Mr. Speaker, today, I rise in the House to speak to Motion No. 559, which directs the finance committee to study the tax treatment of charitable donations.
As vice-chair of the finance committee, I am pleased to have the opportunity to speak to this motion. Now when I say “vice-chair of the finance committee”, it is just an aspiration of mine, and sometimes I like to pretend I am, but I am really not. Nonetheless, I do want to respect the finance committee for bringing this to the House. I also want to thank the previous speakers for their speeches.
The size of Canada's charitable sector has been described as being as large as the economy of British Columbia. The federal government plays an important role in supporting Canada's charities. The federal treasury provides charities with both direct support through grants, and indirect support, in the form of tax credits on charitable donations.
According to the papers published by the C.D. Howe Institute in 2009, tax-receipted charitable giving in Canada has grown by 140%, from $3.6 billion in 1995, to $8.65 billion in 2007. In fact, it estimated that, in 2009, tax credits for cash donations cost the federal treasury approximately $2.2 billion.
Despite this growth in the total amount of charitable donations in Canada, the number of Canadians making tax-receipted charitable donations is actually in decline. This number has been declining for more than a decade. According to the C.D. Howe Institute, in 1990, 30% of Canadian taxpayers claimed a tax credit for a charitable donation, but by 2007, that number had fallen to 24%. So, charities are relying on an ever-diminishing base of donors. Not only is this unsustainable, but it leaves the charities more vulnerable to even small changes in the level of giving, as we have seen recently in the economic downturn.
On top of this, we are seeing a trend where donations are becoming more concentrated. Larger donations are being made to a small number of large charities and foundations ,while revenues for smaller charities are, in some places, actually in decline.
Imagine Canada, a national charitable organization whose mandate is to support Canadian charities and non-profits through both debate and consultation, has surveyed over 1,500 leaders of charitable organizations. According to Imagine Canada's most recent survey, about half of Canada's charities are finding it difficult carrying out their mission because of increased demand for their services, coupled with stagnating or declining revenues. They believe this increased demand is connected to the economic downturn.
In fact, about a quarter of the charities reported that their very existence is at risk because of the increase in demand that they are facing. It appears that many of Canada's charities, particularly of course our smaller charities, simply do not have the resources they need to carry out their mission.
The question we must ask is, what can the federal government do to improve the situation? It is a pertinent question, I would imagine. What are the policies that would encourage more Canadians to donate to a Canadian charity?
The finance committee is well situated to study this issue and hear from expert witnesses who can provide us with examples of best practices that Parliament may wish to consider. And a couple of ideas that are already on the table include: one, expanding the capital gains tax exemption for gifts of listed securities to include gifts of private company shares and real estate; two, introducing a stretch tax credit in order to stimulate new charitable giving by increasing the credit that would apply to donations exceeding a donor's previous highest giving level.
Malcolm Burrows has written about the first proposal in depth. Perhaps he is an expert witness that the finance committee may wish to hear from in the future. In his paper, “Unlocking More Wealth: How to Improve Federal Tax Policy for Canadian Charities”, Mr. Burrows estimates that the proposal would cost federal and provincial governments between $190 million and $440 million per year. While he generally argues in favour of the proposal, he also brings forward some potential challenges with the idea.
For example, he notes, “concerns about determining fair market value for gifts of taxable real estate. As well, real estate presents additional complexity and liability for charities, such as environmental issues, maintenance and property taxes”.
The finance committee may wish to examine this more closely. I would love to be a part of the finance committee and unfortunately I am not, but there are several things the finance committee could to work on this on behalf of all Canadians and certainly for the charities involved, as pointed out in some of the evidence I put forward.
I would be remiss if I did not point out some of the challenges that the committee is currently facing. Today's debate on the supply motion by the member for Wascana has concentrated on the Conservative government's refusal to provide the documents ordered by the finance committee. The committee has been trying to determine the cost of the government's justice bills and corporate tax cuts. It is certainly a challenge for the finance committee.
The government is deliberately frustrating the work of the committee. Despite the government House leader's intervention this afternoon, the Conservatives continue to refuse to provide the detailed costing information we have requested. They are falsely claiming that it is covered by cabinet confidence.
Section 69 of the Access to Information Act is clear. Detailed cost estimates for justice bills are no longer covered by cabinet confidence once cabinet has made a public decision to introduce the legislation. Therefore, the finance committee has requested a very detailed breakdown of the cost of 18 justice bills that have already been introduced in the House.
At 2 o'clock this afternoon, the government provided very little information on the cost of 13 of those justice bills and no cost for the remaining 5 bills. Clearly the information was not near enough to satisfy—