takes to preserve that heritage because they know a country is not here for just today, tomorrow, next week, the week after, the month after or the year after. Like so many countries, Canada is here for a long, long time. In recognition of that we have legislation to support our artists, our donors, our institutions and the public at large.

I think all Canadians, all taxpayers, support this. They will not share some of the criticisms we have heard of the bill. Of course no legislation is perfect. As long as human beings are what we are, imperfect, we will often create imperfect legislation. However, I think we have done a good job on this. Certainly the institutions have told us that. The museums have told us that. They came before the committee and praised this legislation. They praised the minister. They praised all of us in the House and they want the job done. They do not want this frivolous talk, this carping from the other side of the House.

Criticism for criticism's sake does not make any sense. If you have something worthwhile to say, say it. To stand up on your hind legs, to carp and to criticize just to fill the air does not make sense. I think the opposition does us a disservice when it grandstands, when it indulges in that kind of talk. We want responsible debate. In some cases we have fallen short of the goal of responsible debate.

Canadians support the legislation and they want it done. That is all I have to say and I hope we can have this legislation passed as quickly as possible. Canadians want it.

[The Acting Speaker (Mr. Kilger)]

We will now move to the next stage of debate in which members will be entitled to 20-minute speeches subject to 10 minutes of questions or comments.

[John Maloney, Liberal, Erie, ON]

Mr. Speaker, I am very pleased to rise this morning on Bill C-93, an act to amend the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act.

The Cultural Property Export and Import Act came into force on September 6, 1977 together with certain complementary amendments to the Income Tax Act. The purpose was to preserve in Canada significant examples of Canadian heritage through the use of a system of export controls, tax incentives for private individuals who donate or sell cultural objects to public institutions, and assistance to institutions in purchasing cultural objects under certain circumstances. Bill C-93 would affect only the use of tax incentives. It is an amendment to the original act.

The legislation will establish an appeal of decisions of the Canadian Cultural Property Export Review Board to the Tax Court of Canada. This bill is being sponsored by the Minister of Canadian Heritage and it is his responsibility through the Department of Canadian Heritage to develop, implement and promote cultural policies that will enable Canadian creators to flourish and Canadian consumers to enjoy and benefit from a wide variety of cultural products.

The federal government clearly has a role in the development of policies and programs designed to encourage the production and preservation of Canadian cultural materials.

In the area of heritage policies and programs the Department of Canadian Heritage provides support and assistance to museums across the country while at the same time ensuring that our national institutions, including the National Archives, the National Gallery, the Canadian Museum of Civilization, the Museum of Nature, the Museum of Science and Technology and the National Library, function in an environment conducive to giving Canadians maximum access to our cultural heritage.

Culture is fluid, always changing and must not be looked on as something rigid or something around which barriers or parameters can be built. Culture is diverse. Customs that may seem strange to one culture will often be part of the daily life of another.

It is for these reasons that it is important these cultures are reflected in the collections of our museums so that others will be exposed to them, will learn from them and will in turn understand them.

The Cultural Property Export and Import Act already serves as a vital instrument to protect Canada's diverse cultural heritage by building strong public collections. Bill C-93 will serve to strengthen this legislation and will help to ensure the history of all Canadians is preserved for future generations.

The amendments contained in Bill C-93 should not be reviewed in isolation but rather as part of a comprehensive policy for preserving our heritage. Historic sites, parks, museums, monuments and historic buildings are all symbols of what makes us unique as Canadians. Their preservation is essential as both reminders of the past and sign posts for where we are going in the future.

Part of the greatness of our history and our heritage rests with not only the deeds of past generations but with national treasures, the artefacts, works of art and personal objects they created. By preserving and displaying these objects in museums the past can continue to live in the present.

The influence of American television, movies and printed materials can blur the distinction between Canadians and Americans and cause us to forget the great achievements of previous generations of Canadians. The preservation of our cultural property and museums, archives and libraries ensures the continuation of a distinct Canadian identity.

According to the Canadian Museums Association there are over 2,000 museums in Canada. These museums range from small, seasonal, one person operations to medium size facilities, as we have in several communities in my riding of Erie, to great urban museums such as the Canadian Museum of Civilization, the Art Gallery of Ontario, the Glenbow Museum and the Montreal Museum of Fine Arts.

All of these museums enjoy national and international reputations because of one reason, their collections. Great collections do not occur by accident but instead develop from careful nurturing and the generosity of donors and benefactors who believe in the importance of preserving Canada's patrimony for future generations.

Critics of Bill C-93 like to say tax incentives for donations of cultural property are tax loopholes for the rich. In saying that they are ignoring the rigorous standards museums, archives and libraries apply to get at these acquisitions. Our cultural institutions do not frivolously accept people's junk and offer them tax incentives. If that were the case the contents of my garage would make me a rich man. On the contrary, they make conscientious professional judgment about what objects or collections are worthy of certification because they are, in the words of the act, of outstanding significance and national importance.

I mentioned earlier that there are over 2,000 museums in Canada. To be eligible to apply to have objects certified as cultural property and therefore made eligible for a tax credit, a gift must be made to an institution that has been designated under the act. But not just any organization that operates a museum or calls itself a museum is eligible to be designated. I am informed that there are

only approximately 300 designated institutions in all of Canada. Only a fraction of those 2,000 museums in Canada are even eligible to apply to receive the tax benefits offered by the legislation. That small number of designated institutions is an indication of one of the safeguards that was built into the original legislation and is further enhanced in the bill now before the House.

To be designated a museum, archive or library, it must be a non-profit corporation and have as its principal activity the acquisition and preservation of cultural property. It must also have a collection that interprets and displays to the public. It must have a professional staff and it must be open to the public on a regular basis. This means that before an institution is even able to apply to obtain a tax credit for an object that it wishes to bring into its collection, the institution must demonstrate that it has the ability to preserve that object in perpetuity. The institution must then apply to have the object certified as a cultural property by the Canadian Cultural Property Export Review Board.

Again, the tax credit is not automatic just because a museum or other institution is designated and wishes to add an object to its collection. It must be demonstrated that the object is of outstanding significance and national importance and that it fits within the acquisition mandate of the institution. After that, arm's length appraisals for the fair market value of the object must be obtained. These are provided by evaluation experts who have no association with either the recipient institution or the person donating the object. Again there is a safeguard in the system.

The appraisals are reviewed by the Canadian Cultural Property Export Review Board and it determines the fair market value for income tax purposes. The review board is composed of experts in all aspects of cultural property: museum personnel who are knowledgeable about its significance and the means to preserve it and dealers and collectors who are active in the marketplace and know the prices at which objects regularly sell.

Establishing the fair market value of cultural property or any other commodity is more of an art than a science, and it is inevitable that disagreements will occur. In 1987 in the Ontario high court a judge wrote in his ruling that fair market value was a notional or hypothetical concept, an opinion arrived at by evidence, assumptions, calculations and judgment in the absence of an actual transaction. In such a situation it is obvious why there may be disagreement about the fair market value of a particular object.

Responsibility of the review board to determine fair market value can at times be very onerous, particularly when dealing with unique objects and donations to a wide range of institutions. The experts on the review board recognize this. That is why they fully support the two appeal processes established by the bill. They

understand that it is important for donors of cultural property and recipient institutions to be able to request a thorough review of their decisions through the redetermination process and, if necessary, through an appeal to the tax courts of Canada.

The present law enables the review board to redetermine the fair market value of an object if additional information becomes available. To date this system has worked well, but there have also been cases when donors have felt that further consideration of the information that had been provided was required or that additional emphasis on salient facts was needed. This was not possible if a redetermination could only take place when additional information had been provided.

Bill C-93 removes the requirement that additional information be provided before a redetermination takes place. This means that the review board will be able to revisit its decision at the request of a donor or recipient institution with or without the provision of additional information.

We believe it will be difficult to design a first level of appeal that is fairer or more equitable than this one.

If after a redetermination the differences between a donor and the review board still have not been solved, the donor must complete the gift, if he has not already done so, and may then appeal the determination of fair market value to the Tax Court of Canada. This is an important point, because at the time the appeal is made to the Tax Court of Canada the donor will have made an irrevocable gift to the museum, archive or library. He will no longer be the owner of the object. The cultural heritage of Canada will therefore have been enriched regardless of the tax court decision about the object's value.

What will be at issue in an appeal to the tax court will be the fair market value of the object for income tax purposes. The question of outstanding significance and national importance will have been resolved, and the donor will have made the gift in the knowledge that the fair market value of the donation remains an issue.

Again, those concerned about fairness in the tax system and whether rich people are benefiting from a tax loophole will appreciate that the process, by its very nature, guarantees that the tax system is fair and that it will not be abused.

If donors are prepared to make a gift with the full knowledge that they may receive a tax credit for less than they believe an object is actually worth, they are clearly not being motivated by money or profit when they make a donation. If that is their only concern they can withdraw the gift, sell it on the open market, and no tax credit will be given. This system is a win for all involved.

The amendments in Bill C-93 not only reinstate a previous right of appeal but improve on it by establishing two processes that will permit an open dialogue about the fair market value of an object. We believe the ability to discuss fair market value, a concept that involves evidence, assumptions, knowledge and the exercise of judgment, will lead to better appraisals provided to the review board when it makes its initial determinations. This in turn will lead to a limited number of requests for redeterminations and in all likelihood to only a few appeals to the tax court.

Bill C-93 is being strongly supported by museums, archives and libraries, by collectors and donors of cultural property, by dealers and appraisers, and by the review board. I urge all members of the House to support the bill. The amendments are technical in nature and respond to strong concerns expressed by the heritage community. Their passage into law should be seen as part of the ongoing commitment of the Government of Canada to ensure the preservation of Canada's cultural heritage. This will benefit the culture and heritage of my riding of Erie. This will benefit the culture and heritage of the finest country in the world, Canada.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I rise to make a comment on this important piece of legislation, Bill C-93, an act to amend the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act.

I congratulate the member for Erie for laying out the provisions of Bill C-93. I want to explain to Canadians in very straightforward language what those provisions mean. It is extremely important for Canadians to note, as was expressed by the member for Erie and by the previous speaker, the member for Winnipeg St. James, that this is not a bill that is directed, as Reform would paint it, to somehow provide benefit to the rich. To demonstrate that, I did a little calculation of what the implications might be.

If taxpayers were interested in making a contribution of a book, an artefact, et cetera, to a museum, library, et cetera, and the contribution were deemed to have a fair market value of $1,000, assuming their original cost of acquiring it many years ago may have been $100, under the current tax act if they were to sell that artefact to a museum they would realize a capital gain of $900. Half that capital gain is taxable. Reform is saying this is a rich man's scheme, so let us assume the highest marginal rate, in which case they would pay tax of $225 on the taxable capital gain. That means that the net cash to the owner of the artefact would be $725 on the sale to the museum of the $1,000 artefact.

The legislation provides a tax credit to the donor of the artefact. If that artefact is shown to have a fair market value of $1,000, the tax credit would be 17 per cent on the first $200 and 29 per cent on the balance. In total, the tax credit or the reduction of taxes otherwise payable would be some $266.

It really comes down to a matter of cash. A straight sale would generate $775 to the taxpayer who sold the artefact to a museum. If a tax credit system is used, the donor only gets $266. In that regard it is clear that those who are prepared to donate to our cultural and heritage institutions assets of value that have been determined by a rigorous process of review and assessment would be receiving in real cash terms substantially less than if they had sold them directly.

If we are talking about true value, as the hon. member for Winnipeg St. James spoke of so well, since our cultural institutions have very little or no real cash to acquire assets this is really the only way to allow them to acquire those assets. It allows those institutions, the libraries, the archives, the galleries, et cetera, to remain current in terms of the cultural and heritage artefacts and documents that are available. It allows them to be competitive. It allows them, as the hon. member for Winnipeg St. James indicated, to continue to attract Canadians and visitors from around the world to visit our cultural and heritage institutions.

It should be clear to Canadians that in Bill C-93 the mechanism of a tax credit allows our Canadian institutions to acquire these items at substantially less cost than if they had to buy them at their fair market value. Considering also the tourism value that is generated through our cultural and heritage institutions, there is no question that the bill provides a very advantageous arrangement for all Canadians.

The hon. member for Erie might want to amplify or comment on the benefit to Canada that will be generated as a result of the provisions of Bill C-93.

[John Maloney, Liberal, Erie, ON]

Mr. Speaker, my colleague from Mississauga South put forward in a very clear and concise manner the benefits of the tax credit to the cultural industry, as opposed to the loss of taxes. The difference is minuscule.

When I bring my family to Ottawa there is nothing better than visiting the various museums. It is an interesting way to spend a day. Many people come to Ottawa to do that. They should be encouraged to do it, but not only in Ottawa. In my community of Erie there are small museums which are expanding. It certainly provides enjoyment for all people, not only in the riding of Erie but for the tourists who visit us.

The bill can only amplify and increase the benefits we must ensure our cultural community has, not only for ourselves but for future generations.

I had a conversation with the German ambassador to Canada last week. I was asking him about the reunification of East and West Germany. He said that one of the concerns they have is bringing their art objects back from countries such as Russia, where they were carted away during the war.

Preservation of heritage and culture is important to all countries throughout the world. We must not let it happen in our country where we just cut it off as the Reform Party has suggested. It will flounder and die.

[John Loney, Liberal, Edmonton North, AB]

Mr. Speaker, I am pleased to have the opportunity again to speak in support of Bill C-93, an act to amend the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act.

As members will recall, the purpose of the bill is to establish an appeal of decisions of the Canadian Cultural Property Export Review Board to the Tax Court of Canada. Members will also recall that this is the reinstatement of a right that had previously existed. I repeat that it is the reinstatement of a right that had previously existed but was lost when the responsibility for determining the fair market value of certified cultural property was transferred from Revenue Canada to the review board.

Some people have incorrectly called tax incentives for donations to museums, art galleries, archives and libraries a tax loophole for the rich. While some wealthy people do benefit from these credits, there are also many people who donate important objects of Canadiana that have been in their families for generations.

According to the Canadian Museums Association, over 60 million people visited museums in Canada last year. As part of their experience of visiting a museum, these 60 million people were able to view objects that are now in public collections because of the tax credits available for donations. Without these incentives, many of these donations would not have been made and the objects would have instead been exported and sold to museums in other countries.

If Canadians and visitors to Canada are not able to learn about our past by visiting museums, the damage to our history and to our identity as Canadians will be immeasurable. Museums, art galleries, archives and libraries are not just warehouses full of objects that never see the light of day. On the contrary, they are lively centres of education and learning where one learns about the past through objects that have been preserved for the present and future generations.

The idea was perhaps most eloquently stated by Sir Arthur Doughty, Dominion Archivist of Canada from 1904 to 1935, when he wrote about archival documents: "Of all the nation's assets,

archives are the most precious. They are the gift of one generation to another. The extent of our care of them marks the extent of our civilization". These words apply equally to the holdings of museums, art galleries and libraries.

Tax incentives that offer partial financial compensation to a donor of cultural property are a small price to pay for the preservation of our national heritage. Through these tax credits, the Government of Canada is able to assist institutions to continue to acquire and preserve significant cultural objects when acquisition budgets are shrinking or non-existent.

It is also important to consider these amendments in the tradition of tax incentives as a means to encourage charitable donations. Income tax exemptions for donations to educational institutions, hospitals and churches have been included in the Income Tax Act since its passage in 1916.

In 1930 these exemptions were extended to registered charities. Tax exemptions for donations to educational and charitable institutions including museums, archives and libraries have therefore been a fundamental principle of the tax policy since income tax was first introduced.

In recent years, the Income Tax Act has been amended so that tax credits now extend to gifts to non-profit organizations that provide housing for senior citizens, Canadian amateur athletic associations, Canadian municipalities, the United Nations and its agencies, and registered national art service organizations. As this list indicates, tax credits are part of an overall fiscal strategy to encourage donations to a wide range of organizations.

Institutions designated pursuant to the Cultural Property Export and Import Act, that is institutions that have demonstrated they meet legal and professional requirements for the preservation of our cultural property, are both educational institutions and registered charities. Tax credits for donations to these institutions are therefore not new but instead are consistent with the history of giving in Canada.

It has also been suggested that tax credits for donations of cultural property are a waste of taxpayers' money because donors are able to get rid of works of questionable importance. This suggestion demonstrates a lack of understanding of the collecting practices of Canada's custodial institutions and of the professionalism of Canadian curators. It also implies that every object acquired by a museum, art gallery, archive or library is automatically certified as a cultural property for income tax purposes.

I would like to address each of these points in order, as an understanding of these issues is key to understanding the importance of the tax credits available for gifts of cultural property.

First, with respect to the acquisition mandates and practices of Canadian custodial institutions, it must be understood that these institutions are established with a specific mandate to acquire and preserve defined types of objects. Museum curators must therefore carefully select which objects they are going to acquire and must be able to demonstrate how they fit into this acquisition mandate. They do not accept just anything or everything. In fact, I have been told by senior museum curators that they turn down as many offers of gifts as they accept.

Second, museums, archives and libraries are staffed by professional personnel who are acknowledged experts in their subject areas. They know what is culturally significant and what is not. They know what should be preserved and what sometimes unfortunately, must be allowed to perish or be exported. They are also keenly aware that their institutions cannot preserve every example of even important cultural objects. In short, professional judgment is applied when decisions are being made about what objects are worthy of being added to the permanent collection.

Third, there seems to be an assumption that when an object is chosen for inclusion in a public collection it is somehow automatically certified as cultural property and therefore is eligible for a tax credit. Again, this is a fallacy. Just as professional judgment is applied to what will be required, it is also applied when deciding if an application for certification as cultural property for income tax purposes should be submitted. In short, only a fraction of the objects that are acquired in any given year receive a tax credit.

To be eligible for certification, an object or a collection must satisfy the criteria of outstanding significance and national importance found in section 11(1) of the Cultural Property Export and Import Act, which states:

(a) whether that object is of outstanding significance by reason of its close association with Canadian history or national life, its aesthetic qualities, or its value in the study of the arts or sciences; and

(b) whether the object is of such a degree of national importance that its loss to Canada would significantly diminish the national heritage.

It is clear from these criteria that only truly significant objects are eligible for certification for income tax purposes. The decision is not made arbitrarily but rather according to specific legislative requirements that are applied uniformly to all objects that are considered for certification by the review board. It is also worth noting that the decision as to whether an object is of outstanding significance and national importance is made by a board composed of people who are active in the cultural community.

The Cultural Property Export and Import Act requires that review boards be comprised of people who work in custodial institutions, people who buy and sell cultural property, or people

who actively collect objects that are important to Canada's cultural heritage. The review board is therefore a board of experts who are knowledgeable about both the significant and fair market value of cultural property.

When the previous government decided to transfer the responsibility for determining the fair market value of cultural property from Revenue Canada to the Canadian Cultural Property Export Review Board it did so without consultation. Members of the review board were not consulted. Dealers and collectors of art and antiques were not consulted. Custodial institutions were not consulted.

In the course of implementing its new mandate, the review board sometimes lowered the proposed fair market value of cultural property. While this was inevitable and had also been the practice at Revenue Canada, the result was that some donors felt that their donations had been undervalued. When they attempted to appeal the board's determination, it was discovered that the right of appeal that had existed under the Income Tax Act had been lost.

In response to the concerns raised, consultations then took place with members of the review board, dealers, donors and representatives of the institutions that collect cultural property. Their response was unanimous: The right to appeal review board decisions was necessary to ensure that the system continued to work fairly.

Bill C-93 is a manifestation of the will of the people. It is not something that was dreamed up by this government, nor is it an expansion of existing tax incentives for the donation of cultural property. It is instead the reinstatement of a right that was lost in 1991. It is also a tangible demonstration that this government listens to the people of Canada and is prepared to move quickly to correct imbalances and inequities in the tax system.

There has been much talk from members of the third party about fairness in the tax system yet they oppose a bill that is just about that, fairness. The current system with the lack of an appeal of determination of fair market value has been characterized by many people as being unfair. The establishment of not one but two appeal processes will restore fairness to the system. It will ensure that if donors believe they have a legitimate dispute with the review board they will be able to pursue it first with the review board and, if necessary, in the tax courts.

Donations to museums, archives and libraries involve a triangular relationship between the donor, the recipient institution and when certification as cultural property is required, between the donor and the institution on one hand and the Canadian Cultural Property Export Review Board on the other. This relationship is one of mutual respect and co-operation in the preservation of Canada's heritage in movable cultural property. This relationship must also include a mechanism for dispute resolution if and when the participants cannot agree about the value of the gift.

The appeal process of determinations by the Canadian Cultural Property Export Review Board proposed in Bill C-93 will permit

any donor of cultural property who disagrees with a review board determination the opportunity to pursue this first with the board and if necessary ultimately with the Tax Court of Canada.

The amendments proposed in the bill should be viewed as a guarantee of the donor's right to natural justice through an appeal to the judicial system if that is warranted. These amendments should also be viewed as a reinstatement of a right of appeal that was lost in 1991 when the responsibility for determining fair market value was transferred to the review board.

We believe it is important that the decisions of government boards and agencies be subject to appeal because even in the honest exercise of judgment, differences of opinion can occur. An open and transparent process with respect to determinations by the review board is essential and the right to pursue the matter in the courts, if no other resolution can be found, is consistent with both the Canadian legal system and the concept of natural justice.

As Canadians we have the privilege to live in a country with many cultures. The material history, the cultural property of many diverse groups that make up Canadian society must continue to be preserved for the benefit of all Canadians. I believe the amendments contained in Bill C-93 will help to ensure this happens and will only improve the already unique Canadian approach to protecting cultural property.

In conclusion, I would urge the support of the House for Bill C-93.

[Dan McTeague, Liberal, Ontario, ON]

Mr. Speaker, I listened carefully to the comments by my dear colleague, the member for Edmonton North.

This is a very innovative bill. I have had a chance to review both the comments and some of the supporting documentation provided by the minister of heritage.

I am interested in the comments that my colleague from Edmonton made just a moment ago. In Ontario riding we have many museums and a number of people have donated artefacts over the years. It may come as a surprise to the House that Ontario riding was the riding and the county after which the rest of the province was named in 1867. Previous to that it was Upper Canada and Canada East.

I have a very simple question for the member. Perhaps he could explain to the House some of the significant impacts the bill might have in the area like Edmonton where I know there are many people of various backgrounds who moved there over the years.

Particularly the francophone community in that part of the country.

[John Loney, Liberal, Edmonton North, AB]

Mr. Speaker, in response to the hon. member's question, Edmonton and northern Alberta in particular are areas where the descendants of many cultural and ethnic groups coming from many different countries settled, particularly as he pointed out the francophone community.

The amendments in the bill will give the descendants of the people who settled the west, particularly after 1905 when it became a province, the opportunity to pass on to the province, which is now their home province, some of things that their parents, grandparents and possibly great grandparents brought not only from eastern Canada and other parts of Canada when they settled that part of the country but also from their countries of origin.

[John O'Reilly, Liberal, Victoria—Haliburton, ON]

Mr. Speaker, I am pleased to speak in support of Bill C-93, an act to amend the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act.

Throughout Canada publicly funded organizations and institutions are being forced to re-evaluate their mandates, their operating procedures and their very reasons for being with increasing costs and reduced levels of financial support from both the public and the private sectors. The existence of many of these institutions is being debated. In my riding of Victoria-Haliburton it is a great worry for many cultural organizations.

The cultural sector in Canada has developed through a combination of public funding, private funding and volunteerism. In order to meet the targets to reduce the deficit the government believes all institutions that receive public funds must become more self-sufficient.

However, government is not going to just cut them adrift. Instead it will develop structural measures to assist them through this transition period. Tax credits, whether to assist in the development of a distinctively Canadian film industry or for the donation of cultural property to designated institutions such as those available through the Cultural Property Export and Import Act, are the one way the government is able to help through that transition time. It must be remembered that heritage institutions and related activities also contribute to the economy of Canada. The impact of heritage institutions and their activities are increasingly having beneficial, economic impacts on communities across Canada. A recent Nova Scotia study, for example, noted that the economic impact of the six major museums in that province significantly exceeded the direct expenditures associated with the operating of the facilities.

Similarly, data available from a series of studies conducted in Alberta show that spending by visitors to historic sites averaged $50 million annually. These same studies have demonstrated that museums such as the Tyrrell Museum in Drumheller are often the top tourist attractions in a region.

Much of the activities of museums, archives and libraries also support research, knowledge and public education. The research conducted by the staff of these institutions often leads to seminal discoveries and the effect of this can have impact in other areas such as the production and dissemination of CD-ROMs and publications.

Exhibitions also educate the public, create employment and contribute to cultural tourism. Visitors who travel to other cities to view exhibits, stay in hotels, eat in restaurants, shop, attend events, take tours and spend money in a variety of sectors of the economy because they travel to a city or town to visit a museum.

The recent exhibit at the Art Gallery of Ontario of impressionist paintings from the Barnes collection, is an excellent example of this and has provided concrete proof of the contribution cultural institutions can make to the economy.

During the three and one half months this exhibit was on display in Toronto, almost 600,000 people visited the Art Gallery of Ontario specifically to see this exhibit. According to an economic impact study that was conducted afterward, almost $75 million was spent in the province of Ontario on trips or excursions that brought these visitors to the exhibit. This $75 million expenditure created ripple effects throughout Ontario's economy that resulted in the production of $137 million in goods and services.

In addition to these impressive statistics, the Barnes exhibit produced employment and the amount of taxes associated with this event totalled almost $22 million for the municipal, provincial and federal governments.

While these almost 600,000 visitors went to this cultural institution to see an exhibition they also had the opportunity to view works from the permanent collection of the Art Gallery of Ontario. The same is true for visitors to any other museum, art gallery, archives or library. Some of the works on display from the permanent collection would undoubtedly have been acquired as a result of the tax incentives offered by the Cultural Property Export and Import Act contained in Bill C-93.

This represents another side of the economic impact of cultural institutions. The idea that the foregone tax revenue that results from a donation of certified cultural property is somehow lost

money is simply not true. In the first place, the work of art or the artefact that is being donated to an art gallery or a museum will either have been with the donor's family for generations or it will have been purchased by the donor at some point in the past and is now being donated to a public collection.

If, in the case of a work of art, it was bought through a commercial gallery or an auction house, an open market transaction occurred. Money changed hands during that transaction and taxes were paid to governments both in the form of sales tax and income tax paid by the art dealer or the auction house.

Similarly, these objects, often of great cultural significance, were purchased with after tax dollars, that is, with the disposable income of the donor. It is important to remember that a donor of cultural property is not reimbursed dollar for dollar for the fair market value of the donation. Instead a donor receives a tax credit equal to 17 per cent of the first $200 and 29 per cent of the fair market value beyond that. Simple mathematics indicate that the tax refund, the forgone revenue the donor receives is only a fraction of the fair market value of the object.

If a person buys an object with after tax dollars, donates it to a distinguished institution and then receives a tax credit for 29 per cent of the fair market value of the object, it is difficult to see how anyone can fault that individual. They will also have donated it to a public institution where it becomes part of Canada's cultural patrimony that is accessible to everyone.

Members of the third party have objected to tax credits for donations but they have not yet addressed the purpose and intent of this bill. Tax credits are not the issue. In any event, I believe I have adequately demonstrated that tax credits for donations provide an incentive and a modest acknowledgement of a donor's generosity. They do not, as stated earlier, even come close to reimbursing an individual and in fact can contribute to significant revenue gains in a variety of areas of the economy.

It is perhaps worthwhile reminding hon. members that the purpose of this bill is to establish an appeal of decisions of the Canadian Cultural Property Export Review Board to the Tax Court of Canada. It establishes two types of appeal: the right of review of a determination by the review board itself and then, if necessary, the right to appeal to the Tax Court of Canada.

This need for the right of appeal is not new however but a re-establishment of the right of appeal that was inadvertently lost in 1991 when the responsibility for determining fair market value was transferred from Revenue Canada to the review board. There has been concern that the right of appeal would simply add to the backlog of cases to the tax court. We do not know if this will happen but every effort has been made to ensure that it does not. The redetermination process will allow the majority of disagreements to be settled directly with the revenue board.

Is the possibility of adding a few more cases to the workload of the tax court a reason to deny someone that right of appeal when they disagree with a decision that directly affects them? Is this a reason to open the reinstatement of right that was lost and now denies some individuals natural justice through their inability to appeal to the courts? I believe not.

It is also questionable if the reinstatement, and this must be emphasized, of a right of appeal will lead to an increase in appeals to the Tax Court of Canada. This right to appeal existed before when the responsibility for fair market value resided with Revenue Canada. Therefore, it seems reasonable to assume that the tax court is in a position to resume this responsibility.

People from every province and territory have made donations to institutions designated under the Cultural Property Export and Import Act and people from around the world are now able to share in the enjoyments of the works of art, archival collections, books and artefacts that are preserved in public collections as a result.

These cultural institutions both preserve Canada's heritage in movable cultural property and make a significant contribution to the economy. Culture is not a frill enjoyed by only a few people but a valuable economic activity as well. To ensure that it continues to play this vital dual role, our museums, archives and libraries must have vibrant collections that will both contribute to knowledge and attract attention and visitors.

The tax incentives offered by the Cultural Property Export and Import Act are an important means to ensure that the donations of significant cultural property will continue. Without a right of appeal, as contained in Bill C-93, some donors will feel that they have no recourse if they disagree with a decision of the Canadian Cultural Properties Export Review Board and they may not be prepared to make a donation.

The appeal process will contribute to the preservation of Canada's cultural heritage collections of international stature. Both activities are important to Canada as a nation. I encourage all members of the House to support Bill C-93.

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Madam Speaker, I have a question for the hon. member. I congratulate him on a very able speech.

The member must know that at second reading of the bill the members of the Reform Party voted against it. Some of us were kind of surprised at that because the bill does something to promote Canada's culture. It does quite a lot to promote Canada's culture I would suggest, particularly the culture that is contained in Canada's museums and art galleries.

Does the hon. member agree with me that the Reform Party policy on this matter is inappropriate and that Reform Party members should be supporting the bill since they must recognize, as we do, that culture is an extremely important part of Canada's political, economic and social life?

The culture represented by Canada's art galleries and museums is a very significant part of our heritage.

[John O'Reilly, Liberal, Victoria—Haliburton, ON]

Madam Speaker, I thank the member for Kingston and the Islands for his question. It is a very interesting one. I could not imagine not being in support of the bill.

Museums, art galleries, archives and libraries in every province and territory benefit through the receipt of donations of cultural property as a result of these tax credits.

I recently sent a collection of postcards, with no value or tax incentive for me, that I received dealing with western history, particularly in the province of Manitoba. It was sent in the 1800s to my riding of Victoria-Haliburton.

I came across it in a collection and managed to pick it up for very little and I donated it to the Canadian Heritage Museum in Manitoba. It sent me a thank you. I should have asked for a receipt but I did not feel the collection had a lot of value.

The collection significantly added to the heritage, the culture and preservation of culture in western Canada. It is very important for an eastern Ontario member to be concerned with western Canada and with the culture of western Canada, with the preservation of the culture in western Canada.

I have a lot of trouble understanding why the Reform Party would not support such a bill. I know quite specifically that the areas those members represent have gained from Liberal members such as me, the member for Kingston and the Islands and the member for London-Middlesex.

Somewhere along the line we have donated without any tax receipt. The collection I donated was postcards, but it was invaluable. I should have had it appraised. I felt it should be in a museum and was something people should be able to enjoy. It is preserved forever instead of being thrown in the garbage or kept in some personal collection where it is not seen.

I also collect guns, much to the dismay of a number of people here. The gun bill is still in the other place. I have a gun that was carried by an army doctor in the first world war. I guess we would call it an oxymoron that doctors were issued handguns in the first world war. I have had recent discussions with the museum in Lindsay to donate that gun. If I am lucky enough to get a tax receipt for it, that would be fair. It is the only one of its kind registered in Canada and therefore should be preserved so that the public can see it.

Even going into the law and order issues Reform Party members seem to stand for, I cannot imagine why they would be in any kind of discourse with the bill. It is necessary. It will help preserve our culture and our heritage, a very important part of the fibre of our country.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I am happy to speak in support of Bill C-93, an act to amend the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act.

The bill, as previous members mentioned, establishes two processes. The first gives the donor or the recipient institution the right to request that the review board reconsider its initial determination of fair market value.

If after receiving a redetermination from the board the donor is still not satisfied, he or she may take the second step of appealing the board's decision to the Tax Court of Canada. The fair market value of cultural property certified by the review board is eligible as a tax credit of 17 per cent on the first $200 and 29 per cent on the balance over $200. The donor can claim the fair market value of the gift up to the total amount of his or her net income and there is no tax payable on any capital gain resulting from this gift.

This is a technical bill, as was mentioned by colleagues earlier. The objective is the preservation of Canada's cultural heritage.

I understand from a tax policy point of view where Reform members are coming from. They have a system of tax reform not unlike my own approach, a single tax system in which they want to flush out from the entire tax act of Canada all the preferences given in the various sectors.

However, until we as a government get involved in total tax reform we cannot deprive sectors of our economy vital to the economic soundness of the country the opportunity of growth and participation in the economy. This is where the Reform Party is short sighted.

If we say to the artists, the cultural community, that we do not want to give them the opportunity to participate in the tax act through tax credits, we cannot say no to them without having the same approach for the energy sector, the forestry sector, the tourism sector and so on. I am philosophically supportive of where Reform members are coming from but they cannot oppose only one sector.

Until we get a commitment from the House for total tax reform we have to continue to do these tax credits on a sector by sector

basis. Otherwise we will be punishing one community while other communities get a free ride. That is wrong.

Do we want to punish the cultural community and let the very wealthy people have the ability to send their kids to ivy league universities where they get tax credits or estate tax redemptions of up to $600,000 on property in the United States? It does not work.

I want to come at the bill from another point of view, what cultural properties contribute to the tourism sector. I will give a specific example of a museum in Toronto which I know the Speaker is very familiar with, Canada's Hockey Hall of Fame. This is an example of a museum that celebrates the cultural soul of the country, hockey.

About three weeks ago I had the opportunity of going through the Hockey Hall of Fame. I was absolutely blown away by the historical relics on display, with the feeling one gets as one goes through the hall of fame and looks at the history of hockey, its contribution in terms of job creation in hockey, the celebration of those magical moments in great Stanley Cup goals and so on. One walks out of that building with a sense of pride which I cannot describe on the floor of the House.

There is another feature to this museum on which we are not dwelling. It is relevant to all museums, all cultural property establishments across Canada. These are tourism assets. The spinoff we bring to our community when we celebrate and package our cultural properties is phenomenal. What industries are affected by these tourism assets? We are talking about hotels and restaurants. We are talking about replicas of these assets manufactured in small craft shops. These cultural property assets and historic museums exist right across the country.

I have been glancing through "On the Road to Quebec", a guide to the sightseeing attractions in Quebec. We are on the eve of a very important decision in our country. As I was going through this guide I could not help but feel emotional about some of the great cultural and historic sights and assets in Quebec. There is a litany of sights, tourist attractions and properties that celebrate the great history and the great contributions Quebec has made to Canada. Just going through those assets in Quebec right now alone makes the bill worthy of merit.

I believe many Canadians right now are listening to these debates in the House because we are going through a very fragile time in our country's history. Many members are receiving calls in their offices by people concerned about the referendum on Monday. This is no secret. There have been many newscasts on television and radio and many newspaper articles stating that things are very fragile right now.

To Canadians not living in Quebec, if ever there was a time when they could celebrate the great cultural assets in Quebec, try to travel this weekend to Quebec to visit and celebrate some of these great Canadian cultural assets all over Quebec, especially in the outlying regions. We have great centres where our history and cultural assets are celebrated. This would be the weekend for Canadians, if they could find the time, to go and visit these centres, these communities and these small hamlets. While they are there they can go to the local manor, the local inn, stay for the weekend, talk to the community and express to them our hope and our wish that on Monday they vote for Canada.

If a lot of Canadians did something like that, they would be making a great contribution in making themselves feel comfortable in another region of their country, and probably the Quebecers would welcome it. It has been my experience that the hospitality that Quebecers show, especially to people from outside their province, is first class-the restaurants, the inns, all the activities that go on in Quebec.

I want to reflect for a second on the experience you and I have both had, Mr. Speaker, as fathers whose sons played in the Quebec pee-wee tournament, another great celebration we have in our country. Young boys from all across Canada go to Quebec City every February, a majority of them unilingual English, and play in the Quebec pee-wee tournament. One of the unique features of that Quebec pee-wee tournament is the fact that each and every member of the teams from across Canada lives with a family in a home in Quebec City.

We both know, Mr. Speaker, that there is a very special feeling, a very special emotional attachment that stays with those young men when they finish that tournament and come home to their communities right across Canada. This tournament, which has been going on for almost 80 years now, has been one of the unique experiences young boys celebrate. It is a substantial and concrete example of hockey as a cultural instrument pulling people together in the country.

I have absolutely no difficulty in supporting the bill before the House today. If our culture is strong, if our culture is celebrated in every aspect, our ability to galvanize and stay as a nation increases. In my mind, over the last few years we have had too little celebration, too little promotion of our history, of our culture and all those things that bind us as a nation.

As I mentioned the other day in the House, we have become so preoccupied and so focused on deficit and debt reduction that we are actually melting away some of the glue that has been holding us together as a community and as a country. When we see cultural instruments as just another expense and in the name of deficit and debt we have to cut, we have missed the whole point.

The celebration and support of culture is an investment in the community. It is an investment not only in an economic sense but also in a spiritual sense. If we were to spend more time celebrating that aspect of our cultural heritage, we probably would not have some of those parochial thought processes that seem to be so apparent today taking over the agenda.

I repeat that I celebrate the bill. I support the bill. I appeal to all Canadians who are looking for something to do this weekend to travel to Quebec and look at the great Canadian cultural properties that celebrate not just the heritage of Quebec but the heritage of Canada. It is those kinds of discussions, one region to another, one community to another, that ultimately will lead, I hope, to a great victory for Canada on Monday.

[The Acting Speaker (Mr. Kilger)]

That is a bit out of the norm, but while I would not this day or any other day compromise the integrity or impartiality of the Chair, I want to associate myself with the member for Broadview-Greenwood, particularly his memories of our young boys going to Quebec City for the Quebec pee-wee hockey tournament. I thank him for including me in that statement.

[Roseanne Skoke, Liberal, Central Nova, NS]

Mr. Speaker, I rise today to support and address Bill C-93, the legislation that establishes an appeal for a decision of the Canadian Cultural Property Export Review Board to the Tax Court of Canada.

The purpose of the bill is to amend the Cultural Property Export and Import Act with consequential amendments to the Income Tax Act and the Tax Court of Canada Act to establish an appeal of the determinations by the Canadian Cultural Property Export Review Board of the fair market value of certified cultural property.

In December 1991 the responsibility for determining the fair market value of cultural property donated to designated Canadian museums, art galleries, and libraries was transferred from Revenue Canada Taxation to the review board. The review board assumed this new responsibility at its meeting held in January 1992. No provision for appeal of review board decisions was included in the legislative amendments, despite the fact that the right of appeal had existed when this responsibility was with Revenue Canada.

Donors and custodial institutions expressed serious concerns about the lack of an appeal process. The Department of Canadian Heritage, in co-operation with the review board, then undertook a series of consultations within the community about the need for an appeal process. As a result of these consultations it was agreed that legislative amendments should be prepared to establish the right of appeal to the Tax Court of Canada.

The bill establishes two processes. The first gives the donor or recipient institution the right to request that the review board reconsider its initial determination of fair market value. If after receiving a redetermination from the board the donor is still not satisfied, he or she may take the second step of appealing the board's decision to the Tax Court of Canada.

It is appropriate that the bill is receiving third reading today, October 24, because today marks the 50th anniversary of the United Nations. It was 50 years ago today, within a few months of the end of World War II, that the United Nations formally came into being when its charter took effect. The United Nations has the difficult mandate of maintaining international peace and easing global suffering.

We are also approaching the end of the United Nations world decade for cultural development. Launched in 1988, this decade will conclude at the end of 1997. The purpose of the world decade for cultural development is to promote activities that enhance the cultural components of development and undertake research and pilot projects that focus on the relationship between culture and development.

Through agencies such as UNESCO, the United Nations Educational, Scientific and Cultural Organization, the UN also has responsibility for literacy, education and contributions to scientific and cultural development around the world.

Canada has played an active role in the work of both the United Nations and UNESCO and is recognized internationally for the work it has done to protect the cultural property of developing nations. During the 1960s Mexico and Peru in particular, but many other southern and central American countries as well, experienced heavy losses of cultural property through illicit trafficking. Their appeal to UNESCO for a method to stop this led in 1970 to the UNESCO convention on the means of prohibiting and preventing the illicit import, export and transfer of ownership of cultural property. This convention, while it deals with measures to prevent the import, export and illicit transfer of cultural objects, places the onus on each country to develop their own measures to protect and preserve their cultural heritage.

To join the international movement to protect cultural property Canada passed the Cultural Property Export and Import Act in September 1977. The purpose of the act is twofold: first, to ensure the preservation in Canada of significant examples of the nation's cultural, historic and scientific heritage; and, second, to protect in Canada the legitimate interests of foreign states concerned with the preservation of their cultural property.

These objectives are accomplished by the following features of the act: first, the establishment of an export control list of defined categories of cultural property, which restricts their export without

a permit; second, the establishment of the Canadian Cultural Property Export Review Board to review applications for export permits and applications for the certification of cultural property for income tax purposes; third, the establishment of income tax incentives for gifts or sales of cultural property to designated Canadian institutions; and, fourth, procedures for the recovery and return of foreign cultural property that has been illegally exported from its country of origin.

In 1978 Canada became a signatory to the 1970 UNESCO convention on the means of prohibiting and preventing the illicit export and transfer of ownership of cultural property. The convention, which contains measures to prevent the illicit import, export and transfer or ownership of cultural objects, places the onus on each signatory country to develop its own legislation to protect and preserve its cultural heritage and to establish measures to facilitate the return of illegally exported cultural property to its country of origin.

The Cultural Property Export and Import Act contains provisions whereby it is a criminal offence to import into Canada cultural property that has been illegally exported from a country that is a signatory to an international cultural property agreement.

Protection of another country's heritage is not sufficient if we do not protect our own. Canada therefore put into place export controls to regulate the export of cultural property from Canada. It is imperative that we discuss here today the control system. It should be noted that any object that is more than 50 years old and made by a person who is no longer living is subject to export control. For such objects, a cultural property export permit must be obtained before they can leave the country.

The Canadian cultural property export control list provides a detailed description of the classes of objects that are subject to control. It divides cultural property into seven categories or groups of objects. The first is objects recovered from the soil or waters of Canada. The second class is ethnographic arts. The third is military objects. The fourth is decorative art. The fifth is fine art. Sixth is scientific and technological objects. The seventh is books, documents, photographs and sound recordings.

To apply for a cultural property export permit, the exporter submits an application to a permit issuing officer who determines if the object is included in the controlled list. If it is not, the permit is issued forthwith. If it is included in the list, the permit issuing officer refers the permit application to the appropriate expert examiner.

The expert examiner must then determine if the object meets the criteria of outstanding significance and national importance found in section 11 of the act which reads as follows: "The object is of outstanding significance by reason of its close association with Canadian history or national life, its aesthetic qualities or its value in the study of the arts and sciences; and whether that object is of such a degree of national importance that its loss to Canada would significantly diminish the national heritage".

It should be noted that if the expert examiner advises that the permit not be issued, the permit officer advises the applicant accordingly. The applicant either retains the object in Canada or appeals the expert examiner's decision to the Canadian Cultural Property Export Review Board.

The review board then hears the appeal and either overrules the expert examiner or affirms his recommendation. If the review board overrules the expert examiner, the permit is granted immediately. If the board agrees with him, a delay period of between two and six months is established.

There is an incentive system. The act establishes the Canadian Cultural Property Export Review Board which consists of nine members plus a chairman. It is composed of two representatives of the public at large, including the chairman, and four members each from the curatorial and dealer collector communities. As such, the board is an independent body of individuals with a recognized knowledge and interest in Canadian heritage.

The work that occupies most of the board's time is not export control. The certification for income tax purposes of cultural property donated to Canadian institutions is of primary concern.

At the time of passage of the Cultural Property Export and Import Act, the Income Tax Act was amended to provide an exemption from the payment of capital gains tax for gifts or sales of certified cultural property. In addition, the value of objects or collections that have been determined to be of outstanding significance and national importance is eligible as a tax credit up to 100 per cent of net income instead of up to 20 per cent of net income that may be claimed as an exemption for charitable donations.

Prior to these amendments, capital gains tax was payable for gifts in kind. Only federal and provincial government institutions could offer tax credits up to 100 per cent of net income.

From 1977 to 1990 the review board had only an informal advisory role in the determination of the fair market value of gifts of cultural property. In 1990 the responsibility for determining the fair market value of certified cultural property was transferred from Revenue Canada Taxation to the review board. This was confirmed by legislative amendments to both the Cultural Property Export and Import Act and the Income Tax Act in 1991.

No provision was made for appealing determinations of the review board. The right of appeal contained in the Income Tax Act was then lost. The need for an appeal process was identified and acknowledged in 1993. By establishing the right of appeal, potential donors will be assured that if they are dissatisfied with the

review board determination, they will have recourse to the Tax Court of Canada.

With the agreement of the Tax Court of Canada, the appeal to the tax court has been made retroactive to January 1992. That provides all donors who have made a gift since the right to appeal was lost and who wish to pursue an appeal with both the opportunity and the legal right to do so.

Determinations of fair market value are now being made by the members of the review board, people with professional expertise in the various domains of cultural property who are also active participants in the various marketplaces where it is sold. These same people already experience an expertise in a quasi-judicial capacity, that of hearing appeals when export permits have been denied. It is only appropriate and sensible therefore that they assume the additional responsibility as they are experts in the subject matter with experience as an appeal board.

An open and transparent process both at the time the review board determines and if necessary redetermines the fair market value of cultural property is essential. The right to pursue the matter in the courts if no other resolution can be found is consistent with both the Canadian legal system and the concept of natural justice.

As we celebrate the 50th anniversary of the United Nations, let us remember that Bill C-93 is very much in the spirit of everything the United Nations stands for. The Cultural Property Export and Import Act has its philosophical roots in the activities of the United Nations because it both protects Canada's heritage and allows Canada to become a signatory to the 1970 convention.

Bill C-93 is about fairness and natural justice, two principles that are fundamental to the United Nations. On this the 50th anniversary of the United Nations, it is only appropriate that all members of this House support this bill.

[John Richardson, Liberal, Perth—Wellington—Waterloo, ON]

Mr. Speaker, over the past few years a number of donors and custodial institutions have felt uneasy about the arbitrary decision making upon which the value of the goods donated to a museum or an art gallery were executed.

In the mind of the member for Central Nova, are the protocol and processes that will allow for due process and the laws of natural justice to take place incorporated in the bill?