Tough talk on tax breaks misses the pointThursday, September 4th, 2014 | Ian Bird
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National Post columnist Andrew Coyne recently suggested ‘a very simple solution’ to the challenges facing the Canada Revenue Agency and charities around the issue of political activity: take away the charitable tax designation.
The assertion misses the point of tax incentives in the first place. Incentives are all about the outcomes – not the inputs. With incentives governments respond to what we value or what we want to achieve as a society, openly recognizing that the public sector cannot do it all.
Why does the federal government incent saving through RRSPs? Because it recognizes that the public sector alone cannot carry the needs of retired Canadians, so it incents them to save. The outcome: a more sustainable senior demographic.
Why did the federal government introduce tax credits for sport participation? Because it saw obesity rates rising to epidemic proportions and wants us to get more active. The tax credit encourages families to enroll their kids in sports and attempts to lessen the financial barriers. The outcome: hopefully a more active cohort of families and young people that see physical activity as a core part of their lives.
The question that demands to be asked is why does government incent Canadians to give to charities and what’s the outcome of that incentive?
Canadians are incented to give to charities because government recognizes they play a critical role on the front lines of our communities – a role that is not filled by the public or private sectors.
On outcomes, the data is endless. Pick your favourite charity and imagine your community without it – what outcomes would disappear? How many people would go without food assistance or shelter for the night? Who would pick up that work? Could the market or the state respond in turn?
That’s where the conversation really starts.