Mr. Speaker, I am very pleased to speak in support of the bill.
I would like to thank my colleague, the member of Parliament for Jeanne-Le Ber, for his tireless efforts on behalf of Canada's artist community. I would also like to thank the previous speaker for his support of this bill and some of the important points he laid out.
Before I start, I should say that the member who introduced the bill has had a long and distinguished career as an independent artist. He learned first-hand how unforgiving our tax system can be for those engaged in creative enterprise.
The member has consulted extensively with the artistic community. He is determined, and I am hoping we can all support him in his efforts to enact this modest measure of promising, one could say, greater fairness to those in the artistic community.
Bill C-427 seeks to enact a form of income averaging for artists and cultural entrepreneurs under the federal tax code and to exempt from taxation a portion of their income derived from royalties and residuals.
It would allow artists, as carefully defined under the Status of the Artist Act, to average their income for the purposes of federal taxation over a period of two to five years, producing significant tax savings on a flexible scale.
It would exempt from taxation the first $10,000 in income derived from royalties, residuals and other special payments.
It would ensure greater overall tax fairness for a specialized group of taxpayers significantly disadvantaged under the existing federal tax code by the inconsistent hours of work associated with their careers and by punitively high levels of taxation in years of high earning. They are further disadvantaged by lack of access to certain government programs such as employment insurance.
The act would also stimulate a broader public debate about how government can act to appropriately recognize and valorize the cultural industry and artists who enrich our society, unify our country and represent an ever more crucial driver of economic growth, which I will talk about a little later.
Despite strong support for the arts and the existence of many highly developed and competitive cultural industries, Canada lags far behind a number of other developed countries in terms of fiscal policy actions designed specifically to support the work of artists and cultural entrepreneurs.
Due to irregular working hours and fluctuating incomes often associated with their work, artists are almost always disadvantaged both by outrageous tax rates in years where their income is high, and also by their inability to take advantage of certain federal programs, including employment insurance, the Canada pension plan and others.
Bill C-427 will give artists the small business support they need by allowing them to spread their income over a chosen period and make significant tax savings over two or five years. It will of course be possible for them to reinvest their savings in their business and for them to better provide for themselves and their families.
A number of governments, in Canada and abroad, have implemented income averaging mechanisms in order to acknowledge the particular status of certain groups of taxpayers, of cyclical or seasonal industries, whose incomes do not fit the stable and predictable formula of wage-paid work. There are income averaging models specifically for artists in dozens of European countries, including England, France, Germany, the Netherlands and other countries that are Canada's trading partners.
Here in Canada, income averaging models have been used on a number of occasions to provide support to our east coast fishers and to invest in resource exploration projects and in other high-risk employment sectors. In 2004, the Quebec government introduced the only permanent income averaging system in Canada.
Most people understand the importance of arts and culture for the dynamism, expressiveness and vitality that it offers Canadian society, but many do not realize the economic and positive impacts. In a landmark study in 2007, the Conservative-leaning Conference Board of Canada calculated the overall economic footprint of Canada's cultural sector to be greater than $84.6 billion or a staggering 7.4% of Canada's real GDP. By way of context, this means that cultural industries make a larger annual contribution to the Canadian economy than fisheries, mineral extraction and a variety of other crucial industries, accounting for over 1.1 million jobs.
Freelance artists in Canada overwhelmingly confront a situation of income precariousness. The Canadian socio-economic information management program administered by StatsCan indicates that, based on the North American Industry Classification System, the average annual income of an independent Canadian artist was only $37,476 in 2011, which is significantly less than that of tradespeople, contractors and virtually every other variety of independent employee in the Canadian economy. This is not a lifestyle of galas and soirées; it is survival, often on the very edge of the poverty line.
The measures included in Bill C-427 are completely affordable. The analysis conducted by the Department of Finance, further to the request we made to the Parliamentary Budget Officer to give a figure for the cost of the bill, determined that the total cost of the bill’s implementation would be less than $25 million in deferred income tax per year.
The impact of passing the bill will be both reasonable and widely shared. Using the best information available from Statistics Canada, the Parliamentary Budget Officer calculated that some 55,000 taxpayers would probably take advantage of the income averaging provisions in Bill C-427, with an average savings of about $130 per taxpayer. Similarly, the consequences relating to the royalties exemption provision in the bill would benefit some 41,600 Canadians involved in artistic pursuits, with an average savings of about $1,500 per taxpayer. This represents real money in the pockets of real taxpayers that will be used to stimulate Canada's economy and Canada's economic recovery.
In the few seconds I have left, I want to once again thank the hon. member for introducing this bill. As was mentioned earlier, it already enjoys the endorsement of ACTRA and other major national organizations representing Canadian artists. It is a way of stimulating our economy, putting more money into our communities, supporting the arts and at the same time supporting small business. Therefore, I urge all members to support this bill.
