Thank you very much, Mr. Chair.
Thank you for the invitation to speak about Bill C-224.
As the chair said, with me is Mr. Wayne Lepine, the director general responsible for federal and provincial relationships at the Canada Revenue Agency.
Following my finance department colleague’s remarks, I would like to draw the committee’s attention to certain impacts relating to this bill. In particular, I would like to emphasize four impacts that I ask you to take into consideration.
First, uncertainty about jobs.
The agency employs close to 6,000 employees in Quebec in 13 different offices. The agency’s workloads are national, meaning that the work of a particular province can be done in several other provinces. Therefore, although the impact on jobs would be most significant in the province which would choose to repatriate tax operations, many jobs across the country could be impacted.
Secondly, there would be disruption of the agency’s activities not related to tax processing.
In addition to administering tax legislation, the agency administers benefit programs from which all Canadians may benefit. Most of these benefit programs that the agency administers, or administers on behalf of other departments or organizations, are based on tax returns.
Given that one must file a tax return to receive benefits, it is not possible to administer benefit programs without tax information. A transfer of administration to a province could impede the administrative effectiveness of these programs, which are crucial for the well-being of Canadians. Without tax information on hand, the Canada Emergency Response Benefit adopted in the COVID-19 pandemic context, which was crucial for the well-being of Canadians, could not have been implemented as quickly. This also applies, for instance, to the Guaranteed Income Supplement administered by Employment and Social Development Canada, for which eligibility is based in part on tax information.
If tax administration is transferred to the province whereas the agency continues administering benefits, taxpayers will continue interacting with both organizations, potentially creating confusion and dissatisfaction.
Thirdly, efficiency in international taxation would be affected.
The CRA must ensure tax compliance, in Canada and abroad.
Canada has signed many international tax treaties and tax information exchange agreements. These are critical to our effectiveness. Convincing our partners to make changes to include other subnational tax administrations is not a given.
Fourth, there would be cost increases and loss of economies of scale.
The required integration between both organizations’ processes and technology infrastructures would result in additional expenses. The fixed costs related to the functioning and significant investments in infrastructure by the agency to serve all Canadians will not decrease with such a transfer.
Based on the current experience with GST/HST administration by Quebec, the cost of administering federal tax by the province would be higher than what it costs the agency because of the economies of scale that the CRA can effect.
In conclusion, with respect to Quebec’s particular situation, it is important to highlight our efforts to collaborate with the province to reduce the administrative burden on Quebec taxpayers.
We have started discussions to simplify or combine some forms and to simplify the income tax return process by focusing first on vulnerable populations.
Other measures are also under consideration. Their implementation could facilitate the taxpayer experience with both tax authorities. We could, for example, work with tax software providers to facilitate the income tax return process, and coordinate the validation and audit actions between both organizations to avoid taxpayers being audited twice.
We'd be very happy to answer any questions you may have.