Mr. Speaker, I am pleased to speak to Motion No. M-559, which ostensibly addresses how we may improve charitable giving. The two suggestions are general changes to the charitable tax credit amount and, second, the possible extension of capital gains exemptions to private company shares and real estate when donated.
The finance committee has conducted its prebudget consultations. It has had, I believe, some 450 submissions and has heard from about 150 or 160 witnesses. Many of these were giving representations in support of numerous changes that had to do with handling the charitable sector. The committee is now in receipt of its draft report and will be reporting very soon. As a consequence, it is not possible to undertake such a study, so that will probably be put off for some time.
That said, just so we do not raise expectations that this is something the committee will stop, we do have the second budget implementation bill. We also have the minister and officials coming before us on that.
It is interesting, though, if we were to look at the dimension, and I did get some statistics on Canadian donations. The average annual donation was $437, the median annual donation was $120, and 50% of donors who contribute $120 or less account for only 5% of the total amount contributed. The top 10% of donors, who contribute more than $1,000, account for 62%. So it is very much tracking in terms of income levels. Clearly, I am not sure whether this is the most efficient way to generate the dollars. In any event, these are areas in which work can be done to look at where there are some efficiencies.
I also had an opportunity to look at a C.D. Howe Institute report, just to give the member an idea of how many people have really looked at this. Canada has something like 80,000 registered charities, having $100 billion in annual revenue, and more in net assets, and the total charitable sector in Canada is about the size of the economy of British Columbia. So when we touch things, we are talking about big dollars.
As others have raised, the economic circumstances of the country obviously have to be taken into account, because to enhance the charitable credits or make additional assets available for contribution and to be creditable, that money comes straight out of the government coffers.
Obviously the key is whether or not we are giving enough to the charitable sector to do the job it wants, which I think is what Canadians would like to see. There is an awful lot of work. This is an enormous undertaking and should not be taken lightly, and would not be taken lightly by the finance committee, but it may very well have to farm it out to others who have the expertise to work the numbers, like the C.D. Howe Institute.
I want to raise as well, and the member will be aware, that there have been a number of ways proposed in dealing with the charitable sector. I just happened to notice that there were tax principles involved. I thought three of the models were interesting, just so the member understands how many people have really thought about this.
The first model is that the better the charity is at enhancing the quality of life for citizens, the greater the tax subsidy should be. It is really cause and effect. If we are enhancing the quality of life for citizens, we should get a higher tax subsidy. That would be one model.
The second model would be less responsive to the amount donated, and that is the after-tax cost of donations, the lower the tax subsidy should be received, so it depends on the financial impact to the government.
The third one I noted was the redistribution. If redistribution is a goal, charities that have high-income donors contributing disproportionately should receive a lower tax subsidy than others. Some are actually more successful than others and some have more money than they can possibly deal with, but they happen to be the ones that hit a chord, which tends to give them a benefit. It is another way to consider how we might deal with this.
I want to be sure I get on the record the fact, as I am sure the member is well aware, that some have written and expressed concern about the ethical situation within charities. Not to take this too far, there is a strong view that we should not consider any further changes until further actions are taken to enhance the transparency of charities and improve their governance.
The member will also be aware that there is a private member's bill now before the finance committee, which will be considering it before the end of November, and it has to do with the amount of compensation to charitable executives and the overall cost of operations. I know that the Canada Revenue Agency has benchmarks. If a charity were to use 75% of the moneys collected for operating costs and only 25% would in fact benefit the target audience, as it were, that sends up a red flag. There are a lot of tentacles and there is much work to do.
Having said that, I want to encourage the member by saying that I was very impressed by the people who appeared before the finance committee with regard to the need to enhance charitable giving. I know Mr. Johnston, who has been visiting Parliament for many years and knows many members of Parliament, and he makes a very good case.
Certainly the idea with regard to the exemption on the capital gains and expanding it for private companies turns out to be, ultimately, a question of how much impact that might have in terms of the government treasury and how it ranks in terms of priority with regard to the other needs of Canadians, as well as the imperative of being fiscally responsible at a time of financial duress.
The member has raised an excellent motion, but it is opening up, in my view, a very significant undertaking, which could not be done very easily or very lightly. It may take a very long time to do. I am not sure whether his committee would be prepared to take on something that might take months to do, but I know there has to be some consideration as to the scope and recommendations.
I understand where the member is coming from, and I can assure him that I will be voting to move it to our committee to have a look at it. As the member and the House will know, committees may from time to time have to report back to the House circumstances that do not permit it to do a full arrangement. Or they may propose other ways in which we can satisfy the questions the member has raised with regard to specific initiatives and generally with regard to the condition of the charitable sector.