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Income Tax Act

Mr. Speaker, I rise today to speak in support of Bill C-377, An Act to Amend the Income Tax Act – Labour Organizations.

Honourable Senators, 4.3 million Canadians currently hold union memberships. Millions more have held union cards at some point in their working careers.  Labour organizations play a valuable role in Canadian society, representing and defending the rights of workers. The important contributions made by such organizations, and the valuable role that unions play in the lives of many Canadians has not gone unrecognized. 

Our nation’s federal tax system provides benefits to support the work that unions do.  Key among these benefits is a100% tax deduction workers receive for the union dues they pay. In addition, labour organizations receive tax-exempt status.  Such accommodations in the tax system represent considerable benefit to the public. 

Each year, the federal government forgoes $795 million in tax revenue for union and professional dues.  The majority of this – a $400 to $500 million tax exemption -- is claimed by union membership.  Honourable senators, these figures are significant.  It’s equally significant to note that unions, as tax-exempt organizations should be accountable to their membership, given the extent of benefit they and their members receive through the tax system. 

Honourable senators, transparency is one of our government’s watchwords.  We require it of our public institutions, federal departments, crown corporations and agencies.  To this end, early in our mandate, the Federal Accountability Act streamlined and simplified accountability and transparency throughout government.  Its provisions also made federal Crown Corporations more open and transparent by ensuring their applicability to these institutions.  The bill’s requirements for public disclosure by labour organizations have been based on the long-standing provisions in the Income Tax Act with which charities must comply.  This private members bill deals specifically with labour organizations that have never been subject to public disclosure before now.

Also the beneficiaries of tax-exemptions, Canadian charities have complied with similar requirements such as those prescribed in this legislation, for over thirty-five years.  The charitable sector is robust in its efforts to work with the Canada Revenue Agency towards demonstrating transparency.  The Canada Revenue Agency's Charity Quick View is a summary of key information from a charity’s Registered Charity Information Return, readily available on the CRA website.  Imagine Canada, a national charitable organization whose cause is Canada's charities, also worked with the Canada Revenue Agency to provide Charity Focus, an in-depth year-to-year comparison of a charity’s financial information.

Political financing in Canada has also seen significant effort applied to increasing transparency.  Indeed, Prime Minister Paul Martin’s government introduced limits on contributions in 2004. Our government made further changes in 2007.  Together these efforts ensured that the principles of transparency and fairness apply to all participants in the electoral process.  This information is all readily available on the Elections Canada website.

Simply put, because there is substantial public benefit, it is most appropriate that Canadian workers can see how their union dues are being spent.  Honourable senators, this bill is an amendment to the Income Tax Act.  Its provisions will require the public disclosure of the finances of labour organizations.

As I have pointed out, the notion of increasing accountability for public funds is not new.  In addition to improvements in the bureaucracy and the political domain, efforts are also being undertaken by our government to enhance transparency for Canada’s First Nations communities.  There is legislation currently under study in this place by the Standing Senate Committee on Aboriginal Peoples that seeks to increase accountability measures on First Nations reserves. 

Honourable senators, with significant accommodation comes the need for equally significant responsibility.  Labour organizations much less frequently now find themselves having to fund financial compensation for members due to strikes or lockouts, as they did decades ago.  Thus, they have greater resources at their disposal.

As the figures I have quoted today illustrate, with significant revenue to devote to various causes, rank and file membership and Canadians have a right to know where tax-exempt union monies are invested, applied and utilized.  Again, this notion of greater transparency and accountability is not new.  Many other G8 countries such as France, Great Britain, the United States and Australia require similar disclosure.  They have lived with the requirement for financial transparency for a long while without issue or cause.

Honourable senators, Canada once required unions with more than 100 members to provide returns to Statistics Canada under the Corporations and Labour Unions Returns Act.  However, the Chretien government abolished this requirement in 1998.  The Americans have had a statute outlining a number of obligations and requirements for labour union reporting called the Labour-Management Reporting and Disclosure Act of 1959.  As honourable seantors can see, this is one of few areas where Canada is not leading the charge.  We’re playing catch-up.  With the passage of this bill, both union membership and the Canadian public will be empowered to gauge the financial integrity and health of any labour organization. We remain confident that nothing of note will be found to be amiss.  Let us be clear, honourable senators.  This is something Canadians want.  According to a Nanos poll taken for Labour Day 2011, 83% of Canadians and even more union members – 86% - want public financial disclosure by unions.

Honourable Senators, Bill C-377 simply proposes that the statements of income and expenditures for labour organizations be electronically submitted annually to the Revenue Minister.  Among the funded activities captured in the reporting will  be organizing, collective bargaining, education and training, and conferences, in addition to political activities and lobbying.  The statements would also require reporting of disbursements of over $100,000 to directors and staff. It would not require reporting from registered pension plans, health benefit plans or other regulated plans; and it would not require unions to conduct an audit.  This level of detailed public disclosure will increase the confidence of Canadians that the public tax subsidy for labour organizations is warranted, and its reporting deemed useful.

I wish to be clear about the bill and its provisions.  The proposed legislation does not prescribe to unions as to how to spend their resources, nor does it restrict them in any way.  The bill does not place a substantial burden or undue expense on unions.  It is recognized that unions are engaged in responsible accounting of their finances and that many unions are also already publicly reporting this financial information to members and others.  As well, unions are filing much of this information with the Canada Revenue Agency through their tax returns.  Again, only salaries in excess of $100,000 will require disclosure.

Honourable senators, while it is recognized that this piece of proposed legislation is a Private Member’s Bill, our government supports and affirms that organizations receiving public benefit should be accountable and transparent in disclosing how they use such benefit.  This is not a matter of ideology.  Nor is it reflective of any agenda other than that of responsible conduct by an enterprise that receives public accommodation.  Rather, it is an affirmation of a commitment to open, transparent and responsible stewardship of public funds.

Honourable senators, transparency, increased accountability and proactive, open communication are the touchstones of a progressive society, of robust commercial enterprise and certainly of good government.  I look forward to the debate on this proposed legisl ion and I ask that you carefully consider its provisions in the days to come.