A
very important bill (C-377) to unions across Canada is being debated in the
Senate this week. This is the last chance to have the bill voted down, amended,
or delayed. There are many reasons against this piece of legislation as
outlined by Jim Stanford (CAW) in the 17 points below. Please take a moment to
write or call the Senators from Manitoba and urge them to vote against this
bill.
Contact
information for Manitoba Senators:
Janice
Johnson janis.johnson@sen.parl.gc.ca
Joanne
Buth joanne.buth@sen.parl.gc.ca
Maria Chaput maria.chaput@sen.parl.gc.ca
Rod
Zimmer rod.zimmer@sen.parl.gc.ca
Don Plett plettd@sen.parl.gc.ca
UFCW has also created a very
handy online page to make it easy to send a message to your Province’s Senators
and stop Bill C-377. You can choose your province, send the pre-written message
or amend it and send it.
A few additional points about Bill C-377 by Jim Stanford (CAW)
1. The level of reporting detail proposed in this legislation (requiring the disclosure of every expense over $5000) is unique, discriminatory, and burdensome. There is no other sector or institution in society (businesses, charities, governments) required to publicly disclose its financial affairs in such arbitrary detail.
2. This reporting will constitute a major administrative burden on unions. Every union organization, including the smallest local, would have to complete the returns.
3. It will also create a new administrative burden for government. Published estimates have suggested the cost of the new bureaucracy required to receive, compile, and distribute the masses of information received from national and local unions could exceed $30 million per year. The deadweight cost of this unique and burdensome system will reduce the effectiveness of unions, the collective bargaining process, and government, for no obvious public policy purpose.
4. The bill’s requirement that unions separately catalogue all expenses related to matters other than direct collective bargaining and workplace representation is unjustified. Unions participate in broader social and political causes and debates, with the goal to enhance the economic and social well-being of members and all working people. The legitimate right of unions to engage in these broader activities was affirmed clearly by the Supreme Court in the 1991 Lavigne case. Other stakeholders in the Canadian economy (including individual businesses, business associations, professional bodies, etc.) also engage in these types of activity, without associated disclosure requirements or sanctions.
6. It is important to note that unions bargain with many privately-owned corporations in Canada that are not required to publicly disclose any financial information whatsoever.
7. Publicly-traded corporations are required to disclose composite annual and quarterly financial reports, management discussion and analysis of those reports, and the compensation of the top 5 officers in the firm. However, that requirement is imposed not through the Canada Revenue Agency or our tax laws, but rather by securities regulators. The goal is to ensure that individual shareholders have sufficient information to inform their personal investment decisions.
8. The equivalent requirement for unions would be for labour boards or labour ministries (not the tax system) to require disclosure and accountability mechanisms, as a way of ensuring that unions operate according to the preferences of their members. If a genuine problem existed regarding financial disclosure by unions operating in the federal sphere, the matter should be referred to the Minister of Labour or to the CIRB for appropriate legislative or regulatory remedy. This is not an issue that should be addressed through the tax system.
9. In most jurisdictions in Canada, industrial relations regulations already require that unions make composite financial statements available to members who request it. (In the MGEU’s case, that requirement is redundant, since that is our union’s practice anyway.)
10. Indeed, there is no obvious or logical relationship between union financial accountability and the Canada Revenue Agency in the first place. Unions are not generally subsidized by government, and unions do not receive preferential tax treatment (compared to any other non-profit organization). Hence unions do not “owe” financial disclosure of their activities to government or to the broader population. They are and must remain accountable to their own members.
11. The fact that individual union members are allowed to deduct the cost of their dues from gross income in calculating their taxes owed is often misinterpreted as a tax subsidy for unions. It is no such thing. The deductibility of union dues for income tax purposes reflects the same tax principle that is applied to other categories of income and expense: “if you spend money to make money, then you pay tax on the difference.”
12. Union dues are clearly an economic investment on the part of union members. Collective voice and legal bargaining rights allow union members to negotiate higher wages and better pensions and benefits from their employers.
13. Union members therefore pay higher taxes, on average, than non-union workers. Indeed, the average full-time union member pays about $3000 more in personal income tax (federal and provincial) than the typical non-union worker. Far from being “subsidized,” union members pay more in tax than non-union members – and we recognize this is a fair contribution for the value of public services and infrastructure which our taxes pay for, given the higher incomes.
14. The extra taxes paid by union members are modestly and fairly adjusted for the dues which they pay to their organization, in order to allow them to successfully attain those higher wages and pensions. Of course, this principle also applies in all other areas of the tax code. For example, every supplier of safety deposit box services in Canada, presumably, or every investment fund manager, should be held to the same standard of financial transparency as would be imposed on unions under this bill – since their costs are also deducted, for tax purposes, against the income generated by the corresponding investments.
15. If the rationale of C-377 is that unions must disclose their financial affairs (in unique and disproportionate detail) because union members can deduct the cost of dues against the higher incomes they enjoy as a result of union membership, then a strong precedent is set that the suppliers of any other good or service that can be legally deducted against income should disclose their finances in equivalent detail. This would include any firm which supplies an individual or business who in turn deducts that cost as an input expense against their income for tax purposes. That is a very wide net indeed (and would cover any firm which counted at least one tax-paying business among its customer base). Perhaps the authors of C-377 might consider the precedent that is potentially set, and the unintended consequences of that precedent; the uneven application of the principle (requiring some suppliers of tax-deductible services to disclose financial affairs in detail, but not others) would likely spark important legal challenges.
16. Many legal experts have suggested that the provisions of Bill C-377 would likely violate one or more aspects of the Constitution and the Charter of Rights, potentially including personal privacy rights, Charter rights to protected freedoms, and provincial jurisdiction over labour relations policy in most sectors of the economy.
17. It is not apparent how this proposed legislation serves any concrete public policy function. (Again, in the MGEU’s case, financial statements are available, in the same detail as financial statements of other public institutions, to any member who asks for them, and the MGEU’s internal democratic processes provide members with full authority over how the union receives and spends its money).
Jim Stanford is an economist for the Canadian Auto Workers and founder of the Progressive Economics Forum