Private Members’ Business / Financial Limitations

Business of ways and means: motion required for bill seeking an increase in taxation

February 25, 2016

Debates, pp. 1402–3

On February 17, 2016, Gabriel Ste-Marie (Joliette) introduced Bill C-222, an act to amend the Income Tax Act (Canada-Barbados Income Tax Agreement), in the House of Commons.^[1] The purpose of the bill was to designate businesses entitled to a special tax benefit under the Canada-Barbados Income Tax Act Agreement as taxable Canadian businesses.

Resolution

On February 25, 2016, the Speaker delivered his ruling on the admissibility of the bill. He explained that, since Bill C-222 would increase taxes for certain businesses, it would have to be preceded by the adoption of a ways and means motion, which could be introduced only by a minister. He therefore ordered that the second reading of the bill be deemed null and void and that the bill be withdrawn from the Order Paper. The Speaker closed by inviting Mr. Ste-Marie to explore other options, such as a motion, to debate the question of tax avoidance.

Decision of the Chair

The Speaker: Before proceeding to the orders of the day, I wish to draw the House’s attention to Bill C-222, An Act to amend the Income Tax Act (Canada-Barbados Income Tax Agreement), standing in the name of the member for Joliette.

The bill is intended to amend the Income Tax Act, by including in the definition “taxable Canadian business”, any business that is entitled to a special tax benefit conferred by Barbados under the Canada-Barbados Income Tax Act Agreement, 1980. The purpose of the bill is to put an end to the tax benefits that certain companies currently enjoy under the income tax regulations. If the bill were adopted, it would increase the tax payable by these companies. Essentially, it involves eliminating a tax exemption.

As members know full well, any measures of this type raise questions about the need for ways and means motions. As it states on page 900 of the House of Commons Procedure and Practice, Second Edition, the House must adopt a ways and means motion before it can introduce a bill that imposes a tax or other charge on the taxpayer. Historically, this was referred to as charges against the people and, like today, required the adoption of a ways and means motion.

As described in the 24th edition of Erskine May, at page 761:

… ‘charges upon the people’ may be … summarized as: (a) imposition of taxation, including the increase in rate, or extension in incidence, of existing taxation; (b) the repeal or reduction of existing alleviations of taxation, such as exemptions or drawbacks;

Further, at page 763, it states:

The requirement for a Ways and Means resolution also applies to any proposal for a change in tax law or the administration of tax collection which may lead, albeit incidentally, to an increased or accelerated tax burden for any class of taxpayers. A Ways and Means resolution was accordingly needed to authorize the Treasury to vary the way in which certain taxes have effect in relation to a transfer of property, rights or liabilities.

The question before the Chair is whether this is the case with Bill C-222. It is clear that, by obliging certain entities to bear an additional tax or charge by eliminating an exemption, the bill standing in the name of the member for Joliette would mean that the entities would pay more tax. As a result, C-222 should have been preceded by a ways and means motion. The rules in this respect are clear; such a motion can only be introduced by a minister.

When confronted with a similar situation on November 4, 2011, my predecessor ruled that the legislative steps completed, namely introduction and first reading, had not respected the provisions of the Standing Orders and were therefore null and void.

The current circumstance is the same and, as a result, the Chair must order that the second reading of Bill C-222 be deemed null and void and that the bill be discharged from the Order Paper.

The hon. member is not without recourse. He may make use of a motion if he wants to ensure that the House debates this question. I therefore invite him to consider this option.

I thank hon. members for their attention.

Postscript

On the same day the Speaker delivered his ruling, Mr. Ste-Marie gave notice of Motion No. 42, Tax avoidance, which was added to the order of precedence on the Order Paper on March 8, 2016.