A private members’ bill that seeks to extend more generous tax credits to charitable donations would cost the government an extra $1.7 billion this fiscal year, a new report has found.
And the cost would only go up from there.
The Parliamentary Budget Officer released the results of its cost assessment on the proposed changes on Tuesday morning, finding that extending the same tax credits that exist for political donations to charitable ones would set federal coffers back significantly.
Under the current rules, Canadians get a 15 per cent tax credit for donations of less than $200, while those who clear that threshold get 29 per cent of their donation back.
But when it comes to political contributions, things get far more generous.
Political donations up to the first $400 receive a 75 per cent tax credit
The subsequent $350 entitles the donor to a tax credit of 50 per cent
All amounts above $750 receive a tax credit of just over 33 per cent
Conservative MP Ted Falk has argued the disparity is unfair and puts charities at a disadvantage. He tabled the private members’ bill in February to close the gap, saying it would encourage more Canadians to give to charity.
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The Parliamentary Budget Officer, which is responsible for providing non-partisan financial advice to Parliament, concluded that Falk’s bill will bump the cost of Ottawa’a annual charitable tax credits from $2.5 billion to $4.2 billion in 2016, an increase of 68 per cent.
The additional cost is the result of two factors, the report explains. The first is the primary cost of giving Canadians more of their money back. The second is the fact that, as Falk predicted, more people will give if the incentives improve, meaning the government will have to reimburse more people for more money.
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The additional cost would therefore continue to rise each year, the PBO concludes, reaching $1.9 billion in 2020.
That could pose a problem for Falk’s bill, because private members’ bills cannot impose a cost on the treasury without the support of a minister.
The bill has not yet reached its second reading in the House of Commons.
Meanwhile, Prime Minister Justin Trudeau tweeted out a reminder on Monday that today, May 31, is the last day to take advantage of the government’s donation-matching promise for the Fort McMurray wildfires.