Stop treating political parties like charities on steroids

Canada’s tax credits for donations to political parties are absurdly generous compared to those for charities

Are political parties more valuable than charities?

You’d be hard-pressed to find a single Canadian who thinks so, but that’s how they’re treated under today’s tax system.

The way tax credits are handed out in Canada needs to be revamped. The system is broken, both federally and provincially. It’s time to stop giving big tax credits for political donations. Instead, let’s give tax breaks to folks when they donate to charity.

Consider this present-day scenario.

Last year, Sally donated $250 to the Conservative Party of Canada and another $250 to Save the Children. Jim donated $250 to the Ontario Liberals and $250 to the Make-a-Wish Foundation.

Recommended

Canada’s inequality crisis: Why the rich keep winning

Higher home heating bills? Thank the carbon tax

PBO confirms carbon tax hitting Canadians hard

When tax time came, the federal government let Sally use both her donations to lower her tax bill.

But one donation counted a lot more against Sally’s tax bill than the other. And it’s not the one that you might think.

For the Save the Children donation, Sally’s $250 donation netted a $44.50 credit towards her tax bill. The province added another $15.90. That means she will get $60.40 back at tax time.

How about her political contribution?

Because it was a federal political party donation, Sally only received a federal tax credit. But the feds will give her back $187.50 when she files her taxes.

In other words, the amount Sally gets back from donating to a political party is three times as much as her donation to charity.

For those paying income tax, the tax credit situation for a $250 donation to charities and political parties is identical at the provincial level.

Jim gets $60.40 back at tax time from his charitable donation and $187.50 from Queen’s Park for his provincial political donation.

That means the money Jim gets back from his provincial political donation, like Sally’s at the federal level, is three times larger than what he gets back for donating to charity.

On what sane planet should both the feds and Queen’s Park be giving out tax credits for political donations that are so much more generous than tax credits for donating to charity?

Making a terminally ill child’s wishes come true should be valued more than helping politicians pay for political attack ads.

Canada’s provincial and federal governments should take funds that go toward tax credits for political donations and reallocate them to tax credits for charitable donations. Credits for political donations should be scrapped.

Tax credits exist to try to encourage behaviour. The whole idea behind it is that if you give folks a bit of a financial incentive to donate, they’ll be more likely to do so.

That makes sense when it comes to charities. It’s a worthy policy goal to have a tax credit in place to encourage Canadians to make donations to organizations that work to make a meaningful difference in people’s lives.

But why should taxpayers be incentivizing donations to political parties? Why encourage Canadians to shell out money that will end up paying for leaflets, lawn signs and attack ads?

Some try to justify the tax credit regime by arguing that because political parties can’t take corporate or union donations, they need help encouraging individuals to make donations.

But ask anyone on the street, and they’ll tell you it’s charitable donations, not political ones, that should be encouraged.

If political parties can’t raise as much money without the tax credit, they should just spend less money. No one is going to shed tears over seeing fewer attack ads on television.

The sole goal of a political party is to get themselves elected. Why should they get credits of up to 75 per cent while charitable donations get trivial treatment?

It’s time to stop treating political parties like charities on steroids. That means putting political donation tax credits on the chopping block. Instead, the same money can and should be used to supersize tax credits for charitable donations.

Jay Goldberg is the Ontario Director for the Canadian Taxpayers Federation.

Explore more on Taxes, Charity 

---

The views, opinions, and positions expressed by our columnists and contributors are solely their own and do not necessarily reflect those of our publication.

© Troy Media
Troy Media is committed to empowering Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in building an informed and engaged public by delivering reliable content that strengthens community connections, enriches national conversations, and helps Canadians learn from and understand each other better.