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.