Mr. Speaker, I rise today to begin third reading of Bill C-2. This is an act to amend the Department of National Revenue.
While the amendments are administrative in nature they go to the heart of one of the fundamental concerns of the government and the country. That concept is to reshape the instruments of government and to provide both better service and better value to the taxpayer.
Bill C-2 does that in terms of the services provided by the department most involved with the concerns of the taxpayers, the Department of National Revenue.
Since 1926 the Minister of National Revenue has had responsibility for two separate functions: customs and excise on the one hand and taxation on the other. Over this time these two components of the department have operated as virtually autonomous organizations. Yet the daily reality with which taxpayers live has never been so easily compartmentalized. Increasingly through technology, trade and travel Canadians find their lives becoming more complex, more frustrating to manage and more difficult to understand in terms of the burdens government places on them.
All of us see this daily in terms of the complaints received from our constituents of overlap and duplication, of paper burden and red tape. The distinction between taxation on the one side and customs and excise on the other has become more and more an artificial distinction.
Increasingly the distinction denies rather than reflects the way Canadians live their lives. The distinction renders Canadians' lives more complicated than they need be. Reversing that trend must be and is our first priority.
However, increasingly this artificial separation also impedes rather than improves administration, making it more difficult to redeploy resources and to employ new technologies as tools to improve services on the one side and compliance on the other.
It is long past time that we brought the department in its structure and operation into line with the reality with which ordinary Canadians live. It is time we free the quality people who work within Revenue Canada to do a better job. It is time we eliminate overlap and duplication within the department for the sake of the department's clients and the Canadian taxpayer. It is time that we do this in law.
We have already demonstrated what consolidation can achieve within the existing legislative framework. The savings have been substantial. We have also demonstrated that we are at the limits of what we can do within that framework. We require Bill C-2 to remove those limits, to create new possibilities for improvements, to continue our momentum toward the goals of better service and better value and to free the department to work to its full potential. By doing that we can better align what we do with what Canadians want.
During the minister's appearance before the Standing Committee on Finance on February 15 members asked him for specific information on the benefits inherent in the administrative consolidation of Revenue Canada and he has responded to them.
I would like to share with all members of the House some of the benefits administrative consolidation will bring to Canadians and governments in terms of efficiency, productivity, effectiveness in generating revenue, and finally lightening the burden of the Canadian taxpayer.
First, let me speak to efficiency and productivity. Revenue Canada has a solid record of providing Canadians with good value for money. It administers more than 185 acts, regulations, incentives, credits, surtaxes and international tax treaties, and does so with its eye on the bottom line. Through ongoing improvements to its operations and efficiency gains realized through technological advancements, the department has achieved productivity gains equal to adding more than 2,000 full time staff in the last ten years.
These savings have permitted the department to carry out its legislative mandate while also investing in better service, enhanced enforcement and staff training and development.
At the same time, Revenue Canada has made a significant contribution to deficit reduction through both enhanced revenue collection and reduced spending. This will continue in the future.
Bill C-2 will allow the department to go even further in streamlining administration and generating savings for reinvestment. Already the consolidation of corporate activities and administration, which we have been able to pursue within the existing legislative framework, has saved $30 million.
Some $13 million of this saving has been reinvested in critical customs programs that are essential in protecting Canadian law and sovereignty at the border.
These include $2.3 million for the primary automated lookout system. This system provides a primary inspection line officer with access to data base of local and national information to determine the admissibility of travellers and their goods. The cost includes the acquisition of a licence plate reader system to streamline and speed the examination of travellers.
Also included is $1.2 million for the personal alarm security system. Seventy-four isolated border posts will be connected to ultra high frequency radio communications networks to enable customs inspectors to summon help in case they face threats to their health or safety.
Also included is $1.1 million for X-ray equipment. Four X-ray vans will be purchased to enhance examination and enforcement capabilities in Halifax, Toronto, Montreal and the Pacific region for providing a less intrusive and more time saving examination technique.
Also included is $1 million for the integrated customs enforcement system. This project will integrate and replace a number of customs systems to reduce overlap and improve enforcement. The integrated customs enforcement system is a comprehensive information repository and analytical tool that ensures front line customs personnel have the most reliable information to more effectively manage risk at the border.
Also included is $3.5 million for the new business relationship. Significant funds have been allocated to re-engineer processes such as electronic data interchange and to develop profile based release, accounting, self-assessment and audit processes. The benefits translate into real savings for business.
Also included is $1.3 million for the Peace Arch crossing entry. This initiative, which has been successfully piloted in Douglas, B.C., enables frequent pre-approved travellers to use an express lane at border crossing points. Duties and taxes are billed electronically to the travellers credit card based on personalized declaration forms. Additional funds will expand the service to other locations.
Also included is $2.6 million for specialized customs enforcement tools and systems.
Funds have been allocated to purchase a number of devices such as contraband detection kits to detect commonly smuggled goods and to improve compliance.
The full consolidation of Revenue Canada which Bill C-2 enables will permit even further savings. We anticipate that consolidation could generate a further savings of $30 million for the year 1995-96.
Let me turn to the second area, our enhanced revenue generating capability. As the Minister of Finance declared in his budget speech on February 22, our government is committed to take decisive action on tax compliance and to strengthen enforcement.
Through administrative consolidation Revenue Canada will have a stronger combined enforcement capacity and thus be able to follow through on this commitment. Our experience has shown that non-compliance in one area such as under reporting income tax is often matched in other areas such as under reporting on GST.
As a single unified department we will improve our penetration into the underground economy and thus increase the fairness of our tax system. It will do this by allowing us to build bridges between our tax system, trade system and border operations to improve the effectiveness of them all.
We want to apply the benefits of such collective efforts to target those who do not comply with the law and to level the playing field for those who do. Efforts to date in co-ordinating the administration of the two existing departments have enhanced revenue generation by enabling increased co-ordination and enhanced sharing of data bases as shown by the following illustrative examples.
First, we have established a pilot in 15 district offices to identify areas of major non-compliance through joint GST and tax audit activities. As at December 31, 1993, $8.4 million in additional federal tax has been assessed and 4,343 non-filers and non-registrants have been identified.
Second, in November we enhanced our effort to identify GST non-filers. It utilizes a combination of overtime, casual staff and facilities from both taxation and excise. Results to date include $417 million having been identified as additional accounts receivable, of which $220 million has already been collected.
Third, we have undertaken the cross-referencing of excise, GST and taxation data base to identify non-filers and non-registrants. The estimated recovery for 1993-94 is $240 million.
As members will see, the return in terms of revenue far outweigh the cost. This will be enhanced by departmental consolidation. The best examples of this is the initiative to offset GST credit payments against income tax liabilities and family court orders.
For 1992-93, $59 million was offset from GST credit payments. Results for the first three quarters of 1993-94 show that $56 million has already been offset. In similar fashion we have made efforts to use better co-ordination to provide more convenient and fair services in particular areas. As well, we expect enhanced revenues from our recent efforts to clamp down on smuggling.
The recent announcements concerning 42 additional customs officers in the Windsor area and 350 customs personnel for the government action plan on smuggling are examples of the government's commitment to improve border protection.
Finally, let me turn to our efforts to reduce the burden on Canadians of compliance with tax laws.
By eliminating the unnecessary barriers between the different components of Revenue Canada, Bill C-2 will have a positive impact on those who must deal with Revenue Canada whether small and large businesses, professionals, importers or the taxpaying public.
The following are but a few examples of the opportunity presented by administrative consolidation to reduce burden and increase service: an integrated collection program so that clients and their representatives need deal with only one Revenue Canada official; the provision of a convenient, one stop shopping service whereby clients can obtain information, acquire forms and make payments at any of about 130 customs, excise and taxation offices across the country; a single business registration number to replace the various identification numbers that business is currently required to use in its dealings with Revenue Canada.
The plan is to develop one single and common registration process, a single registration form, an integrated approach to payments, inquiries and account maintenance as regard corporate tax, source deductions, GST and customs; a simplified combined business return enabling small business with gross sales of less than $500,000 to file a net payment in a single annual return; simultaneous GST, income tax and source deduction audits when necessary and where possible.
Revenue Canada has been entrusted with a significant mandate that involves the lives and the livelihood of Canadians. This is indeed a challenging mandate affected by national and international elements. This consolidation will give Revenue Canada an unprecedented opportunity to enhance its ability to respond to these challenges without imposing any further burden on taxpayers.
As I said at the outset, this legislation provides concrete evidence of our commitment to reshape government to the needs of Canadians. The unanimous report of members of the Standing Committee on Finance is testament to the recognition of this imperative.
I now seek the support of all members in the passage of Bill C-2.