moved that Bill , be read the second time and referred to a committee.
He said: Mr. Speaker, I rise today in support of my private member's bill, Bill , the supporting Canadian charities act. The pandemic has inflicted tremendous losses on charities and their ability to provide much-needed services to Canadians. The situation is bleak. Canada's 170,000 registered charities have lost $10 billion during the pandemic at a time when the help provided by the charitable sector is needed more than ever. More than four in 10 charities are still facing declines in revenue. The average revenue decline is 44%, and more than half are dealing with revenue declines of more than 40%. Some 42% of charities are facing demands for their programs and services that currently exceed their capacity to deliver.
Arts and cultural organizations have been particularly hard hit, with an average revenue decline of 59%. Many charity workers are suffering from pandemic-related stress and mental health issues. Sadly, many of these amazing organizations may not survive.
Charities employ more than 2.4 million Canadians and account for 8.4% of this country's GDP. Under normal circumstances, each year charities raise $18.5 billion in donations and contribute $169 billion to our GDP. The charitable sector fills the gaps that cannot be fully met by government or by the market and is a key partner in the delivery of services including health care, education and social services. Sadly, nearly 40% of charities have laid off paid staff or reduced staff working hours, seriously impacting the ability of the sector to provide important services.
One study by Imagine Canada forecast a loss of private sector donations of between $4.2 billion and $6.3 billion, with estimates of between 117,000 and 195,000 job losses. When charities are unable to deliver services and programs, it means that individuals do not receive the support they need. That is the bottom line. This could be a person looking for a meal at Agape Table in Winnipeg, a child with a disability in need of special equipment or specialized therapy, someone who is homeless and looking for a place to sleep on a cold winter night, a single mother who cannot pay rent or feed her children, a senior not taking life-saving medications, or a person in so many other situations.
Demand for such services is expected to continue to increase in the coming months beyond the ability of charities to service that demand. Arts, cultural and recreational organizations have also reported revenue decreases of as much as 71%. For health organizations, the decline averages 48%.
Bill would deliver long-term, sustainable funding to the charitable sector. Although the government has played an important role in direct funding of charities, with a simple change to the Income Tax Act, hundreds of millions of dollars in new donations could be raised for charities every year.
Simply put, Bill would amend the Income Tax Act to waive the capital gains tax on the proceeds from the arm's-length sale of privately owned shares or real estate when those proceeds are donated directly to a charity. The last time the government made such a bold decision was in 2006, with the removal of the capital gains tax on gifts of publicly traded securities. This has resulted in additional charitable donations of over $1 billion ever since. Tax incentives also already exist to encourage the donation of ecologically sensitive lands. This bill is the next step.
The example I like to use is of a retiring dentist who is selling his or her practice after many years and may now choose to donate all or a portion of the sale proceeds to a charity. That dentist would receive a waiver of the capital gains tax so long as the donation was made within 30 days of the sale. The value of the shares is established by an actual arm's-length sale in the marketplace. By using that practice, we avoid the valuation ambiguity of an independent evaluation or appraisal. For years, charities across Canada have been recommending that the government unlock more private wealth for public good. The bill provides us all with the opportunity to help charities by stimulating increased charitable donations from the private sector.
This bill would highly incentivize charitable giving at a time when it is most needed. It essentially incentivizes the redistribution of wealth to those who need it most. I submit that there is no better time to do this than now. It is estimated that this one change will increase charitable donations by at least $200 million per year. These additional donations would cost the treasury the capital gains tax revenue of roughly 25¢ on the dollar, which is roughly $50 million to $60 million per year.
One-time-funding programs like the community services recovery fund and emergency community support fund are important, but represent only a fraction of the charitable sector's needs at this time. The opportunity is now to deliver immediate relief to help Canadians without significant additional costs to a treasury that is already running historic deficits. Existing jobs would be saved. New, permanent jobs would be created, and urgently needed benefits would be delivered.
This is not a partisan debate. We all want to help charities. Charities from across the country have endorsed this bill. This broad support includes local organizations, such as the Grace Hospital Foundation in my own riding in Winnipeg, and extends to some of the largest national charitable organizations. This includes the Special Olympics, Imagine Canada, the Heart and Stroke Foundation, Diabetes Canada and many others.
All stakeholders in the charitable sector are supportive of this measure, as are the hundreds of thousands of small business owners who would like to give back to their communities. A full list of the supportive groups and why they support this bill is available on my website.
Removing the capital gains tax on gifts of private company shares and real estate is much more tax effective than direct government spending for charities because the cost is not borne by taxpayers alone. Rather, it is shared by the taxpayers and donors. Not one penny of the donated proceeds would benefit the donor, but would provide major benefit to recipient charities and those they serve. This initiative actually removes a barrier to charitable giving while immediately reducing the donor's wealth for the betterment of their communities.
The real beneficiaries are the people who are served by not-for-profit organizations, including hospitals, social service agencies, universities, and arts, culture and religious organizations. This measure was also recommendation 34 in the report of the Special Senate Committee on the Charitable Sector issued in June of 2019, which states, “That the Government of Canada...implement and evaluate a pilot project on the impact on the charitable sector of exempting donations of private shares from capital gains tax.”
I want to put on record that laws, as they relate to the charitable sector, are in serious need of modernization. The Senate report also made recommendations for the creation of a secretariat on the charitable sector. This home-in-government approach would provide a stronger framework for discussions and solutions between government and the sector on a wide range of issues.
In the 1997 budget, then finance minister Paul Martin cut the capital gains tax on gifts of publicly traded securities by 50% when donated to a charity. In 2006, then finance minister Jim Flaherty followed suit when he removed the remaining capital gains tax on such gifts. The Senate report quotes Ruth MacKenzie of the Canadian Association of Gift Planners noting, “that the elimination of capital gains tax on gifts of listed securities has been ‘enormously successful, resulting in billions of dollars in shares being donated to charities every year.’”
It is now time for the government to take the next logical step by exempting private shares and real estate. This idea was, in fact, included in the Conservative budget of 2015 by then finance minister Joe Oliver, but it never made it into law before the change in government.
I would be remiss in not giving a shout-out to a very special person many members are familiar with, Mr. Don Johnson who has advocated for this measure for decades. Mr. Johnson has said implementing this exemption would be the single most important and tax effective measure the government could introduce to significantly increase charitable donations every year going forward. Mr. Johnson was directly involved when Paul Martin reduced the tax and when Jim Flaherty reduced the tax, and now he has been advocating for this change all along as well.
Many members recently received a copy of his book, Lessons Learned on Bay Street. He sent a personalized copy to every single one of us. I am about halfway through it, and I can tell members it is an excellent and very interesting read. He is a fellow Manitoban and a recipient of the Order of Canada.
Mr. Johnson made his career on Bay Street and successfully advocated for the current application of this law on publicly traded securities, which resulted in billions of dollars for charities and non-profits. Today, I stand on his shoulders. He has been a tremendous resource for me, and I cannot thank him enough.
The bottom line is that when charities are hurting, real people are hurting. Let us do something about it. I ask every member to support this bill. Working together, we can get the charitable sector back on its feet and Canadians back on theirs.
:
Mr. Speaker, I appreciate that the member brought forward this piece of legislation for the simple fact that I would never want to put a pass on being able to share some thoughts on the issue of charities and the important role they play in our society.
My colleague raised a question in terms of the cost. The parliamentary budget office is an apolitical office and the price it came back with was quite significantly more. I think we have an obligation to look at what our PBO says: over $750 million with the potential of a billion. That could be the actual cost if this legislation were to pass.
In listening to what the member had to say about the legislation and with what research I was able to do on the bill, I am not convinced that this is the best way for us to compliment our charities for the fine work that they have done over the years, continue to do today and, no doubt, will do well into the future.
One of the things that I have recognized as a parliamentarian for many years is the fact that Canada has to have some of the most generous people collectively in the entire world. If there is an immediate need in a community, city, municipality, province or territory, you name it, our constituents respond with open hearts and open wallets and purses. I have seen that on a wide variety of issues. We are very fortunate to have a population base that recognizes the importance of giving.
We see that taking place in many different forms. I would like to give a real tangible example. Let us say the PBO's numbers are accurate, because I believe they would be. When talking about those hundreds of millions of dollars, is that the best way we can invest potential tax dollars in terms of encouraging, promoting and supporting charitable organizations?
Every one of us is very much aware of what is taking place in Ukraine today, so I will use Ukraine as an example. The illegal, inhumane invasion that is taking place in Ukraine by President Putin is horrific. Tune into the news and one can see it first-hand on the TV, let alone imagining what the people are living through every day in Ukraine. I say that because one of the initiatives we took was on the issue of humanitarian aid. Even before Canada, as a government, came up with an approach in support of humanitarian aid, Canadians were already at the table. They were actually donating to charitable organizations that were ensuring there was humanitarian aid going to Ukraine. I remember it quite well when the federal government said that we are going to have, through the Red Cross, matching dollars.
That is why I say that it is a comparison. Take a look at what this legislation is doing and the amount of money that could potentially be redirected to see more benefit. In the Ukraine example, we allocated $10 million in terms of matching funds. It only took a matter of days before Canadians oversubscribed to that particular program, so the federal government increased it from $10 million to $30 million. I have not checked it recently in the last number of days, but I would not be surprised, if it were not there already, if it was very close, in terms of the contributions by Canadians.
That is what I mean when we take a look at charitable organizations, and there are many charitable organizations in every region of our country. Some of them have been hugely successful. Even during a pandemic, some have been successful. However, I concur that they have been hit hard as an industry during the pandemic, as other industries have also been hit hard.
However, there is no doubt in my mind that they will rebound. The real issue we should be discussing and debating today is how to maximize the benefits with what are the limited number of tax dollars that we have to deploy. When I look at this legislation, what I see is legislation that does not necessarily allow for an enhancement of the average person's ability to participate, or even provide that additional encouragement or be as universally accessible to some of the smaller organizations that are out there. Charities vary dramatically.
When we talk about health care needs in provinces, one can talk about the Grace Hospital Foundation that the member referenced. Check out their website. I did as the member was speaking. They have a wonderful donor's page with a list of different ways in which people can contribute.
We can talk about the Children's Hospital Foundations or we can go into the private area, such as the Ronald McDonald House Charities, which is across the country and which does an absolutely outstanding job as a corporation in providing the opportunity for Canadians, in particular, those from rural communities, to have a place when they are visiting cities because of a sick child. This is a wonderful organization.
Whether it is the larger charities that are there or it is the smaller charities, if we check with the Canada Revenue Agency, we can see a fairly lengthy list of non-profits and charities that are constantly looking for support. Going forward, I would like to think, in terms of dealing with charities, that, as parliamentarians, we would do what we can to support our charities, big or small.
As much as I can appreciate the member for , a fellow Manitoban, bringing forward a piece of legislation from his perspective, I am not convinced that he has actually allowed for a wider subscription or if we are maximizing the potential limited dollars that come into the government that could go toward charities.
I am a big fan of charities, because I see the fine work they have done in our communities. I think of where there is potential growth, and I think of individuals like Sharon Redsky, who talks about indigenous charities and how the government could look at ways to support indigenous charities and the private sector, and that there is wonderful potential growth in that area. I am very much interested in ideas in that area.
We have the need for charities to assist people in many different ways, whether it is through food banks or direct funds to individuals. It varies greatly. I believe that, as I said at the very beginning of my comments, Canadians are very generous and we need to support and enhance that in whatever way we can.
We can do that through accountability and transparency and by working with organizations like the Canada Revenue Agency and the many different organizations that do not have CRA charity status but continue to do a lot of fine work throughout our country.
:
Mr. Speaker, I thank my colleague for introducing this very interesting bill. I am perhaps one of the few people in the House who really enjoy studying taxation.
I want to take a moment during my speech to acknowledge the people of the Sainte-Scholastique sector of Mirabel, who continue to fight to have the Minister of Transport approve the Synergie Mirabel project. This project, which the Liberals are blocking, would provide housing for 40 seniors who are losing their independence. Again, the Liberals are blocking the project.
I am talking about this because today we are debating the taxation of charities, the taxation of philanthropy. I want to show how important our organizations are to our families and to our community and social fabric, not only in my riding of Mirabel, but also elsewhere in Quebec.
I was in Blainville last week and I visited Moisson Laurentides, an extraordinary organization that collects food to feed thousands of families and thousands of children, people who do not have an easy life, people who live in extraordinarily difficult situations. This organization helps our food drives, and that shows how important charitable organizations are.
Sometimes, in people's minds, charitable donations are not truly generous because they are simply used for tax credits. However, to a person, a business or an estate and its beneficiaries, that money is a real donation, even if it provides a small tax benefit in return, because those who make the donation are giving up their material goods and financial advantages that could have been used for their own benefit. We must therefore commend people who donate, people who participate. We need these organizations and I say thank you.
There are currently tax measures for charitable organizations. We know the principle of charitable giving. Most people give a cheque or cash to an organization. In return, they receive an official receipt that will give them a small deduction on their tax return.
There are also other ways to make donations, including by donating shares of publicly traded companies. Few people do that, but these are often very valuable donations to endowment funds for our universities, our hospitals or very large organizations. These donations are a huge help.
Donating shares has two tax implications. First, at the time of transfer of the value of the shares, the donor receives an exemption from paying the capital gains tax because they will not personally benefit from the donation. Second, they will receive an official tax receipt.
Not all businesses are incorporated, and neither are all sources of capital. There are different types of businesses. If someone owns their own business, if an individual is a partner in a small business or if an individual owns a building and decides to donate the value of the building, one of the two tax benefits is lost, the capital gains tax exemption. However, an official tax receipt is issued.
There are other types of donations that provide tax benefits, including donations of ecologically sensitive land, which we discussed.
I will now invite my colleagues opposite to listen. The bill seeks to achieve tax fairness in response to the following question: Why does capital in a given legal form provide a tax benefit when donated that is greater than the benefit that would be provided by the same capital, in the same amount, but in another legal form?
I think that this bill is worthwhile. I think it is worth studying it in committee because this is about revenue neutrality. The same amount of money, donated in two different ways, must be treated exactly the same way by the tax authorities.
I understand that we are talking about significant amounts of money. I think it is still worthy of study, but I remind those who are studying the cost of this new tax measure that the federal government already provides very significant tax exemptions to a great many organizations. I would even tell my colleagues across the way that their political donors received tax credits. We therefore really need to study this matter in committee.
We must consider costs and the issue will be studied in committee. The Parliamentary Budget Officer says that the measure will cost $777 million over five years. Members on the other side of the House sometimes forget that they need to divide by five, and I know that it is not easy.
These are tax expenditures, revenue the government is foregoing. This $777 million in tax expenditures will generate $981 million, which is close to an additional $1 billion in donations to our charities. At first glance, the cost to the government is lower than what would be donated.
True, that is not a very big gap. True, the Parliamentary Budget Officer told us there was some uncertainty and that the numbers are not 100% clear. However, when it comes to statistics and estimates, nothing is certain. For example, as recently as yesterday, the Bloc Québécois thought there was just one party in government, and now look at what happened.
Things can change very fast, especially seeing as, in this market, most of these donations will be made in the form of property, and capital gains on property change very fast. We have been seeing higher capital gains and higher property values. That gap could widen.
My suggestion would be to have the Parliamentary Budget Officer appear in committee. We have to study the measure, look at the numbers and analyze the impact of this measure. We are all reasonable people who can talk about these things.
It needs to be socially acceptable, because the rationale behind these tax credits for charitable donations is that perhaps governments have less need to collect taxes on the money that organizations give to serve the community, our hospitals and our universities. That can also cause distortions.
This money goes to some good causes, but it also goes to religious organizations and all kinds of other organizations that do not always correspond to the values espoused by our democratically elected governments. Social acceptability criteria are needed, and they do exist. We will examine them, but at first glance, I think that, on the simple principle of tax neutrality and fairness, if anyone in the House thinks that it is normal for existing charities to be entitled to the current tax treatment, it would be entirely reasonable to consider expanding it. We could also consider making amendments.
People from the Department of Finance will have to be invited to appear before the committee, because the bill was introduced under the Harper government. I would remind members that the Liberals decided not to implement it in 2015. The bill was reintroduced in the previous Parliament, so this idea has been around for a while. As we know, Mr. Johnson promoted this idea, so it has been around for a while.
We will have to ensure that the terms and conditions create true revenue neutrality. I cited the example of buildings for the member for , who was kind enough to discuss his bill with me beforehand. As we know, when someone owns a building, over time there are profits, revenues and expenditures associated with it. A profit is made. Every year, the owner is entitled to a CCA, or capital cost allowance. Every year, this is artificially applied. When the value of the building increases, that decreases profit and taxes. When the amount associated with the liquidation of the building is donated to a charitable organization, the taxes are paid back. However, in the meantime, the owner will have indirectly benefited from an interest-free loan from the government for 5, 10, 15 or 20 years, which will have yielded income and a return that at certain times may have exceeded the value of the capital gain on the building expressed as a percentage.
Thus, there may be other tax benefits associated with these types of assets. We will have to study this, because when shares in a publicly traded corporation are donated, all the profits associated with said company's entire basket of investments are included in the donation, for example. We will have to look at all these aspects.
Taxation is complex. There are a lot of ins and outs. What is more, there are terms to discuss.
Again, I think this is a good initiative, that it is supported by our organizations, and that it will increase donations. I think it would be premature to turn our backs on Bill and simply say no to it without studying it in committee.
It was a great pleasure to discuss this with the member for Charleswood—St. James—Assiniboia—Headingley. I know that he is reasonable and open. He knows his bill and taxation. I know that we will be able to discuss various ways of improving the bill. We could talk about other types of assets that may be on the table one day. I know that we will be able to do so calmly and intelligently in a spirit of tax fairness and neutrality.
:
Mr. Speaker, I am pleased to rise to contribute some thoughts to this debate on Bill . It is a bill that seeks to give the same treatment to private shares in real estate as is currently enjoyed for public shares when they are donated to a charity, and specifically to give a break on the capital gains tax for those assets when they are donated to a charity.
I want to start by recognizing the tremendous culture of giving we see in Canada, but I want to particularly single out Manitoba, as it is a province where people are known for their charitable giving and for sustaining charities that do all sorts of good work in our communities. This is particularly true when we are talking about the pandemic and the serious problem of homelessness, which existed before the pandemic, to be sure, but has worsened significantly during the pandemic. That is just one example of an area where charities do an incredible amount of work. Whether it is Siloam Mission, Just a Warm Sleep or the Main Street Project, Winnipeg certainly has benefited from the work of those organizations, which receive some government funding, but also depend, really, on charitable giving to sustain themselves and do the good work they do.
I think of L'Arche in Elmwood—Transcona. It operates in many places but traditionally has had a very strong presence in Transcona that goes beyond the support of housing for its clients. It includes social enterprises like the L'Arche Tova Café on Regent Avenue in Transcona, which is not far from where I live. It has been a wonderful gathering place for the community and helps build life skills for the folks who are part of the L'Arche community.
I could go on and talk a lot about all the various organizations that benefit from charitable giving, but I want to spend some time talking about the bill.
With respect to the bill, we on the NDP side of the House are concerned about the fact that there are already many ways for the wealthy to direct their wealth to causes they support. We are in a time when there has been a need for massive public expenditure to meet the needs that are faced by many Canadians. If we are to do that best, it means trying to coordinate behaviour. It means trying to make sure that when we are talking about wealth redistribution, we are doing it in a way that allows us to ensure the services people genuinely need, particularly those offered on a universal basis and on a basis of need, are adequately funded.
Frankly, this is an issue about which reasonable people can disagree, but we are in a moment when the thrust of our work ought to be on how we manage our resources collectively and well through democratic processes. Our time is not best spent figuring out how to make it possible for the wealthy to direct their personal wealth toward causes they think have value. Often members have heard the New Democrats talk in this place about the need to redistribute wealth, and we should do that by ensuring that the wealthy are paying their fair share.
If it were the case that the things we need in this moment were already adequately funded and that the wealthy were already paying their fair share, then I could see a pathway to a conversation about how we make it easier for them to donate directly to charities of their choosing. However, we are in a moment when, if we take seriously the question of public finance and the role the government needs to play in the pandemic recovery and facing down the challenges of climate change, it is not the best time to be talking about how to promote more complexities within the tax code that give tax breaks to individuals who are fortunate enough to have the kind of wealth in the first place to be able to donate.
It is not the typical donor who is donating in these ways. Often when we think about giving to a charity, we think about supporting different kinds of drives, like food drives for food banks, picking up a bit of food at the local grocery store or buying perogies. There is a church on the corner of Munroe and Watt that is currently doing an excellent fundraiser. It is mobilizing the great expertise in the faith community to make delicious perogies to support the people in Ukraine who are in desperate need of help. That is often what we think about when it comes to charitable giving. This is a select group of donors who may have a lot to give, but our conversation should be centred on how we redistribute wealth and how to do it fairly and democratically without creating more opportunities within the tax code for the very wealthy to direct their wealth to things they choose rather than to things we deliberate about in this place and in other appropriate places.
As I said, there is room for this kind of conversation, but for us it is not a priority of this Parliament to get it to committee to delve further into it. We believe there are other priorities the finance committee should have in this Parliament that very much bear on the kinds of supports and services that Canadians need. We would be better off talking about those directly and ways to finance them than talking about modifications to the tax code to allow the wealthiest among us to make those decisions for themselves.
:
Mr. Speaker, it is my privilege to be able to contribute to the debate. I want to commend my Manitoban colleague, the member for , for taking the initiative to present this private member's bill, Bill .
Also, I would try to convince other Manitoban colleagues who have spoken on this tonight to make it a bit more of a priority than was just indicated by my NDP colleague, because this really does affect every family in Canada and Manitoba. I agree with him about the charitable status of Manitoba being as great as it is.
My colleague was a Winnipeg city councillor and now is a member of Parliament and has always been driven by results. I am extremely proud to call him a friend, not only for that purpose but for others. When he sees a problem, he looks for a solution. As an elected official, that is exactly the right mindset to have. I also want to thank him for his efforts to keep the spotlight on these very important changes to the Income Tax Act and how they will positively impact countless charities.
Charities, both big and small, are woven into our communities. From medical research to the arts to recreation to food banks to museums and heritage to housing to education, these charities are integral to every aspect of society.
We both come from a province that is known for the philanthropic efforts of its residents and businesses. When I look around my constituency, multiple buildings at the university, the Assiniboine Community College, the recreation centres and many others were built with the help of private donors. Entrepreneurs, businesses and individuals rose to the occasion to support their communities. Of their own free will they decided to donate to the causes nearest to their hearts. They decided to give back to the community that helped them prosper.
The essence of this bill is very simple, but its impacts are enormous. It will result in more money ending up in the hands of charities. By eliminating the capital gains tax on charitable donations of private company shares and real estate, it will result in millions more dollars going directly to charities, rather than as taxes to the government. From the donor’s perspective nothing will change. The same shares are being sold. The only difference is the level of tax the government would collect. From the charity’s perspective, it will now receive the total sum of the private shares being sold.
We are cognizant that the pandemic has been hard on charities. We know donations are down and demand for charities has gone up. According to the latest available data, donations declined by 10% due to the pandemic, and close to half of all charities are struggling. These are troubling statistics.
As members of Parliament, the onus is on us to propose solutions from all sides of the House. I believe Bill is a responsible and appropriate response to the challenge that charities are currently facing. It is projected to result in roughly $200 million being directly given to charities from across the country on an annual basis. As a Conservative, I am always keen on advancing ideas that are market-driven and sustainable over the long term.
This legislation does not expand the size of government, nor does it burden charities or individuals with more red tape. It does not reward one charity over another. It does not pick winners or losers. It simply unlocks and leverages the private sector’s philanthropic spirit. This legislation will help our charities prepare for the future. As we have seen in the last two years, a little help can go a long way. Of course, we are presently seeing that with the situation in Ukraine.
That is a win-win and that is exactly why I am supporting this legislation. As parliamentarians, we must advocate for policies that harness ingenuity. We can give people the tools and incentives to help bind communities together. We can make our communities and charities stronger and more resilient. We can empower individuals by letting them take the reins of their generosity and philanthropic efforts. It is about celebrating the value of local communities and charities, and it is a recognition that those at the grassroots level have the capacity to respond almost immediately to the needs and causes they feel passionate about.
It is in that spirit that Bill delivers in spades, and it respects the decisions made by donors themselves to support the charity of their choice. Not only am I confident of the aims of the bill, but we also have ample evidence to suggest it will accomplish its intended goal. It builds on the success of the removal of the capital gains tax on gifts on limited securities, which was introduced in 2006, as my colleague mentioned earlier. Since that common-sense change, charities have received donations of listed securities of over $1 million every year, and that is for 16 years. It is a tremendous amount of money that is helping do the good work that charities do. It is time to make the Income Tax Act equitable and apply those previous changes to the sale of private shares.
There is no logical argument to oppose the bill, although we have certainly heard from those in government who fear the loss of tax revenue and people using tax loopholes, and have heard that again today from some of my colleagues across the way. These were the same arguments made by the finance officials for my private member's bill last summer, and when presented the evidence at committee, I was pleased to see numerous Liberal MPs vote for the legislation at third reading. I hope they will consider that in this particular bill as well.
I believe if my Liberal colleagues carefully scrutinize the legislation for themselves, they will quickly determine that it was drafted with those concerns in mind. There are safeguards built into this legislation as well, such as the requirement of having to sell the shares to someone at arm's length. Also, the sale of those shares must be at fair market value. These are sensible clauses built into the bill to ensure that the actual disposition of the shares occurs. Moreover, this ensures that shares are not sold at an inflated price to exaggerate the charitable donation tax credit.
My colleague from deserves credit for how well thought out this legislation was designed. As he stated in his speech, though, we all owe Donald Johnson a tremendous round of applause for his passionate advocacy over the years. He has spearheaded these legislative changes for as long as I can remember. Like clockwork, every year members of Parliament would get his budget submission on the proposed changes contained in this bill. Mr. Johnson has been tireless in his efforts to get these important changes to the Income Tax Act, and I am thrilled we are speaking about them here today. I want to quote Mr. Johnson, who wrote a column published in the Toronto Star. He said:
Charities across Canada have been recommending that the government unlock more private wealth for public good. The best way to do that is by removing the capital gains tax on gifts of private company shares and real estate which, it has been estimated, will increase charitable donations by $200 million each year.
That would do a lot of good in Canada, particularly at this moment.
In closing, I want to urge my colleagues and other parties to support this legislation. Let us pass the bill, send it to committee and bring in the charities and tax experts. I also recommend that my colleagues reach out to the charities in their constituencies and ask if they support Bill . Call the volunteers and organizers and ask them if they believe the aims of this legislation will result in further dollars being donated to charities. I know that if my colleagues do, they will find universal support for the bill.
I want to congratulate my colleague from once again for bringing this important bill forward. I am honoured to call him a friend, and he is an integral member of our Manitoba caucus. I am proud to second the bill and speak in favour of it. I pledge to do all that I can to see it pass.
:
Mr. Speaker, it is an honour to rise today.
A lot of representation from Manitoba and from Quebec has spoken to this particular bill, and now I will lend my voice as the first Ontarian to speak to the bill before us.
I want to go back to the comment I made at the beginning of the question I asked the member who introduced the bill, which was how important it is that private members' bills have an opportunity to come before this House to advance individual ideas that members have that they are passionate about. I know this particular issue is not just important to this member but indeed to a number of members who were around when it was introduced in the 2015 budget of Stephen Harper. As pointed out by the sponsor of the bill, it did not get implemented due to the change in government, so I can recognize that there is a desire for this. Indeed, I can also recognize where the intent of this piece of legislation is coming from and why it can be looked at as very favourable.
I will be completely honest in that I am learning a lot about this initiative from reviewing the bill beforehand, forming some opinions on it and listening to what I heard in the House this evening. I cannot say that I have come to a conclusion as to how I will vote on it, but I am certainly interested in hearing more, and when we get to the second hour of debate, I will continue to listen to inform myself on how to vote.
I will say from the outset that I have a few concerns. Perhaps between now and the second reading I can have a conversation with the sponsor of the bill so that he can try to address some of the concerns, which I will put forward now.
The first concern is with respect to the fact that I see the legislation before us as being disproportionately in favour of those who are high-income earners, or those who are in a position to have shares in companies or real estate and have the ability to dispose of those towards charity. However, any taxing measure that seeks to remove tax from individuals who are high-income earners I generally look at as regressive forms of taxation because they would primarily benefit such a small class of high-income individuals rather than targeting the charitable organizations and the broader public.
This brings me to my next concern, which is that I do not fully understand how the benefit is going to flow from the tax incentive to charity. I have been thinking about this as I have been listening, and I realize that the bill speaks specifically to shares and real estate, so I thought of who would donate real estate. What pops into my head when I think of the times when somebody would donate real estate is that, probably more often than not, it is part of an estate settlement through somebody's will.
If somebody has a piece of property that they want to donate to a charity, that is something that would probably be willed, or the executor of an estate, through consultation with those named in a will, would come to a determination to donate a piece of property. However, the only recipient that I see as being a beneficiary to a tax implication on that is the actual estate in that case. The estate would save on the capital gains tax there, but that would not necessarily be transferred down to the charitable organization because in my example the charitable organization would have received that particular piece of real estate regardless of whether or not the capital gains tax was paid.
In order to properly look at this, I would have to assume that we are not necessarily talking about estate planning, or those who are willing property or shares for that matter, but those who are doing it while they are still alive, outside of their estate. The question then becomes this: How often does that happen? How often do people gift shares in companies or gift property to charitable organizations while they are still alive? I certainly respect the fact that it indeed does happen, and it happens quite a bit, but I still fail to see how the benefit will be transferred down to the charitable organization.
That is one of the big problems that I had with this. How does that benefit go from the individual who is receiving the capital gains benefit to the charitable organization?
The third and last concern that I would bring to the attention of the House is with respect to the cost of this particular measure. I know that it has been brought up by a few other colleagues. I had the opportunity to ask the sponsor of the bill a question about that and he indeed did provide some clarity to me with regard to the discrepancy between what the PBO was saying and what he said in his speech. It makes sense when he talks about it being over a five-year period. That certainly clears up a lot of that, but there is still a cost to it.
I guess I land on the position of trying to determine, personally, whether I see the benefit of the cost associated with this particular tax measure being of a benefit to society as a whole, and that is where I am a little concerned. As I indicated in my question, the Parliamentary Budget Officer said that it would be in the neighbourhood of $750 million, as much as a billion, and depending on what the uptake on this is, it could even be more. I hope the sponsor realizes that this is a real concern of some of us in the House, particularly me.
I would also perhaps add that I do not think it is the regular practice of any government to allow a private member's bill to change our tax code specifically. The tax code is a very complex document. I know that there have been calls, many times over the last few decades, to relook at our tax code from square one, i.e., put everything aside and start to build a new one because of how complex the tax code is with the various different layers and parts that are inserted into it. I am concerned about what the implications of this might be as it indirectly or directly relates to the tax code. I know it sounds very straightforward, but as we have seen in other times, whether it be through government legislation, in particular, or private member's motions like this, changing the tax code could have other consequences that we are not looking at in advance when we are trying to study this as a whole.
Those are the concerns that I have. I certainly, as I indicated previously, will continue to listen to the debate. I want to hear more as this comes forward in the second hour for the next reading of this and then hopefully inform myself to the point that I can make a good, wise decision and cast my vote in this place.