Mr. Speaker, I congratulate the member for Lakeland for his tenacity on this bill. Of course another bill, which is almost exactly the same, has been deemed votable and will be coming to the committee.
This private member's bill proposes changes to the Income Tax Act to help mechanics defray the cost of providing their own tools when it is a condition of employment. The changes would allow mechanics to deduct the cost of buying, renting, insuring or maintaining their tools.
An income tax deduction would be available for tools costing less than $200. This amount may be adjusted according to inflation. For larger amounts, the tool costs would be subject to capital cost allowances and these allowances would be set by regulation.
Canadian employers normally provide workers with the tools and other resources they need to do their jobs. Even so, all Canadian workers bear some job related costs. Whether these are the costs of getting to and from work, the costs of uniforms or other work clothes, the costs of eating away from home, or the costs of keeping up with trade journals. These costs are something that all Canadians incur when they take a job.
These normal work related expenditures are recognized in the tax system through the basic personal amount. The government increased this amount substantially since the elimination of the deficit.
I am pleased to remind members that the 1998 and 1999 budgets increased the basic personal amount by $675. Budget 2000 went even further with measures to ensure that the tax free amount would be more than $1,500 higher in 2004 than in 1997. More tax free income helps low income workers offset normal employment expenses.
The bill before the House aims to recognize that employed mechanics face exceptional work related costs. The Government of Canada understands that the costs can sometimes be a significant burden, particularly at the start of a career.
Last summer, for example, a Nova Scotia newspaper reported the case of a young apprentice mechanic. He was earning $18,000 a year working in a garage service station. He had invested some $10,000 in his tools. On top of that he said he had to pay insurance costs, another $100 per $1,000 of tools. For him that was another $1,000 per year. I think all members would appreciate that is a large amount for one making only $18,000 a year.
I expect this young man also had other bills to pay like groceries, heat, rent, et cetera. Clearly the costs that this young man incurred were worth it to him. The tools he purchased will serve him for years to come.
Surely these costs were a big financial burden as well. Upfront costs should not be a barrier to an individual's ability to enter an occupation which at least in the longer term could provide a living income.
In short, the government understands the difficult issue that this bill is trying to address. We can support the principle that underlies. it, but I must nevertheless point out that this specific bill in many ways does not adequately address the issue.
Allow me to explain. The bill would allow mechanics to deduct even small expenditures related to their tools. As I said earlier, most Canadian workers have specific job related costs that they need to cover out of pocket. What about carpenters, for example, or computer operators?
I remind members that the tax system provides some recognition with to the basic personal amount. Instead of just covering the exceptional tool expenses that a mechanic might incur, the bill would give mechanics preferential tax treatment on normal work related expenditures. It would simply be unfair to other tax paying Canadian workers. If tax relief is provided for specific groups, it should be limited to extraordinarily high expenditures.
The bill also opens the door to other inequities. For example, it does not adequately ensure that tax relief is provided only for items genuinely required as a condition of employment. Employers should have to certify that the expenditures are a condition of employment. Further, the principle of fairness would dictate that the tax benefit should be adjusted when tools purchased for work are subsequently used for other purposes or when tools are sold, for example. There is no provision in the private member's bill to ensure that this takes place.
Finally, I would briefly note that this bill creates unnecessary administrative complexities. Instead of using the existing regime for capital expenditures, the current capital cost allowance regime, this bill would set up a parallel system for employed mechanics. This is not warranted since the existing capital cost allowances would achieve essentially the same results as the private member's bill.
The very substantial employment expenses incurred by some employed mechanics are certainly a concern. There is merit in the idea behind the private member's bill. The lack of tax recognition for exceptionally high work related expenses should not be a barrier that prevents people from participating in the economy.
I trust as well members agree that the bill would create inequities and unfairness in the tax system. That is why much more work and thinking is needed to develop a workable solution to this important matter.
As the government examines the issue it intends to work with representatives of the automotive industry, particularly with respect to the challenges faced by apprentices, to find a way to address the shortcomings in the private member's bill.