Please see the following from Bob Jackson,
In conjunction with the Canadian Labour Congress, PSAC is calling on members to contact their Member of Parliament concerning Bill C-377. In its current form, Bill C-377 would be the most costly and discriminatory Bill faced by the labour movement across Canada in memory.
We ask that all members contact their local Member of Parliament – especially if the local MP is a Conservative – and voice opposition to the Bill C-377. For more information see below.
Bill C-377 is a Private Member’s Bill sponsored by MP Russ Hiebert. The Bill will require every labour organization (PSAC Local, District Labour Council, etc.) and every labour trust (pension plan, benevolent fund, training fund, and health and welfare fund) to file a public information return with the Canada Revenue Agency (CRA).
The Bill would require all unions and each of their locals, area councils, etc. to disclose detailed financial information, salaries, supplier contracts, loans, accounts receivables, investments, and spending on organizing, collective bargaining, education and training, lobbying and all political activities.
The requirements are so detailed and so broad that the Canadian Labour Congress estimates that it will take the average local union 200-400 hours annually to prepare the returns at significant cost to local unions’ treasuries.
This Bill singles out labour organizations only – the Bill does not apply any other dues deducting professional organizations.
The Bill is being supported by such anti-union groups as the Fraser Institute, the Merit Shop Contractors and the Canadian Federation of Independent Business because they want access to this information to utilize when combatting organizing drives.
Attached are the CLC talking points on Bill C-377, a summary of Bill C-377, and the Bill itself, to assist you with contacting your MP.
If you would like assistance contacting your MP or more information, contact your PSAC Regional Office.
In solidarity,
Bob Jackson
Executive VP for British Columbia
Public Service Alliance of Canada
Bill C-377: Costly and Discriminatory
Discussion points for use in interviews, letters, briefs, etc.
1. This is a Bill trying to solve a problem that doesn’t exist.
• Labour organizations are an example of organizations providing
transparency to their members.
• Union financial statements are already open to all members. Unions do
this kind of reporting to their members because they are open and
democratic organizations.
• On top of that, the vast majority of provincial labour codes require
unions to do this.
• A number of unions already distribute financial reports to their
members on an annual basis.
2. This Bill will be very costly for the government to administer, and it will
therefore cost taxpayers a lot of money.
• There are 25,000 union organizations, and internal divisions of union
organizations in Canada that will have to file incredibly detailed reports
under this Bill. All those reports will have to be processed.
• There will be a huge cost to government to develop all of the regulations
needed to enact the legislation, to develop and prepare all of the forms
and instruction booklets required, to develop the software programs to
file, receive and process the information, and to develop an online
searchable database. A conservative estimate is that this will generate
additional costs in the hundreds of millions of dollars.
• The government will need to employ many full-time staff: auditors,
accountants, lawyers and administrative workers to process those
reports. In comparison, there are currently about 100 employees at
Canada Revenue Agency (CRA) processing and auditing charities which
have disclosure requirements not even close to the detailed reporting
requirements that are proposed in this Bill.
• The Bill would serve no useful purpose and will only cause needless
busy work for unions – but will benefit employers.
• Russ Hiebert, the MP behind this Bill said: “Public disclosure will help
the public better understand how the benefits that are provided are
being utilized.” But he also said in an interview that he had not received
a single call or complaint from any member of a union or the general
public saying they wanted the information and were unable to obtain it.
• This Bill would allow employers and anti-union groups to get extremely
detailed information about everything a union spends money on, and
how strong the union they are bargaining with is. This information
which will be provided to these groups, at taxpayers’ and union
expense, can be used to threaten collective bargaining rights and
organizing drives.
• In the United States, a similar data base is a gold mine of information
for anti-union employers.
• The strongest supporters of this Bill in Canada are the Merit Shop
Contractors and other open shop contractors (many of these contractors
are resisting union efforts to use properly trained and qualified
tradespeople), the Canadian Federation of Independent Business, and
the Fraser Institute.
• Russ Hiebert stood in the Parliament and made statements that are
completely false and designed to mislead people.
• Hansard, the official record of debates in Parliament reports that he
stated, “unions already file detailed financial returns with CRA,
providing much of this information”. That statement is simply untrue.
• He also said, “filing would not impose any additional outside expense on
labour organizations”. Again, this is not true. The United States Office of
Management and Budget estimates that in the US, completing the forms
under their legislation, which requires less information that Bill C-377
requires over 550 hours of work each year – the equivalent of one
person working for three months to complete the task.
• And the Canadian legislation would apply to all national, international,
and regional unions, components and local unions along with
Federations of Labour and Labour Councils – approximately 25,000
organizations.
• Most of the local unions and many smaller national unions, which
depend on volunteers to carry out their work, simply do not have the
resources to do this themselves and if required, to hire professional staff
from outside, may need to reduce expenditures in other areas to off set
the increased cost of compliance.
• Hard working women and men pay into their labour organizations to
protect and advance their rights in the workplace and in society. The
time and money allocated to do those reports will be money not spent by
labour organizations to defend their members.
• The proposed Bill is an intrusion into the internal affairs of unions to
provide information to employers and anti-union groups while
penalizing unions with significantly increased costs.
• The Bill’s discriminatory treatment of unions reveals a hidden agenda.
• This legislation does not apply to other organizations that also charge
dues that are tax deductible by the members such as professional
organizations like the Law Societies and the Canadian Medical
Association.
• The fact that the proposed legislation only targets unions reveals a
hidden agenda where taxpayers bear the cost of collecting and making
detailed information available to big businesses who don’t want their
employees to exercise their right to join a union.
3. Privacy rights would be violated.
• This Bill violates the privacy rights of many individuals, companies, and
organizations. It requires that all transactions and all disbursements
over $5,000 be shown along with the name and address of the payer
and the payee, the purpose and description of the transaction and the
specific amount.
• This means every business or professional that does work for a union
will have all of the information about what they are charging and what
their contracts are, disclosed to the public, and therefore to their
competitors. The effect would be bad for businesses that have contracts
with union offices. Businesses like photocopier suppliers,
telecommunications companies, and office supply companies would
have their negotiated contracts publicly available for their competitors
to see.
• The Bill would also require labour organizations to disclose specific
details of any invoice from a legal firm over $5,000. This is a gross
violation of solicitor client privilege. No one should be required to
disclose to the government and the public, the details of their
relationship with their legal counsel.
• Trusteed pension and health plans will have to disclose the details of all
pension and health related expenditures over $5,000 which again
violates individual privacy rights.
• The requirement that there be a report of all disbursements to
employees means that everyone from the receptionist who answers the
phone at a union office to the president will have their names, salaries
and benefits disclosed to the public. Yet the Prime Minister’s Office says
it cannot disclose the salaries of people working there because it would
be an invasion of privacy. Sounds like a double standard.
4. The hidden agenda – interference in labour relations.
• This Bill, is not at all about taxes, so doesn’t belong in the Income Tax
Act. It is clearly interference in the labour laws of this country, most of
which are in provincial jurisdiction. It is an overt interference in the
labour relations process designed to give significant advantages to
employers, at taxpayers’ expense.
CLC Summary of Bill C-317
Introduction
Bill C-317 – An Act to amend the Income Tax Act (Labour Organizations) was
introduced as a Private Members Bill (PMB) on October 2, 2011 in the House of
Commons. The Bill requires that the Income Tax Act be changed to make it
mandatory for all labour organizations to make detailed annual financial filings
covering salaries, revenues, and expenses. The information would be posted, on the
Canada Revenue Agency (CRA) website, for anyone to read.
The framers of the Bill argue that workers get hundreds of millions of dollars in tax
benefits through union and professional dues deductions. They point out that
charities have to disclose how they spent their money on the CRA website because
people get a tax benefit when they contribute to a charity. They argue that any
organization that enjoys a tax exemption should be fully transparent so that
taxpayers may assess the propriety of their actions and determine whether the tax
exemption is being used for the intended purposes.
While the intent of the Bill seems simple enough, when you dig into the details, the
Bill is onerous and labour intensive in its reporting requirements on unions, unfair
in its segregation of labour organizations under the Income Tax Act, and completely
discriminatory in its disclosure requirements. There seems little or no connection to
the Bills filing and disclosure requirements over the internal affairs and
expenditures of trade unions and the tax deduction and exemption rules under the
federal tax authority.
The real crux of the Bill is political activity of labour organizations. Charities may
engage in political activities that are ancillary or incidental to their charitable
purposes, provided the charity devotes “substantially all” (generally 90% or more) of
its resources to charitable activities or purposes. In no case, may the charity directly
or indirectly support or oppose a particular candidate or Party. CRA monitors
political activities of charities, in part, through the annual filings of the charity.
By contrast, the Lavigne Supreme Court decision (1991) affirms the rights of unions
to engage in political activity without the restrictions that a charity is subject to.
This allows us to question the necessity of disclosing information on political activity
and lobbying to the tax authority, when the activity itself continues to be perfectly
lawful and does not affect a labour organization’s tax status.
Who is included? ─ Everyone!
Under the definitions of the Bill C-317, the Act defines a “labour organization” as
follows:
“labour organization” includes a labour society and any
organization formed for the purposes which include the
regulation of relations between employers and employees
and includes a duly organized group or federation, congress,
labour council, joint council, conference, general committee,
or joint board of such organizations.”
The definition of labour organization is quite broadly framed. Umbrella organizations
that do not directly participate in negotiation and administration of collective
agreements may still be subject to the disclosure provisions of Bill C-317.
“Labour Trusts” have the same requirements under the Bill but there is no mention
of union controlled non-profit corporations. If a non-profit corporation, for example,
is considered excluded from the labour organization exemption and is structured to
provide benefits to union members, it could be considered a taxable entity. This all
depends on how CRA chooses to interpret the information obtained in their review of
the public information returns.
What do we have to disclose?
Section 149.01 – Subsection 3 requires disclosure of financial statement to include:
• Individual transactions above $5,000 identifying the payee, payer, the purpose
and description of the the transaction with such transactions segregated
based on accounts receivable, loans, asset sales, investments, accounts
payable, and loans payable.
• Disbursements to officers, directors, and trustees must be identified in similar
fashion to executive compensation disclosure in public companies, with the
added disclosure of percentage of time dedicated to political and
lobbying activities.
• Sub-statements disclosing disbursements to employees and contractors again
with political and lobbying activities segregated and reported.
• Disbursements respecting labour relations activities, political activities,
contributions, gifts and grants, administration, general overhead, organizing
activities, collective bargaining activities, conferences and convention
activities, education and training, legal, and categories yet to be prescribed.
• International unions must disclose amounts allocated to the Canadian union
or Trust and the expenditure of the labour organization or Trust both inside
and outside Canada.
The drafters of this legislation are also seeking to find the proportion of salary paid
to officers and employees and contrast the amount of resources dedicated to
labour relations activities with political and lobbying activities.
Comparison with Charities
A Canadian charity can operate in only one of two ways: either it devotes its
resources to carrying out its own charitable activities or it makes grants to qualified
donees.
In contrast, the policies applied to labour organizations where it has been long
recognized and accepted, that the only restriction on a labour organization’s
activities in order for the tax exemption to apply, is that any commercial activities it
engages in, are not the organization’s dominant purposes and that any commercial
proceeds are generally used for labour organization activities.
In contrast to charities, the Supreme Court of Canada in the Lavigne case,
specifically recognized the importance and legitimacy of trade unions engaging in
political and advocacy activities, as integrally related to collective bargaining and the
broader aims of their members.
Furthermore, unlike a trade union’s activities, where decisions about which
activities to engage in are part of the democratic decisions of the membership, the
charity system is essentially a closed system.
Disclosure
Contrary to the general policy of the Income Tax Act that disclosure of taxation
information is treated as confidential, this Bill would make all information openly
accessible to the public and open to public scrutiny.
Under Bill C-317, the level of disclosure for labour organizations is far more onerous
than for regular charities.
Bill C-317 requires labour organizations to make reports available to the public,
through the minister, while charities have to make individualized reports, but they
are not made available to the public.
There is a solid rationale for high level disclosure of governance and financial
information for charities. Since charities publicly solicit donations in an open forum
for the purpose of applying the donations to further charitable objects, small
safeguards should be in place to ensure that the objectives communicated to
potential donors are adhered to and that the money donated is dedicated to the
purposes. This rationale does not extend to trade unions.
Labour organizations operate for the benefit of its members. The governance and
transparency of the organization should be a matter of concern to the membership,
not the general public. The nature of Bill C-317 would seem to go more to the
regulation of labour organizations, a matter unrelated to fiscal enforcement or
taxation. There simply does not appear to be an income tax enforcement basis
for the disclosure entailed in Bill C-317.
In comparison to public and private corporations, there is nothing in the Income Tax
Act that requires or leads to public disclosure of financial transactions or
governance information for public and private corporations, including those that
bargain with trade unions. There is nothing that singles out expenditures over
$5,000 or various components of those expenditures or details of salary, political or
lobbying expenditures for mandatory reporting by corporations, nor is there any
required public disclosures.
Finally, there is no intention to change the existing assessment rules regarding tax
exempt status and deductibility of dues, the sheer level of detail sought is not tied to
assessment at all, leading one to question whether Bill C-317, as drafted, can be
challenged as being outside of purposes of the Act and beyond federal taxation for
requesting labour organizations filings appears to be to obtain information on who is
engaging in and how much money is spent on lobbying and political activities.
The right-wing think tank, Canadian Centre for Policy Studies claims that the
“proposed changes go a long way toward restoring the right of workers to control
how their dues are spent, but its only a first step. In the long run, this information
will only matter if workers are allowed to opt-out of paying for non-bargaining
activities with which they disagree.”
Click on the link below to read the bill
http://www.parl.gc.ca/content/hoc/Bills/411/Private/C-377/C-377_1/C-377_1.PDF
