Mr. Speaker, it is with great pleasure to rise today to speak on my private member's Bill C-324, an act to amend the Income Tax Act. Bill C-324 provides for the elimination of entertainment expenses as a deduction under section 67.1 of the Income Tax Act.
I received a number of calls and correspondence from lobby groups and business associations under the mistaken belief that meal deductions would be affected by this amendment. I would like to make it clear from the outset that this amendment would not affect business meal deductions.
What this amendment would do, however, is bring a certain amount of fairness into the tax system for both small businesses and individuals. I would like to commend the government which in the 1994 budget reduced the deduction from 80 per cent to 50 per cent. At that time there was much concern expressed by the
business community that this would have a detrimental effect, but this was proven not to be the case.
I believe that elimination of the entertainment deduction would in the short term cause a small amount of disruption but in the long term have no negative effect on businesses and a positive effect on the revenues of the government and create a more equal playing field for all those who pay taxes
If we look at sport stadiums in any major Canadian city the majority of the best seats and practically all the box seats are held by corporate entities. They do so with the help of 50 per cent deduction on their income tax, while at the same time the average Canadian sits in a cheaper seat up in the bleachers and pays full price. The same holds true for attending the theatre, opera or the events where the business community gets to deduct half the cost while the average Canadian pays full price. This situation gives rise to the circumstance that most sport stadiums count on the very expensive box seats to provide necessary revenue to pay the exorbitant salaries of sports figures who are indirectly being supplemented by the Canadian taxpayer.
Although no figures are available there is much anecdotal evidence to suggest that many of these corporate seats and boxes are used by employees and their friends and families rather than to further business contacts, as was the original intent of the deduction. In my opinion this change would result in significant savings to the people of Canada with relatively no impact on small businesses and only a small period of adjustment for large businesses.
While this bill has not been deemed a votable item, I believe that it is of some importance and when the opportunity arises I shall resubmit it.