The mayoral race is in full swing, with the field wide open now that Sam Katz has announced he will not be running again for office this fall. Winnipeggers then should expect to see candidates and their volunteers at their doors, seeking support at the polls and in donations to their campaigns. Some of the chat will be about what this city needs to work.
It is unlikely, amid the promises and platitudes about making Winnipeg a better place to live and work, that any of those mayoral candidates or those vying for council, also soon to come, will be vowing to cut the generous rebates to donors who make political donations. That would be counterintuitive; more likely, candidates will use the municipal rebate as added appeal to donate.
And there's good reason why donors would prefer to give monetary support to their favoured municipal candidates.
Political contributions to federal or provincial candidates or parties are tax credits and can only reduce an individual's tax bill to either or each government by a maximum of $650. The city's rebate, however, comes from sending in the invoice and can be as much as $1,000 -- more bang for your municipal-donation buck.
Political parties and candidates defend tax rebates and refunds for donations as a means of engaging voters at a higher level, giving individuals a way to directly support the democratic process. But politicians and parties are assisted by a variety of tax-supported features that rebate money for campaign expenses. Parties at both the federal and provincial levels get sizable annual payments based on the number of votes each earned in the last election.
The returns are substantial, cutting the cost substantially for running campaigns and allowing parties, especially, to build war chests for the next run at the polls.
City council and mayoral candidates can make the same case for rebates as their provincial and federal counterparts, while noting they do not have the support of party machinery during campaigns.
But what should be noted is municipal rebates come straight from the city coffers and are not refunds on taxes paid. Donors to the federal or provincial candidates or parties can use the credit only to reduce their tax bills.
In the 2010 election, the city administration sent more than $540,000 in rebates to donors. In a city strapped for cash, that counts. It's something the new city council ought to be considering in the next budget deliberations that begin immediately in the fall.
The generous returns on political contributions, however, are offensive when compared to the tax credit allowed for charitable donations, which offer refunds at a much lower rate, federally, and lesser still provincially.
To illustrate: A $500 political donation to a federal or provincial candidate or party cuts an individual's taxes by $350 to either government, but $500 to the Salvation Army would get a taxpayer a federal credit of $117 and a provincial credit of $73.80.
The city has taken up the cant, reasonably so, of straitened financial resources to pay for all the many services to property owners and citizens, and the provincial and federal governments continue to fund programs and services on deficits. (The federal and provincial tax credits for political donations were enriched to make up for the mix of caps and bans on political donations from individuals, unions and businesses.)
Already weak on principle, political-donation rebates and refunds are unreasonable in the face of the lower credit applied to charitable donations. Rather than raise the charitable tax credit, all levels of government should move to cut the returns on political donations and give the tax coffers a break.