Flaherty says budget will crack down on money laundering through charities

TORONTO – Jim Flaherty says the government will outline plans to curb the link between terrorists, organized crime and charities, as part of stricter rules for charitable status that will be delivered in the new federal budget next week.

“There are some terrorist organizations, there are some organized crime organizations that launder money through charities, and make donations to charities,” he said during a media conference in Toronto on Friday.

“That’s not the purpose of charitable donations in Canada, so we’re becoming increasingly strict on the subject. You’ll see some more on Tuesday.”

The finance minister didn’t offer specifics on what measures would be taken, but said he’s not concerned about suggestions that changing rules for charities could be seen as a way to silence critics of the government.

“If the critics of the government are terrorist organizations and organized crime, I don’t care,” he said.

During the past few years, Flaherty has taken a stronger stance against the finances of charities, and in the 2012 budget he dedicated $8 million to monitor the political activity of the groups.

Earlier this week, several environmental charities raised concerns that the Canada Revenue Agency is sifting through their books to see if they meet requirements which restrict political advocacy.

A report from the CBC said if the groups exceed the limits, their charitable status could be revoked, which would effectively shut them down. The organizations include The David Suzuki Foundation and Tides Canada, the report said, and several are strong critics of the Conservative government.

New Democrat House leader Nathan Cullen said Friday he believes specific charities who have clashed with Conservative leaders over pipeline projects, for example, are being targeted by auditors.

“They are not imposing any of these same Draconian measures on any other charitable groups that we’re aware of,” he said after question period in Ottawa.

“I don’t really care what’s in David Suzuki’s email. I think he’s a Canadian citizen and should be able to correspond with who he wishes to.”

Flaherty offered further insight into his budget plans during the traditional pre-budget shoe fitting in Toronto.

Other areas on the agenda next week include price parity between U.S. and Canadian goods, he said, as the value of the Canadian dollar continues to slide against the U.S. dollar.

“We have not let that issue go away,” he said. “We had the Senate committee do some work for us and we are on top of it.”

The event was held at Mellow Walk Footwear, a factory in Toronto that makes industrial safety shoes, and is one of the last shoe manufacturers in the country. The family-run business has about 50 employees, said president Andrew Violi.

Flaherty chose steel-toed black wingtips, which he said were “good working shoes for a good working budget.”

He slipped them on over a pair of vibrant blue, white and green striped socks he joked were his “Conservative socks.”

Flaherty told reporters that the budget will encourage economic growth and jobs.

While the federal government has projected a deficit of $17.9 billion for the 2013-14 fiscal year that ends March 31, it aims to tighten the gap to a $5.5-billion shortfall in 2014-15, before posting a surplus in 2015, just in time for the next election. The extra cash would allow them to pay for some long-promised election plums, including income splitting for tax purposes.

Flaherty would not say if he expects the budget surplus in 2015 to be more than the $3.7 billion forecast in November.

“Could be. We’ll see. The world economy is still fragile,” he said. “As you know, the equity markets were hammered on Monday. We just need to be cautious in what we do.”

His comments also suggested it’s unlikely that the government will balance the budget earlier than expected.

“We always said we would get back to a balanced budget and every year we chipped away at it, and now we’re almost there,” Flaherty said.

“If you make a plan you have to stick with it,” he added.

A report Friday that showed the Canadian economy gained 29,400 jobs in January, after a downturn in December, is expected to bolster Flaherty’s position as he prepares to deliver the budget on Feb. 11.

Statistics Canada reported the unemployment rate slid 0.2 percentage points to 7.0 per cent for January, as the number of full-time jobs increased. Analysts caution that the employment trend is still sluggish.

Note to readers: This is a corrected story. An earlier version said the StatsCan labour report was released on Tuesday.