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Imagine Canada

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House Finance Committee releases pre-budget report

Thursday, December 11, 2014

On December 10, the House of Commons Standing Committee on Finance released its pre-budget report entitled: Towards Prosperity: Federal Budget Priorities for People, Businesses and Communities.

The Committee’s report is based on recommendations received from written submissions made in the summer by more than 400 individuals and organizations; testimony from invited witnesses (including Imagine Canada); and detailed written briefs submitted by witnesses. This year’s pre-budget process involved a wide array of charities and nonprofits from across the country.

The report contains 47 recommendations in the six areas identified by the Committee as priority themes for this year’s consultation. These recommendations are submitted to the Minister of Finance as he prepares the 2015 federal budget. The report also includes supplementary opinions submitted by the NDP and Liberal Party members of the Committee.

Recommendation about the Stretch Tax Credit

The key recommendation of cross-cutting interest to charity leaders across the country who have been advocating for the inclusion of the Stretch Tax Credit for Charitable Giving in Budget 2015 is the following:

  • That the federal government continue building on successful initiatives that encourage charitable giving. In this regard, the government should explore measures that would prompt higher levels of charitable donations, such as a stretch tax credit. (Recommendation #17)

While the Committee’s pre-budget recommendation does not include an unqualified commitment to implementing the Stretch Tax Credit in the next budget, it is worth noting that most, if not all, of the recommendations in the report are qualified somewhat, no doubt due, in part, to the growing commodity price volatility. So although inclusion of a measure in the Finance Committee report by no means guarantees inclusion in the budget, this recommendation is nonetheless an encouraging sign that the Stretch is being seriously considered. Charities can leverage this endorsement as they continue to advocate for the inclusion of the Stretch in Budget 2015.

Economic context

The report places the Committee’s efforts in a broader economic context, noting the federal government’s commitment to balance the federal budget by 2015-16, with a currently anticipated surplus of $1.9 billion in 2015-16. With the volatility of the domestic and global economy as its backdrop, the Committee made a number of recommendations regarding federal spending in general, including the following:

  • that the  federal government introduce balanced budget legislation to ensure future fiscal and spending restraint;
  • that, recognizing the fragile global economic situation that includes commodity price volatility, the federal government maintain its commitment to fiscal sustainability; and
  • that the federal government continue to scrutinize and review the spending of taxpayers’ dollars in order to eliminate waste and inefficiencies.

Other Items of broad interest to charities

Credit card fees

The report acknowledges Imagine Canada’s recommendation to reduce credit card transaction fees. However, no formal recommendation is included in the report given the recently announced voluntary reduction in these fees. Read about Imagine Canada’s involvement on this issue.

Small Business Job Credit

In their dissenting reports, the opposition parties took issue with the Small Business Job Credit, which despite its name, also benefits charities as employers. The main concern expressed by the opposition is that this credit was recently announced without the government having conducted its own internal analysis of its economic impact, relying instead on research done externally.  The Liberal party recommended in its dissenting report “that the federal government replace the Small Business Job Credit with an EI holiday for employers who create new jobs”.

Labour market and employment

The report included three main recommendations of interest to charities regarding employment opportunities:

  • that the federal government continue to identify ways in which to increase the labour market and economic participation of vulnerable Canadians, including youth, new Canadians, Aboriginal Canadians and persons with a disability, and continue to promote gender equality;
  • that, in relation to Canada’s youth, the federal government build on its strong record of assisting them with job and skills training, connecting them with employment, and creating internship and work experience opportunities for them. As well, the government should act on the recommendations in the report on youth employment in Canada by the House of Commons Standing Committee on Finance; and
  • that the federal government support youth business mentorship and consider new incentives to invest in young entrepreneurs.

In their dissenting reports, the NDP and Liberal Party also emphasized employment opportunities, including a focus on addressing unpaid internships.

Long-form census

The NDP recommended that “the Government should reinstate the long-form census and reverse its devastating cuts to Statistics Canada”. This is the only recommendation in the report that would seek to improve data collection to inform public policy decision-making.

Political activities

While the report contains no recommendation regarding charities’ political activities, one witness, Gareth Kirkby, testified that “the Canada Revenue Agency is auditing charities that have public policy preferences that differ from those of the government.” The report goes on to explain that Mr. Kirkby “called for abolition of the Agency’s political activities audit program, encouraged greater clarity in the Income Tax Regulations definitions that pertain to charities, and proposed that the Canada Revenue Agency provide charities with the criteria it uses to evaluate charitable activities.”

Disbursement quota

One witness “in highlighting the large amount of money that is being held by private foundations rather than used for charitable purposes…supported an increase in the annual disbursement rate by such foundations from 3.5% to 8%.” However, the report makes no formal recommendation in this regard.

Sub-sector issues

There are a number of references throughout the text to charities and nonprofits which contributed their views on a wide array of issues including health, education, international development, the environment, arts, culture and sports, among other areas. The full list of recommendations made as a result of these interventions is available in the report.

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