Private Members’ Business / Financial Limitation

Business of ways and means: motion required for bill seeking an increase in taxation

November 28, 2007

Debates, pp. 1463-4

On March 27, 2007, Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration), standing in the name of Chris Charlton (Hamilton Mountain) was introduced in the House. Ms. Charlton stated that the Bill would no longer allow companies to write off as a business expense more than one million dollars per year in respect of remuneration paid to an employee or officer of the corporation in that year.^[1]

On November 28, 2007, the Speaker, exercising his duty under Standing Order 94 to “make all arrangements necessary to ensure the orderly conduct of Private Members’ Business”, ruled on the procedural admissibility of Bill C-418. Since the Bill would increase the tax payable by certain corporations, the Speaker stated that it must be preceded by a ways and means motion. Noting that this difficulty ought to have been detected earlier, he informed the House that he had asked legislative drafters and procedural staff to provide early advice to Members to avoid similar problems in the future. In the absence of a ways and means motion, he directed that the Order for second reading of the Bill be discharged and the Bill withdrawn from the Order Paper.

Decision of the Chair

The Speaker: Before we proceed to Orders of the Day, I wish to give a ruling on a matter before the House.

Members will recall that on October 16, 2007, the Chair made a statement reminding Members that our Standing Orders provide for the continuance of Private Members’ Business from session to session within a Parliament.

In discharging its usual responsibilities regarding the orderly conduct of Private Members’ Business, the Chair reviewed all Private Members’ Business items eligible to continue from the First Session into this new one. I need to bring to the attention of the House an issue that was noted with regard to Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration), standing in the name of the hon. Member for Hamilton Mountain.

Bill C-418 proposes to amend the Income Tax Act to provide that a corporation may not deduct as a business expense more than $1 million per year in respect of remuneration paid to an employee or officer of the corporation in that year. If adopted, this measure would therefore have the effect of increasing the tax payable by certain corporations. In essence, this constitutes a reduction of an alleviation of taxation. In other words, the Bill deals with an issue of ways and means.

As indicated at page 748 of House of Commons Procedure and Practice, there are two types of ways and means proceedings. The budgetary policy of the Government is the first of these. The second type refers to “the consideration of legislation (bills based on ways and means motions already approved by the House) which imposes a tax or other charge on the taxpayer”.

Furthermore, at page 896 of Erskine May’s Parliamentary Practice, 23rd edition, it states that “the repeal or reduction of existing alleviations of taxation” must be preceded by a ways and means motion.

In my view, Bill C-418 imposes a charge on the taxpayer, but it was not preceded by a ways and means motion, which, as hon. Members know, can only be proposed by a Minister of the Crown. I realize that this is a difficulty that ought to have been noticed earlier. In fact, it should have been noted when the Member for Hamilton Mountain introduced the Bill.

Accordingly, I have asked legislative drafters and procedural staff, working together, to provide early advice to Members on their legislative initiatives so that Members have ample opportunity to make the necessary adjustments to ensure their draft legislation does not offend House rules.

In conclusion, for the reasons stated above, proceedings on the Bill to date, namely, introduction and first reading, have not respected the provisions of our Standing Orders and are therefore null and void. Accordingly, the Chair must now direct that the Order for second reading of the Bill be discharged and the Bill withdrawn from the Order Paper.

I thank hon. Members for their attention.