Mr. Speaker, it is a privilege to speak to Bill C-10, as it universally affects most Canadians, for we have become a nation of city dwellers, living within highly organized municipalities. Within these political city or municipal units the federal government and its crown corporations have vast holdings of land and improvements which are not subject to local municipal taxes. Nevertheless, the federal government began making payments in lieu of property taxes in about 1950, following years of persistent representations by the Federation of Canadian Municipalities. With 63,000 buildings and parcels of land the Government of Canada is the country's largest municipal property owner. The federal government makes payments in lieu of taxes to some 2,200 local governments.
There is a long history to the rule that a lower order of government does not tax the higher one. Municipalities are the creation of the provinces and certainly within their powers they have not been given the ability to tax federal lands and buildings, such as a local armoury or military base. This bill will amend the Municipal Grants Act, at it is claimed that it will improve the fairness, equity and predictability of payments made under the act from the federal government to municipal governments.
The enactment establishes an advisory panel to advise the minister on disputes concerning payment amounts. It addresses the issues of compensation for untimely payments when the bureaucracy cannot get its job done on time, perhaps if there is an interpretation dispute or when there is a default on tax obligations by tenants of the crown.
Although its property is exempt from taxation under the constitution, the Government of Canada, through this bill, accepts the responsibility to pay a portion of the cost of local government in communities where it owns property.
In 1950, at the pleading of the Canadian municipalities, the government established a program of payments in lieu of taxes. Federal agent crown corporations also make payments in lieu of taxes and the corporations themselves manage the payments.
The point of tension between municipalities and the federal government has been longstanding in this area. The bill attempts to improve the practice of giving money instead of submitting to local taxation.
In one section of the bill the minister is given the authority to pay interest on payments in lieu of taxes if it is in his opinion that a payment in whole or in part has been unreasonably delayed. Through regulatory instruments and amendment to the crown corporations grants regulations, crown corporations may now make supplementary payments for payments that are unreasonably delayed. Is it not nice of them to be so benevolent?
Of course there is no legal requirement to pay or set penalties for not paying on time. Municipalities have such authority for the lowly homeowner, but the federal government would never submit itself to the same standards, especially to pay the full going rates of everyone else. There is no change here. The government is able to set its own property values and pay lower property taxes than might otherwise be levied.
The government also leases some of its property to non-departmental third parties. In the past, municipalities have experienced some difficulty in collecting property taxes from some of these third parties, with payments sometimes never being made. To correct the situation Bill C-10 proposes that if after the last day of the taxation year all or part of the taxes remain unpaid and if in the opinion of the minister the taxing authority has made all reasonable efforts to collect the taxes and there is no likelihood that the authority will ever be able to collect, then the property will be deemed to be an operational federal property and the government will pay the benevolence payments, for that is what they still are. The bill is very clear that there is no power to tax and no rights are created. However, the government says through Bill C-10 that it will be benevolent.
It is good that the bill proposes to include some structures and improvements that used to be excluded from payments, such as crown corporations. Schedules III and IV of the Municipal Grants Act outline the crown corporations that are eligible to pay benevolence payments if they do not pay real property tax or real business occupancy tax. Those contained in Schedule IV are corporations involved in profit oriented activities and may therefore pay both property and business occupancy related assessments.
The joint technical committee on payments in lieu of taxes recommended that the Canada Post Corporation and the Royal Canadian Mint be added to Schedule IV, but surprise, surprise, they do not appear in the bill.
In the private sector disagreements about property values are handled through a formal appeal process and the decisions are binding on both parties, but in the case of the federal government this process is not used.
The value is used to calculate payments or to determine under federal authority the one who pays, and not within the jurisdiction of provincial and territorial tribunals. Would private companies not love to set their own rules for how much they are going to charge themselves for property taxes?
In 1983 to give municipalities a way of redress when they disagreed with the amounts of the payments in lieu of taxes, the minister established a municipal grants review committee, MGRC. This panel provides the minister with advice on the resolution of disputes between taxing authorities and the department concerning the valuation and classification of federal property. The decisions of the MGRC are given in the form of recommendations which the minister is not obliged to accept. This has given the municipalities the impression that the process is, to say the least or charitably, biased against them. It certainly is not a full independent delegated authority like a municipal board of referees for residential assessments.
Bill C-10 simply puts into legislation the status quo that was implemented in 1983, with the minister hand selecting the advisory panel from at least two members from each province and territory. The federal minister also appoints the chairperson from those members. Sadly, the recommendations are non-binding.
In summary the bill has some merit but warrants improvements, particularly regarding payments by crown corporations with the inclusion of the Royal Canadian Mint, Canada Post Corporation and Canada Mortgage and Housing Corporation in schedule IV to make them eligible to pay business occupancy payments in lieu of taxes. Additionally the minister and crown agencies maintain too much discretionary power. Reform has said for years “The Reform Party will insist that all laws pertaining to individuals and the private sector apply equally to the Government of Canada, its personnel, its agencies and parliament”.
Bill C-10 still provides for ministerial discretion as to whether or not payments will be made by the government and there is no binding means of recourse in the event of a dispute. This is not the case for the private sector where the payment of property and business occupancy taxes are mandatory and the decision of appeals are binding on both parties. The Government of Canada and its crown agencies still maintain their privilege.
The Liberal government has been verbose on the accomplishments of this bill. I do not need to repeat them. On the disappointment side, the minister and crown agencies maintain too much discretionary power. Recommendations of the dispute advisory panel are non-binding. It merely maintains the old ways of behaviour and entrenches into legislation the common practices that were put in place about 16 years ago. The Royal Canadian Mint, Canada Post Corporation and Canada Mortgage and Housing Corporation should be added to schedule IV in order that they may be eligible to pay business occupancy payments in the municipalities where they reside.
I give the final word to the Federation of Canadian Municipalities. More often than not, the Reform Party has a better idea because we listen and strive to be accountable. We have a clear notion of whom we are working for, unlike the Liberals. The federation said about legislation on federal payments that the Bloc, Liberals, NDP and PCs were all on probation on this count as their policies did not make the grade. Municipalities have maintained that the federal government has an obligation to pay its portion of property taxes like everyone else.
The Federation of Canadian Municipalities gives some credit to the Liberals for their efforts to negotiate improvements to the program, but it still places them on probation for failing to make an explicit commitment to respect future provincial taxation principles. However, the Reform Party passes its examination with our commitment to legislated accountability and to subject the federal government to the same general tax laws as everyone else.
With Bill C-10, the Liberals again show that they are slow to change. I hope they will permit sufficient amendments at the committee stage to fully respond to the Canadian public agenda of reforming and renewing the federation.