That, in the opinion of this House, the government should bring in legislation making the tax deduction for contributions to charitable organizations no less than the tax deduction for contributions to political parties.
Madam Speaker, on the weekend as I was sitting on the couch doing as little as possible trying to recover from my cold, for a few moments I watched a telethon on television. It was the Children's Miracle Network telethon. It was raising money across North America for a whole series of charitable works that it does to help to provide hospitals for children, hospice care, counselling and so on.
As I was watching television I noticed at the bottom of the screen the names and the donations of the people who were putting forward their widow's mite, so to speak, to help out the cause.
Of course there are millions of dollars required to make this thing function properly but, as the dollars and names were going across the bottom of the screen, I noticed an obvious trend. There was a name such as John Adams, $100; Sarah Smith, $50; and on it went down the list.
Consistently people were very generously giving to a charitable cause because they wanted to do what was right and they wanted to do a good thing. Most of the donations were very small. They were in the order of $20, $50, $100, and there was the odd large donation. But, in essence, they were all trying to do a good thing. They will get a tax credit for doing that. That is good. We support that in our tax system.
Unfortunately, what is not going to happen is that they are not going to get the same kind of tax credit as they would if they gave that same money to a political party. That is not right.
That is why this motion reads:
That, in the opinion of this House, the government should bring in legislation making the tax deduction for contributions to charitable organizations no less than than the tax deduction for contributions to political parties.
I will not claim this as an original idea of mine. In 1996 the 24th report of the Standing Committee on Finance recommended that the government consider enhancing the charitable tax credit for donations to charities currently funded by governments to make it as generous as the current political tax credit for small donations to political parties.
The government chose not to implement that recommendation in 1996. However, the time has come. The budget is now balanced and it is an option that the government should consider. This motion, when passed, will ask the government to do the right thing; that is, to put charities on a level playing field with political parties.
There are other aspects of charities that some people may want to debate in the House. For example, the member for Wentworth—Burlington has done some work on the accountability of charities themselves, but that is a debate for another day. This has to do strictly with the donations and how they are handled by the tax system. That other debate is a good debate for another session.
Does the present tax credit system benefit political parties more than charities? Absolutely. For a $100 contribution to a political party a donor will receive a $75 federal tax credit. For a $100 gift to a charity a donor will receive a $17 federal tax credit. Clearly the donations to charities are not treated the same and are treated far less favourably than donations to political parties.
Today I will argue two points in relation to M-318. First I will explain why charities deserve special treatment under Canada's tax law and, second, why charities deserve no less favourable treatment than what political parties receive currently under the tax code.
First, the activities of charitable organizations provide sociably desirable benefits in a number of important areas of Canadian life. They includes everything from health services to services to prisoners, heritage exhibits and shelters for homeless people. In innumerable ways charities help society.
Charities employ over one million people in Canada. They are a big employer. Yes they take in charitable donations, but they in turn put that money back into services for people. Charities maintain and improve the quality of life in our communities. Charities provide a more direct and efficient way of identifying the needs and preferences in our communities than do governments.
I have used this expression before, but I think it is worth repeating. Governments take our money, deduct 50% for handling, then give it back in the form of services that the community often did not ask for. However, when an individual gives to a particular charitable cause they have chosen to direct their money to a particular need in their community. Rather than give $100 to the taxman, they have indicated that they would rather give their money to the Salvation Army soup kitchen, to a homeless group or to help someone who is providing hospice facilities for battered women.
Whatever the cause might be, the individuals have chosen to direct their money to a certain area. They have not asked the government to provide a program. They have said they will do it. They just want the flexibility to be able to direct the money. They can do it just as well and, in fact, often better than government.
Alternatively, governments must identify the needs and allocate resources as best they can to meet the needs. They do this in a variety of ways. They combine their political agenda with the perceived needs to create a blanket, country-wide program that often does not meet those needs. They often do not represent the needs required in a very diverse country like Canada.
Study after study has indicated that tax incentives designed to encourage charitable giving will increase revenues to non-profit organizations by an amount greater than the loss of tax revenues to the federal government. In other words, when we try to help the charities with this kind of tax measure we not only encourage more giving, we increase exponentially the benefits to all communities across the country.
Why should the charitable tax credit be no less than the political tax credit? First of all, the status quo hurts charities. In the 1990s federal, provincial and municipal governments have reduced spending on programs significantly. As a result the charitable sector has become a life support system for the hungry, the homeless, victims of domestic violence, refugees, the unemployed and medical patients who find themselves relying more and more on the charitable sector.
To help charities pick up the slack of these cuts the federal government has implemented a number of tax incentives to encourage giving to the charitable sector. Those moves which the government has made have been good moves. Although I have not agreed with the budgets that the government has brought forward in the last couple of years, the provisions it has made to charitable status, for example, increasing the amount of donations eligible for tax credit from 50% to 75% of net income, are good.
This indicates the government's acknowledgement that charities do good work in Canada. We should encourage charitable work. More than just dollars are involved. It increases the compassion of society.
We on this side of the House and I think all members would agree that governments cannot do it all. We will have to rely increasingly on individuals, on families and on charitable organizations to pick up the slack. That is not a bad thing; that is a good thing. That could be a very good thing. But we need to ensure that we do not discriminate against those organizations by making the tax system skewed one way or another.
The question that now remains is what are the best public policy tools to use to generate greater incentives for people to give to charities?
Motion No. 318 provides one of those tools. It is an excellent tool to generate greater giving to charities. I do not have a Canadian study on the equivalent but it probably is much the same as the American studies. They indicate that for every dollar in government revenue lost in the U.S. due to higher tax credits, donations to charities increase by over $1.20. In other words people pick up the slack and then some. They will say “If that is a cutback over there, I will give sacrificially in order to pick up that slack”.
Levelling the playing field between charities and political parties also would send a signal to Canadians that the government values donations to political parties and charities equally. Right now they value the political donations more highly than they do charitable donations. That is not right. This motion would eliminate the unfair advantage political parties have over charities when it comes to trying to attract donations and in fact when the taxpayer in essence is topping up the funds of a political party rather than topping up the funds of the local Salvation Army.
Where does the government stand on this issue? I will be interested to hear from the government side during this debate. Certainly in the 1996 prebudget report, the all-party finance committee recommended that the government enhance the charitable tax credit for donations to charities to make it as generous as the current political tax credit for small donations to political parties. This is exactly the motion I brought forward today.
That is why I admitted earlier I will not claim that this is my original idea. What it is trying to do is to bring to fruition the desires I think of all parties in the House to make charities more viable and give them the assets they need to fill the gap that has resulted from other government cutbacks.
Where do the charities stand on this issue? What would they think of this? In November 1995 the president and CEO of the Canadian Centre for Philanthropy said:
Dare I suggest as well that if you believe, as do I, that the value of a dollar donated to a voluntary charitable organization is every bit as important as the value of a dollar donated to political parties, you might also look at equalizing the tax treatment for contributions between those two groups or sectors?
Again it is exactly what this motion proposes. Why has the government ignored it to date? I touched on it briefly. My guess is that in the period of deficit budgets the government just felt it could not move any further on ways to help charities. It felt the budget just did not allow it to do that.
Now that we enjoy a balanced budget and we are going to find ways of distributing surpluses in the coming year, one of the ways no doubt will be some tax relief. That is much needed. One way will be to pay down some debt that is much needed. But another and a relatively painless way is to do what the all-party committee recommended which is to allow charities to do their work and do it better by equalizing this charitable donation. As Canada moves into this post-deficit world, levelling that playing field can be not only an affordable idea for the government but it will become a very politically wise move to show that we value the charitable organizations in our country.
I deliberately worded Motion No. 318 to talk about equalizing the charitable and political donation tax credits. I did not specifically say a percentage rate or whatever because I believe that could be part of an interesting debate over the three hours. We can increase the tax credit for donations to charities from 17% to 75%, the same thing as the current political parties get. That is an option.
The motion is worded in such a way that it allows the government to enter into this debate to say what it thinks that optimum rate should be. Obviously I think charities should get more of a break. We discuss whether political parties deserve any break at all, something in between or what it might be but certainly not more preferential than charities.
I will go through a couple of options. Option one is to increase to 75% the tax credit for charitable donations and political donations. That would cost the government $190 million a year. It is no small amount of money. It is significant dollars but it would at least level it for those small donations, the ones I mentioned earlier that flash on the screen during telethons.
Option two as another example is a 50% tax credit. Obviously that levels the playing field for those small donations. It costs considerably less. It has the appeal of being the same for both politicians and charities and would cost even less money.
My preferred option is to make the charitable donations the same as the current political donation system. That system is very generous to political parties. It allows a 75% tax credit on the first $100. It allows a 50% tax credit for donations between $100 and $550. It would increase the charitable tax credit to one-third for donations over $550. That would cost $800 million. Again it is a significant amount of money.
When we consider that kind of a tax credit, if all other studies remain constant in Canada, it would increase donations to charitable organizations to well over $1 billion a year. Think of the good this country could do through its charities. Think of the goodwill we could extend through those charitable organizations by showing them through our tax system just how much we value their contribution to Canadian society.
Canadians are a very generous group of people. In 1996 there were over five million charity donors. Half of those donors gave $150 or less to charities. They are small givers. Sometimes they are people who are starting out in their married lives and cannot afford to give a lot but they give $100 or $150.
Charities rely on those small donations to make ends meet. That is their bread and butter. They do not get a big windfall at the end of the month where somebody comes by and says “I thought I would drop a million dollars on your organization”. They rely on those small donations. Logically then it seems appropriate to reward those people for their gifts and to encourage even more small donors to get into the habit of philanthropy early in their lives and give them the tax incentive to make sure that it happens.
Making the charitable tax credit no less than the tax credit for political parties is not too expensive. The government can choose one of these options. We could debate what rates are the most beneficial or the most preferential. Perhaps the government has some ideas of its own. I would be interested to hear that.
One must also keep in mind that any public revenue lost in the form of a charity tax credit will be more than made up for I believe in reduced social costs. It is part of strengthening the civil society by allowing charities, families and non-government organizations to do their work and to do it well. We can do that. We can strengthen it. We will help out the sick, the needy, the depressed, the homeless. We can help them all by increasing our support both tangibly with the money and also our public support, our words of support, our acknowledgement of the importance of charitable organizations.
It would also make the system more efficient. We would have a tax system which treats all those donations the same, whether they be political or charitable. We would have a tax system that would at least have one column taken out of the multipage form which would make it somewhat easier to fill out.
It would become a fairer system to the charity donor. They would not have to sit there biting their nails wondering whether it is $100 to the Reform Party or the Liberal Party or somebody else and that only costs them $25 so maybe they had better do it. They could also make that similar choice and what a delicious dilemma to be able to say “Instead I can give it to my local charitable organization of my choice”.
Motion No. 318 would send an important message to Canadians. It would signal the importance of charity work and the responsibility of all citizens to share toward helping to improve the lifestyle and the lives of everyone in society through charitable organizations. It would also send a message that government is not intended nor can it ever be all things to all people. There are other ways and other organizations in which we can help pick up the slack that will be better directed in local communities rather than in broad national programs.
In conclusion there was a newspaper article in the Vancouver Sun last year by well-known financial expert Michael Campbell. He wrote an editorial saying “If the numbers are any indication of the relative importance politicians place on the two activities, then in their judgment the re-election of a political party is about four and one-half times more valuable than charitable work”.
I do not belittle the work of political parties. They serve a purpose in society. I am part of one and I will continue to be. I agree with the all-party committee in 1996 which said “Let us do it right; let us make the playing field level”. I agree with comments like Michael Campbell's that say it is time to level that importance.
Let us put all donations whether they be political or charitable on a level playing field. When it comes down to debate and the vote some weeks from now, I hope all parties and individual MPs in the House will be able to rise to say we did the right thing by levelling the playing field and finally the charitable organizations are to receive the equal treatment they deserve.