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Will Union Information Disclosure Law Apply to the Kiwanis Club?

August 25, 2015

Is life about to get a whole lot more complicated for the Kiwanis Club and the Royal Canadian Legion?   These “clubs” are the latest micro-group to be offered up goodies by Stephen Harper’s Conservatives during this election period.   Harper announced on Sunday that, if re-elected, his government would amend the tax code to permit club members to claim up to 29% of membership costs as a charitable tax credit. 

The new law would grant the service clubs a subsidy from taxpayers at a cost to the public purse of $30 million a year. Lots of organizations already receive public funding in the form of tax benefits, including corporations, churches, professional associations, charities, and unions.  In exchange for this public funding, the Income Tax Act imposes various public reporting obligations.

However, how much an organization is required to disclose varies widely and is, increasingly, a function of

If Tories Extend Tax Benefits to Social Clubs Like Kiwanis, Would Disclosure Law Applied to Unions Also be Extended?

If Tories Extend Tax Benefits to Social Clubs Like Kiwanis, Would Disclosure Law Applied to Unions Also be Extended?

government ideology.  Corporations, which likely receive the most public funding in terms of taxable deductions, special loopholes, and public grants, are required to disclose to the public very little.  As a taxpayer, I cannot look at a website to learn how much I am subsidizing a corporation’s retreat at a five star Caribbean resort, or its executives’ first class travel, or the corporate box at Maple Leafs’ games.  Nor is there any way for me to learn how much time corporate employees spend lobbying governments or engaging in politically-related activities.

Likewise, the public reporting obligations for charities, religious organizations, and professional associations are minimal.  For example, charities must publish their financial statements, but the information contained in these forms is vague, similar in form and content to a bland income statement.  I went through the Fraser Institute’s charitable return in an exchange I had with Senator Eaton on this blog.

However, one type of association is singled out for special treatment by the current Conservative government:  unions.   Under a recently enacted law (Bill C-377), only unions are required to produce and publicly disclose some 20 detailed statements that list, in addition to the usual financial statements required of charities,  a list of all payments of $5000 or more with the name of the “payer and payee and setting out for each of those transactions and disbursements its purpose and description” and a long list of other details, as well as a list of the “percentage of time dedicated” by union employees “to political activities, lobbying activities and other non-labour relations activities”. The list of detailed information that must be compiled and publicly disclosed by unions runs on for some two statutory pages.

Bill C-377 took a long time to receive Royal Assent. The fact that the Bill was so obviously a partisan attack on a Conservative political foe, and that it would divert resources and millions of taxpayer dollars away from enforcement and collection of unpaid taxes to police reams of mostly useless information about how much unions spend on office supplies and rent, led to an unusual Senate rebellion that stopped the Bill in its tracks.  However, unrelenting, the Conservatives pushed forward with the law despite wide spread concerns by opposition politicians, provinces, and professional law associations, and it finally passed on the eve of the election call.

The government’s justification for the union disclosure law was that since unions receive “public funding”, in the form of tax-related benefits, they must account to the public for how they spend their money and their time.

Tories Enacted Special Reporting Rule for Unions Only on Eve of Election

Tories Enacted Special Reporting Rule for Unions Only on Eve of Election

Applying this logic, the Kiwanis and Royal Legions would be subject to the extensive reporting requirements in Bill C-377 once the new tax subsidy kicks in.  Since these organizations would be receiving public funding in the form of tax subsidies, like unions, the logic of the reporting law would apply equally to both types of associations.

Of course, if the Conservatives actually believed that all organizations that receive taxpayer benefits should fully account to the public, then there would already be one set of public reporting obligations applicable to unions, businesses, professional associations, charities—and “social clubs” like the Kiwanis if the new law is enacted.  All receive public funding and tax subsidies of some sort.  As a taxpayer, I subsidize all of them.  If I am entitled to know how one type of organization spends “my” taxpayer money, then I am equally entitled to know how they all do.  To help the government ensure equality of treatment of all organizations that receive taxpayer benefits in the form of tax subsidies and credits, I redrafted Bill C-377 some time ago to extend its reporting obligations to businesses, professional associations, and charities. If it would help, I could just add in “social clubs”.

Yet, does anyone believe that the Conservatives would require the Kiwanis to annually prepare some 20 detailed statements accounting for the expenses and how they spend their time, under the threat of a $1000 per day fine for any errors made?  It’s laughable to imagine a Conservative government extending the reporting obligations imposed on unions to businesses, the Kiwanis, or even charities. Bill C-377 is the nanny state on steroids, intended to drown unions in paper work.  I bet the Kiwanis would decline the new tax benefit if it came attached to Bill C-377 reporting obligations.

The fact that we just chuckle at the idea of the Conservatives extending the reporting obligations it imposed on unions to other organizations that similarly receive tax subsidies demonstrates the extreme partisan nature of Bill C-377.   The Bill was always about making life difficult for one type of organization that tends not to support the Conservatives.  It was never about so-called “public accountability” by publicly subsidized organizations. The Kiwanis (and businesses, professional associations, and charities) are probably safe and will not be required to comply with the extensive Bill C-377 reporting requirements imposed on unions.  That is, unless they make the mistake of speaking out against Conservative policies.


One Response to Will Union Information Disclosure Law Apply to the Kiwanis Club?

  1. Jerzy Reply

    September 2, 2015 at 3:50 am

    Conceptually, I don’t see the ability to claim some portion of your taxes as the State granting you a “subsidy.” What claiming means, in essence, is that your tax rate is smaller. Yes, in our politicians’ Orwellian double-speak, a tax break is characterized as the State giving you something. But in plain no non-sense language you are just paying less taxes. Nobody is giving you anything. You are just surrendering less of what is already yours. A subsidy would be the State actually giving you funds. It is when the government taxes somebody else and gives you the proceeds. Anyways, more to the point I want to highlight the not so tacit deal of Bill C-377

    With Bill C-377, the State is saying that it agrees to charge you less taxes on the condition that you reveal how you spend your money. Okay then. Here’s an idea for the Unions. Don’t take the deal. Instead, lobby for a law that allows you to pay taxes on membership dues and you’ll get that government monkey off your back. The additional upside is that Unions generally support big government and big social spending. Paying more taxes will add ammunition to government coffers so that our politicians can spend even more money on Canadian-State agendas. Hooray! Sure, the Unions would cringe at giving the Conservatives more tax revenue. But look at the big picture. Conservative won’t always be in power. They’re due for an election loss. Who knows how our potential new Prime Tax Revenue Spenders (Molcair or Trudeau) will fair in the upcoming election. And even the nasty Conservatives engage in social spending and subsidizing unionized businesses to “save/create” jobs.

    If you are going to accept favours from the government, be prepared for an unpredictable ride. These elected people make the laws. They can and will change those laws as best suits the political agenda of the day. Your best protection is to not owe them anything due to some tax favour or subsidy. Be an independent organization unburdened by government “favours.” Unions are recognized and sometimes well branded organizations in the Canadian, and to some extent, international society. Fundraising, crowdsourcing, and other creative opportunities for increasing Union goal-oriented revenues exist – which can make up for lost revenues due to paying more taxes.

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