April 15, 2021

Winnipeg
4° C, Overcast

Full Forecast

Contact Us Subscribe Manage Subscription Chat with us
Log in Create Free Account Help Chat with us
    • Contact Us
    • Advertising Contact
    • Submit a News Tip
    • Subscribe to Newsletters

    • Finding your
      information

    • My Account
    • Manage my Subscription
    • Change Password

    • Grid View
    • List View
    • Compact View
    • Text Size
    • Translate

    • Log Out
    • Log in
    • Create Free Account
    • Help

    • Grid View
    • List View
    • Compact View
    • Text Size
    • Translate
  • Coronavirus Coverage
  • Replica E-Edition
    • About the E-Edition
    • Winnipeg Free Press
    • The Herald
    • The Headliner
    • The Lance
    • The Metro
    • The Sou'Wester
    • The Times
  • Above the Fold
  • Front page
  • Arts & Life
    • All Arts & Life
    • The Arts
    • Autos
    • Books
    • Book Club
    • Cannabis
    • Celebrities
    • Diversions
    • Puzzles
    • Environment
    • Events
    • Faith
    • Food & Drink
    • Your Health
    • Life & Style
    • Movies
    • Music
    • Science & Technology
    • TV
    • Travel
  • Business
    • All Business
    • Agriculture
    • Personal Finance
  • Canada
  • Local
  • Opinion
    • All Opinion
    • Analysis
    • Columnists
    • Editorials
    • Editorial Cartoons
    • Letters to the Editor
    • Send a Letter to the Editor
  • Sports
    • All Sports
    • Amateur
    • Auto Racing
    • Blue Bombers
    • Curling
    • Football
    • Goldeyes
    • Golf
    • High School
    • Hockey
    • Horse Racing
    • Winnipeg Jets
    • Manitoba Moose
    • WHL
    • MLB
    • NBA
    • Olympics
    • Soccer
  • World
  • The StarNEW
  • About Us
    • About Us
    • Advertising
    • Contact Us
    • Carrier Positions & Retailer Requests
    • FP Newspapers Inc.
    • History
    • Internships
    • Job Opportunities
    • News Café
    • Privacy Policy
    • Retail Locations
    • Staff Biographies
    • Terms and Conditions
  • Archives
  • Canstar Community News
    • All Canstar Community News
    • The Headliner
    • The Herald
    • The Lance
    • The Metro
    • The Sou'wester
    • The Times
    • Sports
    • Events
    • Contact Us
    • E-Editions
  • Classifieds
  • Contests
  • Coupons
    • All Coupons
    • Staples Copy & Print Coupons
    • Ripley's Aquariums Coupons
    • The Bay Coupons
    • Staples Canada Coupons
    • Altitude Sports Coupons
    • Nike Coupons
    • Tuango Coupons
    • Ebay Canada Coupons
    • Sport Chek Coupons
    • Roots Coupons
  • Sponsored
    • Publications
    • Sponsored Articles
  • Flyers
  • Homes
    • Property Listings
    • Featured News
    • Renovation and design
    • New homes
    • Resale homes
  • Newsletters
  • Obituaries
  • Puzzles
  • Photostore
  • More

©2021 FP Newspaper Inc.

Close
  • Quick Links

    • Coronavirus Coverage
    • Above the Fold
    • Home
    • Local
    • Canada
    • World
    • Classifieds
    • Special Coverage
    • Flyers
    • Newsletters
    • Obituaries
    • Photostore
    • Archives
    • Contests
    • Publications
    • Sponsored Content
    • Privacy Policy

    Ways to support us

    • Pay it Forward program
    • Subscribe
    • Day Pass
    • Read Now Pay later
  • Replica E-Edition

    • About the E-Edition
    • Winnipeg Free Press
    • The Herald
    • The Headliner
    • The Lance
    • The Metro
    • The Sou'Wester
    • The Times

    Business

    • All Business
    • Agriculture
    • Personal Finance
  • Arts & Life

    • All Arts & Life
    • The Arts
    • Autos
    • Books
    • Cannabis
    • Celebrities
    • Diversions
    • Puzzles
    • Environment
    • Events
    • Faith
    • Food & Drink
    • Your Health
    • Life & Style
    • Movies
    • Music
    • Science & Technology
    • TV
    • Travel
  • Sports

    • All Sports
    • Amateur
    • Auto Racing
    • Blue Bombers
    • Curling
    • Football
    • Goldeyes
    • Golf
    • High School
    • Hockey
    • Horse Racing
    • Winnipeg Jets
    • Manitoba Moose
    • WHL
    • MLB
    • NBA
    • Olympics
    • Soccer
  • Opinion

    • All Opinion
    • Analysis
    • Columnists
    • Editorials
    • Editorial Cartoons
    • Letters to the Editor
    • Send a Letter to the Editor

    Media

    • All Media
    • Photo Galleries
    • Videos

    Homes

    • Property Listings
    • Featured News
    • Renovation and design
    • New homes
    • Resale homes
  • Canstar Community News

    • All Canstar Community News
    • The Headliner
    • The Herald
    • The Lance
    • The Metro
    • The Sou'wester
    • The Times
    • Sports
    • Events
    • Contact Us
    • E-Editions
  • Coupons

    • All Coupons
    • Staples Copy & Print Coupons
    • Ripley's Aquariums Coupons
    • The Bay Coupons
    • Staples Canada Coupons
    • Altitude Sports Coupons
    • Nike Coupons
    • Tuango Coupons
    • Ebay Canada Coupons
    • Sport Chek Coupons
    • Roots Coupons
  • About Us

    • About Us
    • Advertising
    • Contact Us
    • Carrier Positions & Retailer Requests
    • FP Newspapers Inc.
    • History
    • Internships
    • Job Opportunities
    • News Café
    • Privacy Policy
    • Retail Locations
    • Staff Biographies
    • Terms and Conditions
Winnipeg Free Press
Articles Read
Your Balance +tax
Day Pass Till
Day Pass
    • Contact Us
    • Advertising Contact
    • Report an Error
    • Send a Letter to the Editor
    • Staff Biographies
    • Submit a News Tip
    • Subscribe to Newsletters

    • Finding your
      information

    • Log in
    • Create Account
    • Help
    • Chat with us

    • Grid View
    • List View
    • Compact View
    • Text Size
    • Translate
    • My Account
    • Manage My Subscription
    • Change Password
    • Chat with us

    • Grid View
    • List View
    • Compact View
    • Text Size
    • Translate

    • Log Out
Log in Create Account Contact Us
Contact Us Manage Subscription
  • Sections
  • Local
  • Arts & Life
    • All Arts & Life
    • The Arts
    • Autos
    • Books
    • Diversions
    • Environment
    • Faith
    • Food & Drink
    • Health
    • Movies
    • Music
    • TV
    • Travel
  • Business
  • Sports
    • All Sports
    • Amateur
    • Blue Bombers
    • Curling
    • Football
    • Goldeyes
    • High School
    • Hockey
    • Winnipeg Jets
    • Manitoba Moose
    • WHL
    • MLB
    • NBA
    • Soccer
  • Opinion
    • All Opinion
    • Analysis
    • Columnists
    • Editorials
    • Editorial Cartoons
    • Letters to the Editor
    • Send a Letter to the Editor
  • E-Edition
  • Homes
  • Classifieds
    • All Classifieds
    • Announcements
    • Automotive
    • Careers
    • Garage Sales
    • Merchandise
    • Pets
    • Real Estate
    • Rentals
    • Services
  • Sponsored
    • Publications
    • Sponsored Articles
  • Coupons
    • All Coupons
    • Staples Copy & Print
    • Ripley's Aquariums
    • The Bay
    • Staples Canada
    • Altitude Sports
    • Nike
    • Tuango
    • Ebay Canada
    • Sport Chek
    • Roots
  • Obituaries
  • Subscribe
Opinion Analysis

Advertisement

Advertise With Us

Time to eliminate tax break for charitable donations

By: Gregory C. Mason
Posted: 3:00 AM CST Thursday, Jan. 24, 2019

  • Tweet
  • Share
  • Print
  • Email
  • Save to Read Later
Christopher Katsarov / The Canadian Press Files</p><p>According to its most recent annual report, the Canadian Red Cross directs 90 per cent of its incoming revenues to its programs.</p>

Christopher Katsarov / The Canadian Press Files

According to its most recent annual report, the Canadian Red Cross directs 90 per cent of its incoming revenues to its programs.

My smartphone is finally cooling off. It all started three weeks before Black Friday, in late November. Because I make most of my charitable contributions through a website, I need to offer my email address to receive a tax receipt. This has led to a proliferation of retailers and charitable organizations alike seeing me as fair game.

Hey there, time traveller!
This article was published 24/1/2019 (812 days ago), so information in it may no longer be current.

Opinion

My smartphone is finally cooling off. It all started three weeks before Black Friday, in late November. Because I make most of my charitable contributions through a website, I need to offer my email address to receive a tax receipt. This has led to a proliferation of retailers and charitable organizations alike seeing me as fair game.

Weeks before Black Friday, I started to receive notices about "Black Friday in October." Then when December arrived, I experienced increasingly persistent messages that I had only so many days "to make a donation to receive a tax receipt."

The din continued until Dec. 31 as my phone became almost too hot to handle from the incoming barrage. Then all was quiet.

It’s my fault, of course. I could simply make out a cheque and mail it to the charities of my choice, but online giving is too easy. And getting immediate tax receipts via email allows me to easily corral all of the information to receive my just rewards in the form of a reduced tax bill.

Are charity deductions a bribe?

But as tax season approaches, now is a good time to ask whether it’s sound policy to offer what could be considered a bribe of reduced taxes in exchange for donating to charity. What are the positives and negatives from such a policy? What would be the effect of eliminating these tax benefits?

For every dollar I donate to an eligible charity, I get about 20 to 25 cents in the form of a tax refund. But the dirty little secret is that all taxpayers, including me, must make up these 25 cents through increased taxes.

And so, like all tax benefits, the charitable tax credit raises the overall tax burden.

Whenever government adjusts taxation rules to offer a deduction or credit, economists call this a "tax expenditure" to distinguish it from the direct expenditures authorized by treasury boards.

Just like any public spending, the taxpayer finances these tax expenditures. The more generous the relief granted for charitable donations, the more onerous becomes the tax burden.

Just how much money is involved? Last year, the Canadian federal government made $289 billion in tax expenditures, of which $6.1 billion were the tax benefits associated with charitable donations.

This may seem a pittance in the big picture, but we need to delve deeper. Canada incurs much of its tax expenditures by giving up tax rights to provinces; this accounts for about $56 billion. The basic personal exemption accounted for $36 billon and the credits for investing in various registered savings plans cost the Canadian taxpayer $89 billion in lost tax revenues.

Money could have alternate uses

A better basis for comparison among tax expenditures is the GST exemptions on things such as child care and tuition, which accounted for $5.7 billion in 2017. Among the direct expenditures, Canada’s public broadcaster, the CBC, has a budget of about $1.2 billion, the Department of Defence consumes $20 billion and the federal government spends $3.5 billion on the RCMP.

In this context, the $6 billion the federal government gives up because we make charitable contributions could have many alternate uses. So what’s the value of stimulating and encouraging charitable donations?

When we donate to charities, we directly support a favoured cause at a discount. And perhaps the incentive of a tax credit may induce more giving. However, here’s the kicker: recent research suggests that most of us give not for the tax break, but the "warm glow." And so it may be unnecessary to offer a tax reduction to stimulate charitable donations.

Because we all share in the burden of tax credits, we are unwittingly supporting charities we either do not care about or whose goals we don’t share. Sometimes charities appear to support a cause when masking a completely different goal. I recall the shock at seeing gun manufacturers’ displays at the annual show of Ducks Unlimited.

Tax advantage is highlighted

Many appeals from charities stress the tax advantage to the donor, tainting an altruistic act with selfishness.

The tax credit may also encourage charities and non-profits to become lazy, relying more on the lure of tax credits than showing donors their impact. With few exceptions, non-profits do not routinely subject their investments to independent audits to measure impact or report donation efficiency.

One recent counter-example is the Bill and Melinda Gates Foundation, which appears to have spent almost half a billion U.S. dollars to improve teaching effectiveness and failed.

Most of the big guns in Canada’s charity industry issue glossy annual reports replete with anecdotes of how they spend your dollars, but few issue systematic and independent audits to show the net impact of the charity’s investments.

Where do charity dollars actually go?

Donation efficiency — the percentage of donations that translate to direct service — requires work to learn what percentage of total revenues actually flow to end uses.

Stay informed

The latest updates on the novel coronavirus and COVID-19.

Subscribe to COVID-19 Briefing
Sign Up

For example, based on its most recent financial statements, the Canadian Cancer Society directed 53 per cent of its revenue to research and programs, its stated purpose for raising funds in the first place. The remainder went to fundraising, administration and advocacy.

Contrast this to the Canadian Red Cross, where based on its most recent annual report, 90 per cent of revenues flow to programs. One charity I support has a donation efficiency of 85 per cent based on independent financial audits.

Several countries — namely Austria, Finland, Ireland, Italy, Sweden and Switzerland — have removed tax benefits for charitable donations.

It is time for Canada to follow suit. My phone will be thankful.

Gregory C. Mason is an associate professor of economics, at the University of Manitoba.

This article was first published at The Conversation Canada: theconversation.com/ca.

Advertisement

Advertise With Us

  • Report Error
  • Submit a Tip
  • Refund

The Winnipeg Free Press invites you to share your opinion on this story in a letter to the editor. A selection of letters to the editor are published daily.

To submit a letter:
• fill out the form on this page, or
• email letters@freepress.mb.ca, or
• mail Letters to the Editor, 1355 Mountain Avenue, Winnipeg, Manitoba, R2X 3B6.

Letters must include the writer’s full name, address, and a daytime phone number. Letters are edited for length and clarity.

Advertisement

Advertise With Us

Top