PUBLICATION:	Montreal Gazette
DATE:	2005.01.30
EDITION:	Final
SECTION:	Editorial / Op-ed
PAGE:	A10
SOURCE:	The Gazette

A gift for givers

How many times will you be asked, this year, to donate money for a good cause? How much will you give, all told? What can we do, as a society, to encourage those who have money to donate more? Are we giving enough as a society?

In 2003, Canadians claimed personal income-tax breaks for donations totalling about half of one per cent of gross domestic product, the government says. Many other prosperous countries do better. The banking committee of the Senate looked into this, and came up with a proposal that deserves careful attention: Scrap what's left of the capital-gains tax on gifts of shares or real property.

In some quarters, knees are jerking right now at the thought of a tax break for the rich. But Senator David Angus, deputy chairman of the Senate committee, mustered some convincing arguments when he met The Gazette's editorial board last week to sell the idea. He brought along a well-placed ally, Bank of Montreal group President Jacques Menard, who knows a thing or two about fundraising himself.

There's a lot of money to be raised. Menard, who presided with Celine Dion over a successful $100-million campaign for Ste. Justine children's hospital, did a little math: In Quebec alone, over five years, known major campaigns - hospitals, universities, Centraide and so on - total $3.57 billion. Then there are smaller campaigns, and those yet unborn.

At present, if you give property or shares of stock to a charity, you are deemed to have sold it, and must pay 50 per cent of the normal capital-gains tax on the increase in value while you held the asset. Until 1997, the full normal capital- gains tax was due; reducing the "inclusion rate" to 50 per cent in 1997 led to a sharp increase in such donations. The federal finance department told Angus's committee each foregone dollar in tax revenue was linked to $13 in extra giving. Angus believes the multiplier would be even greater if the capital-gains tax were dropped altogether.

The time is right for this, Menard and Angus agree, because we're entering a time of transition in ownership for many family-owned firms, a time when the older generation is ready to be generous - provided their children could avoid a nasty tax hit.

Why give rich people a tax break? Because it stimulates giving that would not otherwise take place. Short of confiscating the money, tax incentives - which the government already uses to encourage a whole range of behaviours - might be the best way to get private money where it's needed. Big business is infinitely resourceful in keeping taxes down, so why not provide this socially useful technique?

Some argue giving the wealthy a tax break while they pick their recipients amounts to just privatizing welfare - if a given company or individual didn't give to, say, the Montreal Children's Hospital, then governments would have to support more generous welfare. There could be a grain of truth in this, but so what? Donors are likely to demand more accountability and transparency from recipient groups than the government seems able to get.

Angus and Menard, who have a firm grasp of how governments work, are not optimistic federal Finance Minister Ralph Goodale will cut the rate in next month's budget - with an election possible any time, even the most logical "tax break for the rich" becomes unlikely. Menard, however, said he hoped Quebec Finance Minister Yves Seguin might prove more open to the idea.

The report (http://www.parl.gc.ca/38/1/parlbus/commbus/senate/com-e/bank-e/rep- e/rep04dec04-e.htm) contains a number of other proposals, too. Noting 43 per cent of all charitable giving in Canada comes from individuals with incomes under $60,000, the committee also looked for ways to make giving simpler for this category of donors, and the charitable organizations they help. One suggestion the committee liked: Never mind the business of formal receipts, which are burdensome for giver and recipient alike. Provided a credit-card slip or some other such document is available, such receipts for amounts up to, say, $250 could be waived.

The Senate committee will continue seeking ways to encourage small-scale philanthropy. At the high end, meanwhile, it's hard to see any good arguments against the capital-gains cut.