Mr. Speaker, I rise today on a point of order in relation to Bill C-52, the budget implementation bill.
It is my view that a portion of that bill is drafted in a way that is not in keeping with the practices and customs of this House, that the bill attempts to exempt itself from our rules regarding parliamentary scrutiny of subordinate law, and does not even comply with the government's own internal rules on proper drafting of legislation.
The part of the bill I am referring to is clause 13(1) at page 20, line 16. It amends section 122 of the Income Tax Act and bears the bill subclause number (2)(b) and deals with the issue of income trusts and how they are to conduct themselves for tax purposes over the next four years, until the year 2011. For ease of reference, the margin heading reads “Application of Definition SIFT trust”, which is the short acronym for income trusts.
A notice of ways and means motion on the subject of income trusts was tabled in the House during the afternoon of October 31, 2006 and was concurred in a few days later. The intent of that ways and means motion was in part to impose a 31.5% tax on income trusts starting in 2007, but that for existing income trusts the start date would be 2011.
On December 21 the government released a draft bill for consultation on this issue. However, the clause in question today never appeared in that draft bill. The implementation of the ways and means motion is now found in Bill C-52. Subclause (2)(b) of the bill found on page 20 referred to earlier reads as follows:
the first day after December 15, 2006 on which the trust exceeds normal growth as determined by reference to the normal growth guidelines issued by the Department of Finance on December 15, 2006, as amended from time to time, unless that excess arose as a result of a prescribed transaction.
This clause which I have just read deals with transitional tax measures involving how a large segment of the Canadian economy and billions of dollars of taxpayer assets are to be governed under our tax laws for the next four years, and yet this is proposed to be administered by way of a reference in legislation to guidelines only, which themselves are no more than a press release. I have a copy of that press release that sets the guidelines which I am prepared to table today. Worse yet, this press release, according to the clause in question, can be amended from time to time, as I have just read.
The bill is silent on any mechanism for amending these guidelines or press releases and there is no official or specified repository of this information. What we have in this clause, in effect, is a delegation of subordinate law, not by regulation nor by ministerial directive, but by press release.
This action of the government, that is to say to apply a tax burden or levy against a group of taxpayers using a so-called guideline or press release, is unprecedented. As a matter of fact, the only reference I could find to a budget implementation bill using guidelines dates back some 11 years to 1996 and dealt with the reimbursement of a conservation expense. In other words, the 1996 initiative gave money back to the taxpayer. For the benefit of the Chair, this was clause 66.1(6) of that bill. The situation now before the House is the reverse.
Let me remind the House that the contents and consequences of using that news release are not minor in nature. They are very broad in scope and have a large impact on this broad group of taxpayers involving billions of dollars. The news release itself says, “The deferred application of these measures is conditional on existing,” and income trusts are referred to by using the acronym SIFT, “respecting the policy objectives of the proposals”.
Materials released with the minister's announcement indicated that, for example, the undue expansion of an existing income trust might cause the deferral to be rescinded. This introduces a whole layer of conditions, at least some of which appear totally arbitrary in nature and which the taxpayer must fulfill in order to benefit from the 2011 delay date of tax liability set out in the bill, and yet the bill is silent on these conditions. They appear nowhere in the bill, only in the news release.
The news release includes the concept that if the conditions are not met, the minister, by some unknown authority, can cause the taxpayer's deferral to be rescinded. That would actually result in a tax increase to the taxpayer. That is a new power found only in the news release, that the minister could by some unknown authority rescind a taxpayer's deferred status and somehow force the person to pay the tax sooner than the bill would otherwise have him or her do. That increases the tax burden.
What we are trying to prevent is a situation where the minister or his officials conclude, based on a news release or guidelines, not as a matter of law, that this or that condition in the news release is not being met or has been amended and then is not being met and so, almost by a fiat, a taxpayer's deferral is rescinded. The taxes would be imposed on the person sooner than the 2011 date that Parliament has set out and the taxpayer would be left wondering why and how all this could happen.
Marleau and Montpetit's House of Commons Procedure and Practice reminds us at pages 686 and 687:
In 1950, Parliament adopted the Regulations Act, which decreed that all “orders, regulations and proclamations...” would be systematically and uniformly published and tabled in the House.
This language is from the Regulations Act, 1950. I ask rhetorically, how does the scheme described in the bill herein comply with these practices. Clearly, they do not. It attempts to exempt itself from those rules.
Erskine May's Parliamentary Practice also has references defining statutory instruments.
Our current Statutory Instruments Act provides clear direction regarding subordinate law, offering instructions in areas such as the coming into force date, the means or instruments by which the coming into force will be achieved, the method to be used to publish the subordinate law, and even Parliament's role in the revocation of the instrument should it be found not to be in compliance.
Again, the so-called guideline tax measure referred to in the budget implementation bill also appears to exempt itself from parliamentary scrutiny.
I want to briefly turn to the oversight issue. Marleau and Montpetit at page 688 describes the authority of the Standing Joint Committee for the Scrutiny of Regulations to “scrutinize any statutory instrument made on or after January 1, 1972”. Statutory instruments are referred to therein as:
--any rule, order, regulation, ordinance, direction, form, tariff of costs or fees, letters patent, commission, warrant, proclamation, by-law, resolution or other instrument issued, made or established...in the execution of a power conferred by or under an Act of Parliament.
Clearly, Parliament intended that important issues such as the one found in the budget implementation bill, should be manifested in a statutory instrument subjected to parliamentary oversight and not left to the status of a guideline or press release which can be amended from time to time by an unidentified government official with a computer and a printer.
Again, referring to the Statutory Instruments Act, the Standing Joint Committee for the Scrutiny of Regulations is mandated to report to this House to ensure that instruments conform to 13 criteria of good governance. I draw the attention of the Speaker to criterion number 7, which requires compliance with the act with respect to transmission, registration or publication.
How are members of this House to know whether or not one of the minister's guidelines, which can be amended from time to time, was even published, let alone whether or not it conforms to the rules?
Criterion number 11 guards against an unusual or unexpected use of the powers conferred in enabling legislation. Again, in this case, members will not have the tools to make such a determination because a press release was used.
Clearly in this clause and perhaps others, the government has attempted to create subordinate law by press release in a way that is not accountable to anyone and certainly not accountable to this Parliament. This is not a proper and accountable way to legislate, particularly for a government that proclaims or touts accountability as an attribute of its administration.
Finally, this part of the budget implementation bill does not even conform to the government's own rules on proper legislative drafting. I have in hand a copy of the Privy Council Office document entitled “Guide to Making Federal Acts and Regulations”, which I am prepared to table as well. Page 3 of the document describes what it considers to be proper subordinate law-making. Suffice to say this bill, or at least the clause I have referred to, does not even come close to adherence to those rules governing the making of subordinate law. Given the historic strictness with which the House imposes on tax measures, these vague and arbitrary provisions should be treated as out of order and a nullity. This is taxing by press release.
I conclude by inviting the Chair to review this submission and to rule that the clause in the budget implementation bill is out of order and cannot be proceeded with in its current form. A bill with references such as this should not be accepted in principle and read a second time. This clause, and any other clause or subclauses ancillary to it, should be struck from the bill and ordered reprinted.
If the government insists on proceeding with the objectives of this clause, as wrong-headed as some members may think they may be, it could do so by way of a separate, properly drafted bill dealing with its scheme for taxing income trusts to which the transition rules are central, which the government seemed to be prepared to do last December in any case and which a committee of the House endorsed earlier this year. Obviously, we would expect that the new bill would be properly drafted and conform to the rules of the House.
Given that Bill C-52 could be voted on at second reading fairly soon, I would ask the Chair respectfully to rule on this at the earliest possible opportunity.