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My Exchange With Senator Eaton On Bill C-377 (The Union Transparency Tax Bill)

This week, I received the following note from Conservative Senator, Nicole Eaton relating to Bill C-377, a private members’ bill being pushed by the Conservatives which would force unions to compile and publicly disclose piles of information.  Senator Eaton supports the Bill, while her colleague Senator Hugh Segal strongly opposed it in a stirring speech in Senate a couple of weeks ago. I have added the hyperlink to the blog post Senator Eaton references:

Dear Professor Doorey,

I came across your recent blog in respect of my colleague, Senator Hugh Segal’s commentary in response to my speech in the Senate chamber regarding Bill C-377.

eatonI share your appreciation for Senator Segal’s compelling political rhetoric.  His address was nothing if not heartfelt and stirring in its defense of organized labour’s right to participate in political debate free from state interference. 

I emphatically support his point of view in this regard.  But this is not what this piece of proposed legislation seeks to do.  This private member’s bill does not deal with the Rand formula. This bill does not seek to regulate political speech or limit political action.  Like my honourable colleague, I would not support such legislation if it did. 

Fundamental to this debate is the reality that Under C-377, the Canada Revenue Agency will not be policing how labour organizations spend their money. In fact, it doesn’t even require that unions pay for an audit of their financial statements.  The bill solely requires the electronic filing of an information return.

My honourable colleague asks that “If this is to apply to trade unions, why would it not apply to rotary clubs, the Fraser Institute, Christian, Muslim and Jewish congregations across Canada?”  The answer to his question is simple: they already publicly report their finances.  The Income Tax Act has required charities, including all the charities the Senator mentioned, to publicly report on their finances for the past thirty-six years.  All one need do to review this information is to do a Google search of “CRA Charities” to see reports from any of these charities and others.

At the root of this requirement to publicly disclose their finances is the substantial public benefit charities – and labour organizations – receive through the tax system.  All Bill C-377 would require is similar public disclosure by organized labour.

It’s very important to realize that public disclosure of union finances has been in place there for many years in Britain, France, Germany, the United States and Australia.  This bill would bring Canada’s financial transparency regime for labour organizations into line with that found in many other progressive jurisdictions.

Diversity in debate is welcomed.  So is the defense of freedom so eloquently spoken to by Senator Segal.  However, in this instance, his emphatic insistence may be based more upon a perception of the impact of the bill’s provisions than in its realities.  

Senator Nicole Eaton

I, like many others, have been critical of Bill C-377, because I think it singles out one type of organization, trade unions, for harassment in the form of unprecedented public reporting requirements at big expense to taxpayers like me, who will have to pay for policing and maintenance of volumes of mostly useless information that hardly any member of the ‘public’ will care about.

Senator Eaton disagrees.  She argues that all Bill C-377 would do is bring unions under the same public reporting laws as exist already for charities in Canada.  The trouble I have with this argument is that charities clearly are not required to report anywhere near the level of detail Bill C-377 requires of unions.  Neither are corporations, for that matter, which receive far more taxpayer subsidies that do either charities or unions.

We could argue about whether unions should be treated like charities.  But if that is the objective, then why don’t the Conservatives just do that?  Why not just extend to unions the reporting requirements that apply to charities? Wouldn’t that be the obvious solution?  If the law did that, then much of what is required of unions in Bill C-377 would fall away.  I wonder why Conservatives think unions should be required to publish more information that either charities or corporations, and why it is worth spending millions of taxpayer dollars on implementing Bill C-377?  Can you think of an explanation?

Here is the response I sent to Senator Eaton.  Do you agree with her argument, or mine?  Are we both wrong, or both partly correct?

Dear Senator Eaton,

Thank you very much for your letter about Bill C-377.

I am honoured that you have read my law blog.  I am also glad to hear that you would oppose the abolishment of the Rand Formula, and that you support Senator Hugh Segal’s sentiments about the importance of labour unions to Canadian democracy.

I have heard the argument that Bill C-377 is intended only to bring unions under the same rules governing public reporting as already exist for charities in Canada.  However, with respect, that simply is not the case.  A quick look at the charities disclosure website you reference demonstrates this.  If the objective was as you state, to extend the charities’ reporting rules to unions, then wouldn’t the obvious solution be to just do that?  Make unions fill out an identical form to the Registered Charity Information Return.  Why is an entirely different, far more extensive reporting law like Bill C-377 necessary?  I have yet to hear a sensible response to that question.  If you have one, I would very much like to hear it.  The fact that the obvious route to aligning reporting requirements of charities and unions has not been taken in Bill C-377  leads to the inference that the purpose of Bill C-377 is to treat unions differently than charities, not the same. 

I have read the Charities disclosure pages you refer to.  I fail to see how the information found there is comparable to what you would have unions disclose under Bill C-377.

Let’s look at The Fraser Institute, as you suggested. Its Registered Charity Information Return is here.  Let’s look at what it tells us.  There is a list of Directors and Trustees here.  Charities have to disclose payroll expenses, but only by vague aggregated range categories that do not disclose any individual name or compensation level. For example, the Fraser Institute had 1 employee who earned more than $300,000, and several more between $200-250K. That’s some charity!  Bill C-377, on the other hand, requires names of anyone who receives a payment of $5000 or more.   That’s one big difference.

Charities must also publicly disclose their financials.  Here is the Fraser Institutes’.   It is just a general list of accounts, not at all like the detailed statements unions would have to prepare and make public under Bill C-377.  We already have  labour laws in every jurisdiction that require unions to prepare and distribute these sorts of general financial statements, and I don’t think anyone objects to that.  Unions do need to be accountable to their members.   However, contrary to your claim that Bill C-377 just puts unions in the same position as charities, there is no requirement for charities to detail every disbursement over $5000.  I have no idea how The Fraser Institute’s money is spent, beyond such bland categories as advertising, office supplies, and so forth.  Bill C-377 would require unions to itemize each expense.  If that is not necessary for charities, then why is it so important for unions to tell the public how much they spend on printer paper and staples, or to use one of Senator Segal’s examples, coffee and coffee filters or a new boiler?

Charities are required to report whether they “carry on political activities” during the year.  Remarkably, the Fraser Institute claimed that it engaged in NO political activities in 2011 (see C5).  Here’s a report from 2011 in which the Institute openly lobbies for anti-union laws.  The paper is called “Reject Unions and Prosper”.   It encourages lawmakers to pass anti-union laws.  Fraser Institute employees  make representations to parliamentary and Senate committees to advocate for legal reforms.  I could point to many other Institute reports that directly lobby politicians to enact specific legislation policies.  Trying to influence public policy, laws, and politicians is what the Fraser Institute is all about.  Now, if proselytizing for specific public policies is not ‘political activities’, then I guess that phrase has a very narrow meaning indeed. If charities like the Fraser Institute can actively lobby for legislative policy and yet not be engaged in political activities, then I presume that unions would be able to do the same without having to report anything under Bill C-377?  

But note this.  Charities are NOT required to publish the percentage of time spent by an employee on ‘political activities’ (whatever that means). That would be a requirement unique to Unions if Bill C-377 is enacted.  Why is it that only unions are singled out of this special treatment:  not charities, not corporations, not non-profits.  Just unions.  That is inconsistent with your claim that all Bill C-377 does is bring unions under the same legal rules as Charities.   Bill C-377 is not at all about bringing unions under the same legal rules as charities.  The rules that apply to public reporting by charities are far less onerous than the rules that would apply to unions under Bill C-377.  I have no explanation for this this discrepancy.  Do you?  Can this differential treatment of unions be justified for some public policy reason, in your opinion?  Such justification is needed if the argument that the purpose of Bill C-377 is merely to apply the same reporting rules to charities and unions.

Finally, it is worth noting another obvious point.  None of the reporting rules that would apply to unions under Bill C-377 apply to corporations, which you must agree receive substantially greater taxpayer support than do unions or charities combined.  Corporations claim as deductible expenses millions of dollars each year on hockey games, first class travel, retreats, concerts, expensive dinners, and so forth.  If the rationale for public reporting is to allow the public to see how tax deductions and credits are being used by organizations, then surely you must agree that the reporting rules should apply equally to corporations as well.  Again, is there some principled explanation as to why it is only unions that are subject to the special reporting rules in Bill C-377?         Thank you again for this opportunity to discuss a very important issue.  



12 Responses to My Exchange With Senator Eaton On Bill C-377 (The Union Transparency Tax Bill)

  1. Don Jordan Reply

    March 6, 2013 at 4:56 pm

    Frankly, I think you both miss the point. No one is obliged by law to support a charity in order to keep their job. No one is obliged buy shares in a corporation to keep their job. However,we do,by law, oblige workers in a unionized workplace to pay union dues in order to keep their job. Since when is transparency with regard to monies paid as a requirement of our laws a bad thing ?

    • admin Reply

      March 6, 2013 at 5:09 pm

      Thanks Don. The Tories’ argument is that any organization that receives a tax benefit should be required to disclose every disbursement over $5000 and the percentage of time spent on political activities. Yet it is only unions that this obligation would apply to. That’s hypocritical and it needs to be called on. I don’t have to buy shares in a corporation, but I do have to subsidize through my tax dollars all of the entertainment expenses they can deduct as ‘business expenses’. I bet the public would like to know the amount of tax dollars lost on expensive dinners and hockey games by corporations and law firms, for example. But we don’t require that sort of transparency, presumably because it is costly to administer and enforce, and we think the value to the public doesn’t warrant the cost. The Tories have made this a tax fairness and transparency issue. When is transparency laws a bad thing? When it is used to harrass and cause administrative burden on only one type of organization that just happens to be a thorn in the side of the ruling political party.

    • Jody Reply

      March 10, 2013 at 1:51 am

      Hi Don;

      I’m a union member, but the job I do is also available in many non-union workplaces. This is true of most unionized positions, to the best of my knowledge. If a person has issues with unionization, they are free to work in a non-unionized workplace. If the law were to change, allowing workers in a non-unionized workplace to opt out of dues, then that opt-out must disqualify the worker from any & all benefits resulting from actions by or contracts with the union.

      • John Reply

        October 11, 2013 at 12:14 am

        Telling someone to only apply to non-union shop would most definitely limit that persons ability to find employment.

  2. Annabella Reply

    March 6, 2013 at 5:54 pm

    Excellent response! I would be interested to hear if you receive any further correspondence from the Senator. This Bill will only cost taxpayers in the end and sadly very few taxpayers are paying attention. I would love for the government to be forced to provide such a detailed account of each expenditure over $5000…perhaps then they would think twice before wasting taxpayer money on such nonsense.

  3. Don Jordan Reply

    March 6, 2013 at 7:08 pm

    The subsidization of business expenses is invigilated by the tax department to insure compliance with the law . Similaryly, charities are audited to insure compliance with the law. Why should trade unions ,whose funds are a product of statutory compulsion, be free of any kind of oversight by government. This bill may go to far , it may be cumbersome etc but do you disagree on this fundamental issue

    • admin Reply

      March 6, 2013 at 7:52 pm

      Thanks Don. If the idea is that unions be subject to private investigation of taxable expenses by the tax department, in same manner as everyone else, then sure. This Bill creates a special, more onerous regime just for unions. Thanks, always appreciate your insights and arguments.

  4. Andres Barker Reply

    March 6, 2013 at 9:15 pm

    What I dislike about Eaton’s response is that it seems to pretend this isn’t about partisan targeting of a political opponent. To pretend that the Conservatives are only doing this as part of some general housekeeping of labour laws to put them in line with other countries, or as part of an agenda of sprinkling fairness across the land where its needed, is not honest.

    I wish the players like Eaton would simply admit that an anti-union animus is playing a role in this legislation so we could advance the debate. As long as they continue to pretend it isn’t how can we even have a discussion of the merits?

    • Bob in Edmonton Reply

      March 7, 2013 at 6:45 pm

      “As long as they continue to pretend it isn’t how can we even have a discussion of the merits?”

      Evading an honest debate, wherein the Tories would be exposed to further criticism that are the creature of corporate interests (at least on this issue), is in the Tories’ electoral interests. There is no profit for the Conservatives in an honest debate because their position has no merit.

  5. Tammie Reply

    March 15, 2013 at 10:27 am

    I think you need to realize charities don’t take your money it’s given willingly your not given that choice with unions. So if you have my money I would like to know exactly how it is spent !


    • admin Reply

      March 15, 2013 at 12:40 pm

      Tammie, first, unions are already required to provide financial statements to their members. Why does the public need to know how a private organization spends its money? The Tories say its because unions receive taxpayer benefits. Fine, then require the same amount of public disclosure from all organizations that receive taxpayer benefits–corporations, charities, professional organizations that exactly the same as unions (law societies, medical associations), non-profits, etc. The fact that Tories are only interested in imposing these burdensome reporting requirements on unions demonstrates the real intent, which is to harass a political foe, not to advance any great goal of transparency.

  6. Mary Coltart Evans Reply

    June 27, 2013 at 5:29 am

    It it interesting to note that the Fraser Institute engages in political activity and yet still retains its charitable status. David Suzuki stepped down last year because his political activity threatened the charitable status of his foundation:


    Has anyone looked into whether the Fraser Institute receives “foreign” donations to further its right wing agenda?

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