Bill C-224 (Historical)

An Act to amend An Act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces

This enactment amends An Act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces to provide that the Minister of Finance may enter into an agreement with the government of a province under which the government of the province will collect the federal personal and corporation income taxes on behalf of the Government of Canada. It also requires that the Minister of Finance undertake discussions with the Government of Quebec in order to enter into such an agreement.

Federal-Provincial Fiscal Arrangements Act

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Mr. Speaker, I am pleased to rise to take part in today's debate on Bill C‑239, which deals with a promise that the Conservative Party itself proposed in the summer of 2018.

We also moved a motion on February 5, 2019, here in the House, on this clear and legitimate request from Quebeckers and the Quebec National Assembly, specifically to cut the paperwork burden on Quebeckers significantly by allowing them to file a single tax return.

On April 24, 2021, all of my Conservative Party colleagues voted for this measure in Bill C‑224. The single income tax return responds to a request that is dear to the hearts of the people of Lévis—Lotbinière and all Quebeckers. All Quebeckers are required to file two tax returns as soon as they start earning an income, even if they have not reached the age of majority. This noble and legitimate request will save a lot of time and money for Quebec families and all Quebeckers. It is important to note that Quebec is the only province in Canada that still has to take on this onerous task.

Whether it relates to this bill or any other measure that would be good for the Quebec nation and the entire Canadian population, nothing seems to make the Liberal government lift a finger since it came to power in 2015, because saving time and money is simply not one of its values and is not in its DNA.

Let me give a real-life example of when all my children were still living under the same roof at home. At the time, it meant 14 individual tax returns for one house, plus two returns for my small farm. Think about it, that is 16 tax returns under one roof. That is a lot of repetitive and counterproductive work forced on families, students and young workers, who are eager to be active in the workforce, which is in need of labour now more than ever.

True to their values, Conservatives have always been committed to simplifying the lives of Quebeckers, saving them time and money, and increasing their quality of life.

We cannot shy away from certain words. We are living under a coalition government, and this cronyism between the Liberals and the NDP is disastrous for all Quebeckers and Canadians across the country. This arrangement is damaging our democracy and prevents any good measures from being adopted. We saw proof of this when the NDP and the Liberals voted against Bill C‑224, sealing its fate.

We saw further proof recently with my private member's bill, Bill C‑215, which got a majority but may not be adopted at third reading because the Prime Minister and the Minister of Finance are still refusing to give it a royal recommendation. I would like to remind members that my bill would extend EI benefits for people with serious illness to 52 weeks, a fix for outdated legislation that has not been amended since 1971.

There are a lot of good bills here, including the one before us now, Bill C‑239, which is perfectly valid. However, we have a major problem in the House after eight years of Liberal incompetence that is now making itself felt across Canada and in every sector.

Our Canada is broken. It will never be like it was before. We are experiencing the repercussions of lack of leadership and political will to bring positive, long-lasting change to the lives of people in Canada.

Under the Liberals, life has become very expensive. Inflation, taxes, crime and drug deaths are on the rise. Honest citizens like hunters and farmers are being attacked and penalized by Bill C‑21. We have a Liberal government that will do anything to help its cronies get funding and contracts in exchange for a $500 ticket to a dinner. The Liberals managed to legalize marijuana and now want to decriminalize hard drugs. However, when it comes to helping honest people who work hard, day in and day out, people who are responsible, or people who are seriously ill and simply deserve our support, there is no danger of Liberal favouritism. There is no danger of giving these honest people a free ride. We hear more than a simple “no”. It is a resounding “no” to anyone with common sense and logic, and this is all currently endorsed by the NDP.

This government is really old, worn out and outdated, not to mention fundamentally incompetent.

I remember all too well the Liberal argument against adopting a single tax return in Quebec. I can already see the return of the stale rhetoric of the Minister of National Revenue—we just heard it. The House has already heard responses using the simplistic argument that having a single tax return would result in massive job losses, which is unfounded and, moreover, would happen at a time when there is a dire need for labour across Canada.

I would also like to remind the minister and my colleagues that the number of public service jobs has increased by 32% from 2015. My constituents write to me to tell me that they can no longer make ends meet, have no savings, are using food banks to feed themselves and their family, can no longer afford their rent, have to work when sick or, even worse, have to declare bankruptcy. Like them, I am very worried about our future and that of our children and future generations.

The aspirations of Quebeckers are eroding after eight years of Liberal incompetence. The single tax return that has been a Conservative election promise since 2018 will still not see the light of day, I am afraid. The NDP has to go back to being an opposition party and stop propping up the Liberal government. We all know that the 32 Bloc Québécois MPs are not the ones who can make the change that Canada really needs.

I am proud that the people in my riding, Lévis—Lotbinière, trust me and the leadership of the Conservative Party to put an end to the Liberal incompetence that we have seen for eight years now—eight years too many. The Conservatives are the best equipped to work for a more productive Quebec, a stronger Quebec, a richer Quebec, a Quebec that is a partner in Canada's success, a Quebec that is proud of its culture and heritage, a Quebec that is worthy of the French language, a Quebec that is respected by the Conservative Party of Canada for what it has achieved. The Conservative Party is a proud partner in the success of all Canadians from all provinces.

Historically, the Conservatives have said yes to Quebec's requests. We said yes to the construction of the new Champlain Bridge, yes to the future third link in Quebec City, yes to more power over immigration for Quebec and yes to a single tax return. That is more than a promise of change or lip service. It is a real commitment, a promise that I have been keeping every day in the House for 17 years now, along with my Conservative colleagues. I say yes for Lévis—Lotbinière and yes for Quebec.

[Soraya Martinez Ferrada, Liberal, Parliamentary Secretary to the Minister of Housing and Diversity and Inclusion (Housing)]

Mr. Speaker, today it is my privilege to take part in the debate at second reading of private member's Bill C‑239.

This bill is identical to private member's Bill C‑224, which was introduced and rejected in the previous parliamentary session. By now, hon. members should be quite familiar with the major flaws that resulted in its being rejected. Now that it is once again before us, I feel obligated to use my time to review those flaws.

The bill authorized Quebec or any other province to collect federal personal and corporate income tax on behalf of the Government of Canada. Our government has always recognized that the purpose of this bill, which is to find ways to simplify income tax returns and reduce the compliance burden on Quebec taxpayers, is appealing. We all share that goal.

However, the way the bill seeks to achieve that raises grave concerns about effectiveness, equity, efficiency and value for both taxpayers and governments, including those in Quebec.

At the forefront of these concerns are the serious negative impacts the bill would have on the employment situation of Canada Revenue Agency employees working in Quebec, as well as their communities as a whole.

At committee stage in the previous Parliament, we heard from expert witnesses and stakeholders such as a representative of the Union of Taxation Employees, who warned that “massive job losses will clearly ensue if this bill is passed and the federal government hands over administration of Quebec's federal taxes to the provincial government” and that “the vast majority of jobs that would be lost are held by people living in Quebec who pay taxes there and greatly contribute to the province's economic activity.” As the witness concluded, this “would be devastating, especially for the Saguenay—Lac-Saint-Jean and Mauricie regions. The CRA is the biggest employer in the Mauricie region and one of the biggest in the Saguenay—Lac-Saint-Jean region, along with the mining sector.”

These alarming findings are consistent with the CRA's projections, which show that the transfer of the federal administration of Quebec's income tax could jeopardize approximately 6,000 jobs in the 14 CRA offices in Quebec. The transfer would also affect employees in many offices outside of Quebec, such as the office in Summerside, Prince Edward Island, and offices in Ontario, which also process income tax returns.

We also learned in the previous Parliament that this bill would likely result in higher costs for taxpayers. The existing tax collection agreements produce efficiency gains that result in cost savings for taxpayers. The transfer of the administration of several provinces and territories to one tax administrator, namely the federal government, creates economies of scale and reduces the administrative burden on each taxpayer. Unfortunately, the bill we are discussing does the exact opposite.

This was confirmed by the testimony of a Canada Revenue Agency official when the bill was being studied in committee in the previous Parliament. As she noted, “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.” The CRA official confirmed that such a decision would increase costs. She stated, “At a minimum, our estimate at this time is around $800 million.”

This was corroborated by the testimony of a representative of The Professional Institute of the Public Service of Canada, who pointed out that “the numbers don't add up. There are no savings or efficiencies to be gained either for Quebec taxpayers or for those in the rest of Canada”, he added. This same union official then went on to point out that “the most efficient and cost-effective way for Quebeckers to have a single tax return would be for them to ask the CRA to administer all tax collection.” This opinion is shared by the representative for the Union of Taxation Employees. That is not to say that we want to go in that direction.

As the CRA official clearly indicated at committee, the question should not be whether Canada should be in charge of Quebec's taxes or whether Quebec should be in charge of Canada's taxes. The question should be: how can we simplify taxes for residents of Quebec?

Our government completely agrees. That is why we will continue to work and engage with Revenu Québec, with whom we have long had a productive and collaborative relationship, on finding ways to simplify the tax return and reduce the burden on Quebec taxpayers. We will continue to work with Quebec and the other provinces to make things more efficient.

Our concerns about the bill go even further. This bill also raises fears about Canada's ability to meet its obligations under international tax conventions and agreements in effect that state that the Minister of National Revenue is the competent authority in Canada.

Canada has more than a hundred tax conventions and agreements of this nature and renegotiating them could take years and considerable resources, with no guarantee of favourable results. Our international partners may, for example, not agree to change these provisions or be prepared to interact with two or more distinct tax administrations. This situation could in return have serious consequences on our capacity to fight tax evasion and tax avoidance, which relies on tax information exchange agreements and treaties.

Those are the important considerations, and Canadians expect us to take them into account. I want to commend my parliamentary colleagues for doing so when assessing this bill in the previous Parliament and for having rejected this bill.

As we clearly stated, our government is open to improving tax administration to ensure the best possible results for all Canadians in terms of fairness, efficiency and value for taxpayers and governments, including those of Quebec.

We will continue to work with Revenu Québec to find ways to simplify tax returns and reduce the compliance burden on Quebec taxpayers. This will ensure a better harmonization of our respective tax administrations and make it easier for Quebec taxpayers to complete their tax returns.

We are always willing to improve the situation. However, the preponderance of the evidence clearly shows that the bill before us will do the opposite.

[The Speaker, Liberal, Anthony Rota]

I declare Motion No. 1 defeated. I therefore declare Motions Nos. 2 to 4 defeated.

At this time, the question would ordinarily be put on the motion for concurrence at report stage of Bill C-224. However, as the House has just defeated the amendments to restore the bill, nothing remains of the bill except the number. The Chair is therefore obliged to exercise the authority provided by Standing Order 94(1)(a) to ensure the orderly conduct of Private Members' Business.

I therefore rule that the order for consideration at report stage of Bill C-224, an act to amend An Act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces, be discharged and that the bill be dropped from the Order Paper.

[The Speaker, Liberal, Anthony Rota]

It being 3:20 p.m., pursuant to order made on Monday, January 25, the House will now proceed to the taking of the deferred recorded divisions on the motions at report stage of Bill C-224.

Call in the members.

Motions in amendment

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Mr. Speaker, for almost three years now, our party has been actively fighting for a single tax return for Quebec. Our position goes back a long time.

For a political party like ours, which respects provincial jurisdiction, listening to the provinces and collaborating with them is crucial. After all, we are the party that gave Quebec its UNESCO seat, that recognized the Quebec nation and that fixed the fiscal imbalance. We are the party that fought for the Meech Lake accord. In short, the Conservative Party has an excellent record when it comes to respecting the provinces and their jurisdiction.

The provincial government and Quebeckers themselves responded very positively to the idea of a single tax return, which our party advanced in 2018. Currently, Quebec is the only province with two tax returns, one for Ottawa and the other for Quebec. This situation dates back to the Second World War. In 1941, the provinces agreed to temporarily hand their power to tax personal and corporate income over to the federal government. That situation ended up being permanent, not temporary.

However, in 1954, the Government of Quebec created its own personal income tax and started administering its own income tax system. The ability to administer its own system is critical to Quebec's autonomy.

Just as Quebec marked Canadian history in 1954, we have the possibility in the House of Commons to simplify life for Quebeckers and continue the march toward a single tax return for Quebec, administered by Quebec. It is an idea we have been presenting for nearly three years now. At first Bill C-227 provided its sponsor the opportunity to take a positive step in that direction and bring us together around his bill, but now it is a different story.

First, the deadlines set out in the bill are unrealistic. Did it ever occur to the member for Joliette that the party currently in power is the Liberal Party of Canada, a party that is hostile to provincial demands?

As currently worded, the bill calls on the federal Minister of Finance to enter into discussions with the Government of Quebec within 90 days of the passage of the bill. What is more, the bill recommends discussions on an agreement within a year. Do they honestly believe that the Liberal Party of Canada will negotiate in good faith with the Government of Quebec to allow it to have a single tax return?

It would have been wiser for the Bloc Québécois to wait for a Conservative government to be elected before initiating such discussions, since the Conservatives are much more in tune with the needs of the provinces. There is no doubt that an agreement negotiated by the Conservative Party of Canada and the Government of Quebec would have been much more beneficial for la belle province than one negotiated by a Liberal government.

In fact, recent events show that the Liberal government is not very responsive to Quebec's demands. Quebec is calling for an increase in health transfers with no strings attached. The federal government responded by seeking to impose Canada-wide standards in Quebec's long-term care facilities. That shows a complete lack of trust in Quebec.

Fortunately, the Conservatives not only want to increase health transfers in a stable, predictable way with no strings attached, but we also want to take action for Quebec in other areas, namely by applying Bill 101 to federally regulated businesses, such as banks, and by giving Quebec more authority over immigration.

Second, rather than sticking to one bill to obtain a single tax return for Quebec, the member for Joliette chose to use this opportunity to promote a completely different agenda. That should not have happened.

Nowhere in its unanimous motion to support the creation of a single tax return did the Quebec National Assembly request negotiating powers with tax administrations in foreign jurisdictions in order to amend the tax treaties and agreements regarding income tax and Canada's tax information exchange agreements. That is a whole other debate that is hindering the passage of the bill.

Although we support Quebec's autonomist vision, foreign relations are definitely a federal jurisdiction. Why, then, include this in the bill?

Is the Bloc Québécois really set on having a single tax return? Did it not know that including this clause would derail the debate? The Bloc Québécois's position on this issue is unfortunate, but not surprising.

The Bloc Québécois is using this clause to have it both ways. The single tax return is in itself a huge win for Quebec. The Bloc Québécois always has to push the envelope.

Third, the bill provides no guarantee that Canadian public service jobs will be maintained following this change. The people of Chicoutimi—Le Fjord know me. I have always said that the single tax return should be brought in without causing any job losses. I can say that this bill does not provide any guarantees about that.

The public service has quality, well-paid jobs in the regions. The Conservative Party has always wanted the regions, and not just Montreal, to develop and have their fair share of the pie. It is in the same spirit that the provincial government has a plan to move public service jobs to the regions.

Unfortunately, if our Bloc Québécois colleagues had paid attention to what was said by the stakeholders who appeared before the committee, including the union representing the workers, they would know that the bill, in its present form, does nothing at all to protect jobs.

This bill jeopardizes an important sector for regions like Saguenay—Lac-Saint-Jean and the Mauricie. We are in the midst of a pandemic; now is not the time to jeopardize jobs. Now is the time to take action for our families, our workers and Quebec.

If the purpose of Bill C-224, in its present form, was to encourage the creation of a single tax return, then it misses the mark. The Bloc Québécois should leave managing to managers and let the Conservatives finish what they started with respect to the single tax return. In other words, the Bloc should let the Conservatives introduce, negotiate and implement the single tax return. The Bloc Québécois's bill is a very good illustration of the expression “give someone an inch and they will take a mile”.

Rather than proposing effective solutions for Quebeckers to make their lives easier, the Bloc Québécois's bill just stirs up quarrels between Ottawa and Quebec. The Conservative Party will continue to push for a pragmatic and effective solution to give Quebeckers the single tax return they deserve, while respecting workers and the regions.

I will close by saying that the Conservative Party will not need a private member's bill to take action. We have every intention of forming the next government, of picking up the phone to call the Government of Quebec and of negotiating and creating a single tax return for Quebeckers.

[Francesco Sorbara, Liberal, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, I wish a good evening to all my colleagues as we continue to operate virtually in this very extraordinary period of time. I am thankful for the opportunity to speak during today's report stage debate on Bill C-224, an act to amend An Act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces.

As the House is aware, after careful study, the majority of our colleagues on the finance committee have recommended that this legislation not proceed further. To briefly recap, this legislation would authorize the Minister of Finance to enter into agreements with the provincial government. As a result of these agreements, and under Bill C-224, the province would then be able to collect personal and corporate income taxes on behalf of the Government of Canada. Additionally, within 90 days of the legislation coming into force, the Minister of Finance would obliged to undertake discussions with the Government of Quebec in order to enter into an agreement within one year.

During my time today, I would like to review the serious issues raised with this bill during the committee stage that prompted members to make the recommendation not to proceed with Bill C-224. Specifically, I want to mention four important areas of concern. They are the bill's potential impacts on public service employment levels in Quebec, the delivery of benefits to residents of Quebec, the fight against international tax evasion and the significant implementation cost of this proposal.

First, as noted by officials from the Canada Revenue Agency who appeared before the finance committee, Bill C-224 would create tremendous uncertainty surrounding job security for the nearly six thousand CRA employees in Quebec, as well as many other CRA employees outside of Quebec.

A CRA official who appeared before the committee on February 16, 2021, said, “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.”

This is a real concern about job security that was also shared by representatives of various public sector unions who also appeared before the finance committee. For instance, the president of the Professional Institute of the Public Service of Canada stated, “it’s critical that we not lose sight of the impact this could have on employment in Shawinigan and Jonquière, where the Canada Revenue Agency provides good jobs to a great many people. I cannot think of a worse time than the middle of a pandemic to start thinking about cutting jobs in smaller communities.”

The CRA is a government leader in the decentralization of its jobs. They are not at all concentrated in the national capital region, as is often the case with federal jobs. Employees cannot be easily redeployed to other departments. Similarly, the national president of the Union of Taxation Employees echoed this apprehension about the job losses that could result due to the passage of Bill C-224 by informing the finance committee of the following:

...massive job losses will clearly ensue if this bill is passed and the federal government hands over administration of Quebec's federal taxes to the provincial government. The Canada Revenue Agency currently employs approximately 6,000 people in Quebec, and our union represents about 4,000 of them. Revenu Québec has around 12,000 employees. Together, the two agencies therefore have a total workforce of approximately 18,000 people. If we compare that to the CRA's total workforce in Canada outside of Quebec, which is about 39,000 employees, it's easy to see that there would be a surplus of employees in Quebec if the bill is passed.

I would like to point out that the vast majority of jobs that would be lost are held by people living in the province of Quebec. They pay taxes there and greatly contribute to the province's economic activity. Basically, they are Quebeckers from all over Quebec, as the national president of the Union of Taxation Employees pointed out when he said, “Included in these job losses are more than 1,200 employees in the Saguenay—Lac-Saint-Jean region and 1,500 in Mauricie.”

As I have clearly demonstrated, Bill C-224 could represent a serious negative impact on job security for the thousands of public servants in Quebec, which is especially unfortunate because of the ongoing COVID-19 pandemic.

In that regard, I cannot believe that the Bloc Québécois, a party that claims to stand up for the people, could imagine that jeopardizing the livelihood of thousands of Quebeckers in the Quebec City region is a good idea.

As the Bloc Québécois leader said yesterday at a press conference, when you take an interest in the regions, you take a real interest.

The second area of concern I would like to highlight with Bill C-224 is its potential negative impact on the delivery of benefits to residents of Quebec, as explained by the CRA official who appeared before the finance committee. The CRA and the Government of Canada use information obtained by the CRA to administer key federal benefit programs, such as the guaranteed income supplement and the child care benefit. Tax information is needed to administer these programs to ensure individuals get their benefits. This official went on to state that 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, COVID-19 emergency benefits, which are crucial to the well-being of Canadians, would not have been possible to implement as quickly.

A third point of concern I would like to flag with Bill C-224 is its potential negative impact on Canada's fight against international tax evasion. Part of the CRA's mandate is to ensure the tax compliance of Canadians, both domestically and abroad. For this reason, the Government of Canada has signed many critical international tax treaties and tax information exchange agreements to help ensure the CRA's ability to fight international tax evasion. However, as noted by the CRA official at the finance committee, convincing our partners to make changes to include other subnational tax administrations is not a given.

A representative of the Professional Institute of the Public Service of Canada warned that Bill C-224 could negatively affect Canada's fight to combat international tax evasion, stating that because international agreements aimed at fighting tax evasion are signed between central governments, it would be difficult for Quebec to perform the federal government's work in this area without a great many treaties being redrafted. This could lead to increased tax evasion at a time when billions of dollars are sitting offshore that the government is trying to recoup. This is money that is badly needed to fund the public programs and services Canadians depend on every day.

A fourth and final concern with Bill C-224 is the significant potential implementation cost of the proposal, as there would clearly be cost increases and loss of economies of scale. A CRA official explained to the finance committee that the required integration between both the CRA and Revenu Québec processes and techniques would incur significant additional expenses.

In summary, these four areas represented real, substantive worries for the expert witnesses who appeared before the finance committee and helped inform the recommendation of the majority of the members of the finance committee not to proceed with this bill, a recommendation that I also support.

Before concluding, though, I would like to briefly note the important efforts the Government of Canada, through the CRA, has taken to reduce the administrative burden on Quebec taxpayers. In fact, the CRA has started discussions with the Province of Quebec to simplify or combine some tax forms and to simplify the income tax return process. This is an important and responsible step that I think all members would applaud and support.

Speaker's Ruling

[The Deputy Speaker, Conservative, Bruce Stanton]

There are four motions in amendment standing on the Notice Paper for the report stage of Bill C-224. Motions Nos. 1 to 4 will be grouped for debate and voted upon according to the voting pattern available at the table.

I will now put Motions Nos. 1 to 4 to the House.

The House proceeded to the consideration of Bill C-224, An Act to amend An Act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces, as reported (with amendment) from the committee.

Finance

[Wayne Easter, Liberal, Malpeque, PE]

Madam Speaker, I have the honour to present, in both official languages, the second report of the Standing Committee on Finance in relation to Bill C-224, an act to amend an act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces.

The committee has studied the bill and has decided to report the bill back to the House with amendments.

[The Chair, Liberal, Wayne Easter]

Okay, we'll order a reprint.

That will end the discussion on clause-by-clause on Bill C-224.

Thank you for your efforts, Mr. Ste-Marie. You wanted to make a point.

Thank you, Mr. Legislative Clerk, as well.

Go ahead, Gabriel.

[The Chair, Liberal, Wayne Easter]

I call the meeting officially to order.

Welcome to meeting number 23 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of January 27, 2021, the committee is meeting to study Bill C-224, an act to amend an act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces. We will be meeting on Bill C-208 in this committee meeting as well. Larry Maguire will present his bill.

Today's meeting is taking place in a hybrid format, which we've all become used to, pursuant to the House order of January 25, 2021. Therefore, members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website.

We will not go through the rest of the formalities.

We will start with Mr. Gabriel Ste-Marie's bill, Bill C-224. We will go through clause-by-clause consideration. I hope people have the bill before them. It's not like we're in Parliament, where we can hand around fairly short bills.

Pursuant to Standing Order 75(1), consideration of the preamble will be postponed.

(On clause 1)

I will call for the vote on clause 1, which has four proposed subsections.

I expect you want a recorded division on this, Mr. Ste-Marie.

[The Chair, Liberal, Wayne Easter]

I call the meeting to order. Welcome to meeting number 22 of the House of Commons Standing Committee on Finance. Pursuant to the committee's motion adopted on Friday, February 5 of this year, the committee is meeting to study all aspects of COVID-19 spending and programs.

Today's meeting is taking place in hybrid format pursuant to the House order of January 25 of this year. Therefore, members are attending in person in the room and remotely using the Zoom application.

The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.

I would also remind folks that we're not to take screenshots, in accordance with the House of Commons rules.

I welcome the witnesses from across the country. If they could hold their remarks to about five minutes, that would be helpful. Then, after all witnesses have made their presentations, we will go to a series of rounds of questions with members.

I might point out as well that although the motion says “COVID-19 spending and programs”, if you have any brilliant ideas on where we should be going on spending when we put COVID-19 behind us, we're always open to that as well.

Before I start with the first witness, I'll clear up a little confusion I might have caused at the close of the meeting the other day in regard to next week. I don't think the day is established yet, and it's a constituency week. On whatever day it is, we will deal with Bill C-224, which is Mr. Ste-Marie's private member's bill. We will start clause-by-clause on that. That will be followed by Larry Maguire's private member's bill, and that will complete the day. Anyone who has witnesses for Mr. Maguire's bill, please have your witness list in to the clerk by Sunday night to give time to have them appear the following week.

The other day next week, we will have a public meeting with the law clerk relative to the motion that passed in an earlier session of this committee.

Mr. Kelly and Ms. MacEwen aren't here yet, so I guess we'll start with Mr. Mike Cassidy, with Coach Atlantic Maritime Bus.

The floor is yours.

[Jean Couillard]

Having two levels of government makes things very complicated for taxpayers. There are costs for taxpayers as well. Bill C-224 won't address the costs and complexity of tax returns. Both laws need to be simplified. Unfortunately, this won't happen at my level. It must happen at the political level. Until both levels of government talk to each other to try to simplify tax returns, nothing will happen, unfortunately. As an auditor, I couldn't simplify tax returns even if I wanted to.

[Marc Brière, National President, Union of Taxation Employees]

Thank you.

Good afternoon, ladies and gentlemen.

I am the national president of the Union of Taxation Employees.

First of all, I too would like to thank you for giving me the opportunity to take part in this discussion today on Bill C-224.

The Union of Taxation Employees is a component of the Public Service Alliance of Canada. We represent around 28,000 employees of the Canada Revenue Agency.

The purpose of the bill introduced by the Bloc Québécois member of Parliament Gabriel Ste-Marie is to have the federal government make the province of Quebec responsible for collecting and administering federal-level personal and business income taxes on behalf of the federal government.

Because the Bloc Québécois is an openly sovereignist party, I can certainly understand the political reasons that prompted him to introduce this bill. However, I can see no other good reasons that would justify passing Bill C-224.

First of all, massive job losses will clearly ensue if this bill is passed and the federal government hands over administration of Quebec's federal taxes to the provincial government. The Canada Revenue Agency currently employs approximately 6,000 people in Quebec, and our union represents about 4,000 of them. Revenu Québec has around 12,000 employees. Together, the two agencies therefore have a total workforce of approximately 18,000 people. If we compare that to the CRA'S total workforce in Canada outside of Quebec, which is about 39,000 employees, it's easy to see that there would be a surplus of employees in Quebec if the bill is passed.

Moreover, as reported in a January 2019 article in the daily Le Devoir, Quebec Premier François Legault believes that there will definitely be job losses. He is also careful to point out that only employees in the group working for Revenu Québec would keep their jobs. I actually don't agree with him, but that's what he said.

I'd like to point out in passing that the vast majority of jobs that would be lost are held by people living in Quebec who pay taxes there and greatly contribute to the province's economic activity. Basically, they are Quebeckers from all over Quebec.

Included in these job losses are more than 1,200 employees in the Saguenay—Lac-Saint-Jean region and 1,500 in Mauricie. The bill calls for measures to be put in place to mitigate the job losses that will be inevitable. While I have been looking for a realistic solution to this problem, I have yet to find one.

Now, I also need to point out that the idea itself of creating a single tax return in Quebec is not the solution, at least not at this time. This is not coming from me. This is according to Quebec tax experts who met in May 2019 in Sherbrooke. According to those experts, the solution is not applicable at this time. They said that international practices would prevent Quebec from being able to do a part of the federal government's work in this area. They also said that the result of bilateral agreements negotiated solely between the central governments, like the Government of Canada and other countries, such as co-operation agreements on, among other things, combatting tax evasion, do not usually allow the data to be shared with other levels of government.

I know that the bill is asking us to look into that, but I want to point out that it took years for the CRA to negotiate these agreements with other countries. It will take a long time, if it can happen and if the other countries agree, to make any changes to these agreements.

In any case, the real problem doesn't lie there. The bulk of the additional cost of tax compliance in Quebec doesn't arise from a redundancy issue, according to François Vaillancourt, a renowned Quebec tax expert. It comes from the tax policy differences between the two levels of government, because there are two tax laws, one provincial and one federal. He said that as long as we have to comply with two different sets of legislation, we cannot hope to achieve such huge savings.

The experts therefore suggest that Quebec and Ottawa harmonize their tax policies before even thinking about creating a single tax measure. According to those experts, if the objective is solely to reduce redundancies and achieve efficiencies, it would be more logical to entrust the work to the agency that is most capable of achieving large-scale savings, namely, the Canada Revenue Agency. I suggest that this is why the nine other provinces are counting on the CRA to do the work.

In its report published in June 2015, the Robillard commission, commissioned by the current government itself, came to the conclusion that transferring the tax administration activities from Revenu Québec to the Canada Revenue Agency would result in direct annual savings of approximately $400 million for the Quebec government.

In our view, if Quebec administers the federal government's taxes in Quebec, it will lose some of its autonomy, since it will have to harmonize many of its tax policies with those of Canada's Income Tax Act. In particular, that will include the definition of income, which is not the same at the federal level as it is in Quebec.

In conclusion, thank you again for the opportunity to speak to you today. I will be pleased to answer any questions committee members may have.

[Jean-François Sylvestre, Vice-President, National Executive, Syndicat de la fonction publique et parapublique du Québec]

Thank you, Mr. Chair.

Thank you very much for your invitation.

For five years, the Syndicat de la fonction publique et parapublique du Québec has been proposing that Quebec taxpayers fill in one tax return only, rather than two, as is currently the case. In order to ensure Quebec's autonomy in tax matters, this single tax return should be administered by Revenu Québec. We therefore enthusiastically welcome Bill C-224, as proposed by the hon. member for Joliette, and we invite all parties to study it seriously and support it in the upcoming votes.

A single tax return would clearly come with its share of changes, but the advantages would be well worth the cost, especially if the necessary measures are put in place to avoid any loss of jobs. Thanks to employers like the public service in Quebec and at the federal level, all the mechanisms are available to protect them.

Among the advantages of a single tax return, we might mention the significant and ongoing savings for the governments and therefore for the public as well. According to an analysis by the Research Institute on Self-determination of Peoples and National Independence, the savings could well be $425 million annually. In the light of this observation, a refusal to achieve those savings can only feed the prevailing cynicism as to the management of public funds. Given all the investments needed for services to the public, those hundreds of millions of dollars could clearly be put to better use.

In terms of the choice of the agency that would become responsible for the single income tax paid by Quebeckers, it seems clear to us that Revenu Québec would be the best option. In fact, according to Revenu Québec itself, leaving the collection solely to the CRA would not mean savings. It would mean annual losses of $300 million, because Revenu Québec combats tax evasion more aggressively. It does so through the wealth indicators program that uses artificial intelligence to identify taxpayers whose returns do not match the value of their assets.

It is also essential to maintain Quebec's autonomy in tax matters. The autonomy allows the Government of Quebec to have its own tax policies without having to pay a penalty, as is the case with other provinces that wish to define the tax base differently from the federal government. The fight against tax evasion and tax avoidance is close to the hearts of Quebeckers, as shown by the strong support for taxing the tech giants, hand in hand with the strong criticism directed at the federal government for taking too long to collect those taxes. The provinces turned over tax collection to Ottawa. We therefore emphasize that, since Ottawa asked the provinces for flexibility in determining the tax base, Quebec could well ask Ottawa for flexibility in return.

Revenu Québec also has much more of a presence here than the Canada Revenue Agency. The provincial agency has 60% more points of service than its federal equivalent. We must also ensure that we maintain service in French that is of good quality and easily accessible. A lot of evidence, albeit anecdotal, shows that people prefer to call Revenu Québec for information on federal income tax.

Now that we have laid out the advantages of a single tax return, we also want to submit our ideas on solutions to mitigate the impact on the workers as much as possible. This of course is a problem to which we as a union are sensitive.

The impact that this change would have on the 5,000 affected jobs in Quebec should be carefully studied. All transfers or re-assignments should be spread over as many years as it will take. The Saguenay and Shawinigan regions specifically will have no costs in moving to a single tax return. We also believe that the National Verification and Collection Centre in Shawinigan-Sud, with its 1,300 jobs, should hardly be affected. Because it deals with returns coming from all over Canada, there would be therefore no reason to change the Centre's mission.

In addition, new exchanges of tax data between countries as a result of the OECD's initiative called BEPS, or base erosion and profit shifting, require some reinvestment in the federal agency so that this significant quantity of data is properly processed. We must also not forget the eight programs created in response to the health crisis, which CRA manages. As Quebec already has fewer federal public servants compared to the Canadian average, it would be even more timely for those new investments to be used to maintain CRA employment in Quebec.

Other federal programs could also benefit from the skills of the people working at CRA, including the ability to provide quality services in French. Priority hiring in certain other federal departments and agencies could be made available to the workers that have to be reassigned.

In addition, we must keep in mind that Revenu Québec would certainly benefit from the expertise of CRA employees, who could be transferred to the provincial agency, with all their working conditions intact. This type of situation has come up before; it would not be the first time.

Finally, we will conclude by asking for the same thing as the Commission des finances publiques du Québec, that is, greater cooperation between the two agencies in exchanging information required as the result of federal agreements. Whether or not we have a single tax return, it is essential that each tax authority have all the information available to ensure that all taxpayers pay their fair share.

Thank you very much.