Madam Speaker, first of all, let me thank my hon. colleague for his great work on this private member's bill. We have enormous respect for the work that has been done by every member when they present private member's bills, and the member knows because we did talk to each other about how much l respect his work and how much I value his contribution to public debate in Canada.
However, life is about choice, and l will outline why, as government, we will not be supporting the bill, and I will try to explain to the member in the most respectful way what the reasons are for that choice.
We recognize the spirit and good intentions of Bill C-239, which amends the Income Tax Act regarding charitable gifts. Of course our government applauds the important work done by Canadian charitable organizations, as well as the generosity that leads Canadians all across the country to donate to charities every year.
That said, the government cannot support this bill for a number of reasons. The parliamentary budget officer estimates that if Bill C-239 were to pass, it would cost the government about $1.7 billion more in 2016, and $1.9 billion more in 2020. He estimates that the total annual cost of the tax credit for charitable gifts would be as high as $4.2 billion in 2016, which is an increase of nearly 68%.
In this debate, I think it is important to take into account the considerable cost of this proposal and the fact that tax incentives for charitable donations are already very generous in Canada. Canada boasts countless assets, and one of those assets is the generosity of its people. They are compassionate, tolerant and kind. They give countless hours of their time to just causes, such as welcoming refugees, serving meals to the poor, taking care of patients in hospitals who are far from their family, and taking care of the environment by cleaning up the shorelines of our lakes and rivers, for example.
Canadians' generosity is so huge that it accounts for 8.5% of GDP. That is more than Canada's auto sector or retail sector. These organizations have a role to play in Canadian society. They contribute to the quality of life in all our neighbourhoods, and they support communities. Basically, they are crucial to social cohesion. That is why the Canadian government supports them, in particular, when it comes to taxes.
First, registered charities are already exempt from paying income tax. Also, Canadian taxpayers and businesses that make donations to these charities are eligible for a tax break. Including all provincial tax deductions, every Canadian can get back, on average, 46% of every dollar donated above $200. Moreover, charitable donations can represent up to 75% of an individual's net income and be deferred for five years.
Federal support for charities is really important. At about $3 billion a year, it is among the highest in the world. Canadians are also very generous. In 2013, donations to charities and not-for-profit organizations totalled $12.8 billion Canadian.
I want to point out that even without a tax credit, Canadians are very generous, as we all know. Statistics Canada proved it in its 2015 general social survey. Ninety-one per cent of the time, Canadiens give out of compassion, and 88% of the time, they give because of personal belief. Only one-quarter of survey respondents said that they were motivated by the tax credit.
We can proudly say that Canadians are agents of change for their country. They are engaged in their communities, and they are politically engaged as well.
In 2003, changes were made to the political financing act to encourage Canadians to get involved in politics. It was decided that an annual limit should be set on personal contributions to a political party. Furthermore, the related tax credit must be claimed in the year in which the contribution is made. Unlike a charitable donation, the credit cannot be carried forward, and the maximum amount that may be claimed is much lower.
The charitable donation tax credit, with the limit of net income and the five-year carry-forward period, is much more generous for large donations. These are two very different types of donations, and there are two different deduction frameworks. The charitable donation tax credit and the political contribution tax credit have different objectives and are structured differently. The charitable donation tax credit is designed to encourage individuals to make larger donations to registered charities and other qualified donees.
This means that the higher the donation amount, the higher the tax credit. By comparison, the political contribution tax credit's goal is to encourage widespread public participation in the political process by giving generous tax assistance for small contributions to federal political parties and candidates. For that particular credit, as donation amounts rise, tax assistance goes down.
When developing tax measures, it is important not to compare apples and oranges. Studies have shown that if Canadians have to choose between making a charitable or a political donation, they prefer doing both. Canadians are politically engaged, and they expect the government to bring greater transparency, as promised. We committed to restore Canadians' confidence in the political system by proving to them that their vote counts and they play a part in shaping public policy.
The first step will be to engage in a nationwide discussion with Canadians on reforms to the electoral system. We will then establish a special all-party committee, which will make proposals for electoral reform. A good government is an open and transparent government. That is why budget 2016 includes $10.7 million over the next four years to organize activities that will encourage Canadians to participate in the reform process. Changes to the electoral system will result from an open and transparent process, which is what we promised and Canadians are calling for.
To serve Canadians, who are so generous, it is important that the government carefully scrutinize its expenditures and eliminate ineffective programs that do not or no longer meet our objectives. In closing, I would like to remind the House about our government's efforts to directly support this country's middle class. We have cut taxes for nine million Canadians, and we have introduced the Canada child benefit, which will be fairer, more generous, and simpler than what the former government put in place. We have invested in innovation, infrastructure, indigenous peoples, and youth.
In closing, this bill would increase the costs associated with tax credits for charitable donations by about $1 billion a year. This would diminish the government's ability to pay for important public programs that Canadians rely on. It would actually diminish our ability to invest in the country's future.