Who do you think needs your financial assistance more, a registered charity or a national political party? Your elected officials think that they need your donation more and they have used tax laws to enforce it.
In this posting, I'm going to compare the Federal tax credit for a $1000 donation to a federal political party versus donating the same amount to a registered charity.
1.) For federal political contributions of $1000.00:
Federal tax credit on first $400 is 75% = $300.00
Federal tax credit on the next $250 is 50% = $175.00
Federal tax credit on the next $250 is 33.33% = $83.33
Total Federal tax credit = $558.33
2.) For registered charitable contributions of $1000.00:
Federal tax credit on first $200 is 15% = $30.00
Federal tax credit on remaining $800 is 29% = $232.00
Total Federal tax credit = $262.00
There is a $296.33 tax advantage to every Canadian taxpayer that elects to donate $1000 to a federal political party rather than to a registered charity. This is a very significant difference. Fortunately, most Canadians are philanthropic and would prefer to donate to charities that truly serve the needy of Canada rather than donating to federal political parties that serve the needs of very few.
While I like nothing more than to minimize the amount of tax that I have to remit to the government, it seems morally wrong that it is far more advantageous, for me personally, to donate money to a Canadian political party than it is for me to donate the same amount to a legitimate charity. Control of this tax advantage lies in the hands of those we have elected and it is time that politicians of all parties work to reduce the tax credit for political party donations and raise the tax credit for charitable donations. This rebalancing could be done to encourage increased donations to registered charities and should result in no loss of revenue to the federal treasury.
It is time for our politicians to stop using Canada's tax system to their own advantage.