Mr. Speaker, I rise on a point of order with respect to Bill C-470, standing in the name of the member for Mississauga East—Cooksville.
Without commenting on the merits of Bill C-470, An Act to amend the Income Tax Act (revocation of registration), I submit that the bill would extend the incidence of a tax and therefore should have been preceded by House concurrence in a ways and means motion for the bill.
The second edition of House of Commons Procedure and Practice states on page 900 that:
The House must first adopt a ways and mean motion before a bill which imposes a tax or other charge on the taxpayer can be introduced.
In addition, citation 980 of the sixth edition of Beauchesne's Parliamentary Rules and Forms states:
A ways and means motion is a necessary preliminary to the imposition of a new tax, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of the incidence of a tax so as to include persons not already payers.
I would further note that on page 898 of the 23rd edition of Erskine May, it states:
A Ways and Means motion resolution is required to authorize extension of the scope of a tax, for example, to cover new classes of tax-payers.... The requirement for a Ways and Means resolution also applies to any proposal for a change in tax law or the administration of tax collection which may lead, albeit incidentally, to an increased or accelerated tax burden for any class of taxpayers.
By way of precedent, on November 28, 2007, the Speaker ruled in the case of Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration) that:
If adopted, this measure would therefore have the effect of increasing the tax payable by certain corporations.... In other words, the bill deals with an issue of ways and means....
In my view, Bill C-418 imposes a charge on the taxpayer, but it was not preceded by a ways and means motion....
Accordingly, the Chair must now direct that the order for second reading of the bill be discharged and the bill withdrawn from the order paper.
The purpose of Bill C-470 is to allow the revocation of the registration of a charitable organization, public foundation or private foundation, if a particular entity is paying an annual compensation that exceeds $250,000 to any of its executives or employees.
Let me explain why the bill would result in the extension of a tax. For the information of members, subsections 149.1(2) to 149.1(4) of the Income Tax Act provide rules upon which the Minister of National Revenue can deregister a charity. Bill C-470 would amend the Income Tax Act by adding paragraph (c) to subsection 149.1(2) of the act, adding paragraph (f) to subsection 149.1(3) and adding paragraph (e) to subsection 149.1(4). This would add a new condition where the Minister of National Revenue can deregister a charity. Let me explain in detail, if I may, how that may work.
At present, upon the issuance of a notice of revocation of its registration under any of the current subsections from 149.1(2) to 149.1(4), an entity is facing an additional tax burden. Subsection 188(1.1) of the Income Tax Act, read in conjunction with subsection 188(1), provides that such an entity is liable to a tax calculated in accordance with the formula found in subsection 188(1.1). This additional tax liability is known as the revocation tax.
Bill C-470 would add the new circumstances described in subsections 149.1(2) to 149.1(4) for deregistration of charities by providing that the Minister of National Revenue can, in addition to the current circumstances described in the Income Tax Act, deregister an entity on the basis that it pays more than $250,000 in compensation to one of its executives or employees.
Charities that would be deregistered under the new circumstances in Bill C-470 would be liable to pay the revocation tax imposed under subsection 188(1.1).
In addition, paragraph 149(1)(f) of the Income Tax Act provides that registered charities are exempt from taxation. Upon deregistration of an entity in the circumstances proposed by Bill C-470, that entity loses its tax exempt status as a registered charity and, assuming it remains a charity, it will not be able to benefit from the other exemptions from tax provided for in subsection 149.1(1).
In other words, Bill C-470 would result in an extension of the incidence of a tax by including entities that are not already paying the revocation tax or, potentially, a tax on their income. This means that the bill should have been preceded by the concurrence of the House in a ways and means motion for the bill.
As a result, I submit that the order for second reading of the bill should be discharged and the bill be withdrawn from the order paper.