Madam Speaker, I am pleased to debate this motion. However, before we rush to adopt this motion, which on the surface would appear to give added tax benefits to charitable donors, let us first examine the present status of tax benefits for charitable donations and ask ourselves what would be the fiscal cost to government and, most importantly, what would be the consequence to charities themselves.
In fact, the immediate consequence to charitable contributors, were the legislation to be put in place as moved, would be a zero federal tax benefit for charitable donations in excess of $1,150 per donor per year. That is the present situation for federal tax credits on political contributions.
Why is the design for tax treatment different between political contributions and charitable donations?
The difference in design reflects the difference in the policy intent and goals of the two. A tax credit for political contributions is aimed at encouraging greater grassroots involvement by all Canadians in the political process, while at the same time preventing the overbearing influence of those who can afford a large donation. Hence, more generous tax assistance is given to smaller political contributions.
This tax assistance is reduced incrementally to the point of zero when political contributions exceed $1,150 per contributor per year.
In contrast, the tax credit for charitable donations is aimed not only at recognizing the value of all levels of donations, big or small, but also at encouraging larger donations to charities. Hence, tax assistance for charitable donations is greater for amounts in excess of $200, 29% or more versus 17% for the first $200, and the threshold for this eligibility was recently lowered from the original $250.
Moreover, tax credits may be claimed for very large donations up to 75%, raised from the previous 20%, of a taxpayer's income in any given year. The tax credit may be carried forward for the ensuing five years should the 75% limit be exceeded.
The income inclusion rate for capital gains arising from the donation of appreciated publicly traded securities was also reduced to 37.5%.
So we can see that in four of the last five federal budgets tax measures have been taken to ensure that donations to charities indeed are encouraged.
To date, the level of tax benefits accorded most charitable donations result in approximately a 50-50 partnership between the government and the private sector in the support of charities.
What the fiscal cost of the measure would be were we to implement the motion as moved would be approximately $125 million per year for the federal government and some $55 million for the provincial governments. The effect on the level of charitable donations likely would not be that much.
Small donations to charities are not strongly motivated by the availability of tax benefits. Thus, treating charitable donations in the same way as political contributions would not necessarily increase the total amount of donations from small donors. At the same time, larger donations from big donors may in fact diminish in number.
In a recent news item reported in the May 27, 1998 issue of the Ottawa Citizen , the increase in the number of large donations—in millions of dollars—to help the Canadian Red Cross, land mine survivors and cultural institutions was attributed to tax measures adopted in the last five federal budgets of this government.
The greatest effect of the proposal would be to increase the fiscal costs of tax assistance accorded to donations that would have been made in any case. Charities themselves would receive little benefit.
I share the principle of charitable giving. We share the belief as Canadians that charitable giving, which is a defining character of the Canadian nation, expresses the best in our people. We are people who take pride in helping the most vulnerable of our citizens and in advancing lofty causes such as scholarships, the performing arts, research, professional faculties, ethnic studies, finding cures for diseases, literacy, sports, international development projects and others.
In essence, we help to ensure that the Canadian citizenry is sound in mind and body. This goal is a chance we give as well to the people in developing nations. This spirit of helping fellow citizens, neighbours and strangers, is very much a part of the Canadian culture. Essentially, Canadians, particularly the small donors, give not because of tax incentives or any monetary inducement, but because they want to give.
Viewed in this light, Canadians will see the soundness of the current differential government policy with respect to the two types of donations and see the absence of need to treat them in the same way.
A political contribution is a contribution to help advance the cause of democracy. Charitable donations are more than a contribution. Charitable contributions are gifts to help advance the noble causes of the heart. We value and hold in esteem charitable donors for their gifts of the heart.