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.

[Debi Daviau, President, The Professional Institute of the Public Service of Canada]

Thank you so much. Good afternoon. My name is Debi Daviau. I am president of The Professional Institute of the Public Service of Canada, or PIPS, the national union that represents approximately 1,400 Canada Revenue Agency professionals in Quebec. Overall, we represent some 12,000 auditors at the Canada Revenue Agency across the country.

With me today is Mr. Jean Couillard, our representative for our group at CRA, and he is our representative for the Quebec region. He is a CPA and a CGA and a subject matter expert on CRA-related issues.

We'd like to thank you for the opportunity to present our views on Bill C-224 and on the possibility of transferring tax processing from the Canada Revenue Agency to Revenu Québec. Together, we would be happy to answer any and all questions you may have after our presentation.

I want to assure committee members that we have thoroughly researched this issue. Our position is based on substantial academic and expert literature. In a nutshell, Bill C-224 is not in the best interests of Canadians and Quebeckers, and there are alternatives to transferring this responsibility to Revenu Québec. We urge members of Parliament to carefully review our arguments and decide if this is really the road to follow, especially at this time. Why? Because it would have a negative financial impact on taxpayers across Canada, and it would not result in tax-processing efficiencies for residents of Quebec. It's a step backward in the fight against tax evasion. It's a move away from tax fairness. Finally, it would lead to the loss of high-quality jobs in Shawinigan and Jonquière, two smaller provincial communities already hard hit by the pandemic.

I'd like to emphasize that we are not the only ones to take this position. Academic and expert literature on this issue demonstrates that there is no clear evidence that decentralization of Canadian tax administration to a provincial authority would result in greater aggregate savings, efficiency, compliance or accountability, as compared to centralizing the administration of provincial taxes at the CRA.

Please note that we can provide committee members, and any member of Parliament, with our list of these studies and references upon request.

I'd like to address each of our arguments individually.

First, 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. The June 2015 report of the Commission de révision permanente des programmes, which was commissioned by the provincial government itself to look into this and other issues related to government spending and efficiency, found that the most efficient and cost-effective way for Quebeckers to have a single tax return would be for the CRA to administer all tax collection. Plus, a shift from the CRA to Revenu Québec would require a significant expansion of the latter's capacity as well as an expansion of its administration budget. The CRA is already in a position to centralize Quebec's tax administration.

Second, it represents a step backward in the fight against tax evasion. We know that other provinces are watching to see what happens with Bill C-224. We believe that if it is adopted, the bill could lead to a balkanization of Canada's tax system, resulting in more regressive taxes and weakened enforcement of measures aimed at combatting tax avoidance amongst wealthy Canadians and large corporations. Also, 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 recuperate. This is money that is badly needed to fund the public programs and services that Canadians depend on every day.

Third, it's a move away from tax fairness. Progressivity in Canada's tax system largely stems from federal taxes. This is even more the case now, as the federal government has introduced more progressive tax measures at both the top and bottom ends of the income spectrum. These measures are delivered through Canada's existing tax system. Their administration would be far more complicated if individual provincial agencies became involved. If we are to have a fairer and more progressive tax system in Canada, it must come from the federal level of government. We can't depend on provincial governments, which are by nature and by economic imperatives more constrained in what they can do.

Historically, the shift to a tax-on-income basis for provincial income taxes rather than as a percentage of federal taxes gave them more flexibility to set their own rates. This led to many putting into place considerably less progressive income tax systems.

Of course administration and collection of taxes are different from tax policy-making, but further devolution of the administration and collection of taxes will inevitably lead to a greater devolution of tax policy-making and to a less progressive tax system overall.

Finally, 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 can’t think of a worse time than the middle of a pandemic to start thinking about cutting jobs in smaller communities. The CRA is a governmental leader in the decentralization of its jobs. They are not all concentrated in the national capital region, as is often the case with federal jobs. They may not be easily redeployed to other departments.

To conclude, Bill C-224 should not be adopted. A better way to go, if we want to have less paperwork and a lighter tax-filing burden on individuals and ensure that people get the benefits they are entitled to, would be to have automatic tax filing. This is something the Trudeau government has committed to implementing. We support that initiative, and the CRA has the capacity to effectively process Quebec taxes as it already does for the other provinces.

I want to thank you for your time. Mr. Couillard and I would be pleased to answer your questions

[The Chair, Liberal, Wayne Easter]

I call this meeting to order.

Welcome to meeting number 21 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.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. Members are therefore attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website, and so you are aware, the webcast will always show the person speaking rather than the entire group. I think most members are aware of all the technicalities around this. Also, to remind people, pictures are not supposed to be taken of the meeting and keep your mikes off when you're not speaking.

We have three witnesses here today for the session. We'll start with the president of The Professional Institute of the Public Service of Canada, Ms. Daviau, and Quebec's representative, Mr. Couillard.

The floor is yours, Ms. Daviau, if you have opening remarks.

[The Chair, Liberal, Wayne Easter]

I will call this meeting to order.

Welcome to meeting number 20 of the House of Commons Standing Committee on Finance.

Pursuant to the committee's motion adopted on Friday, February 5, 2021, the committee is meeting to study all aspects of COVID-19 spending and programs. That should be a short issue, you would think.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021, and 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 website, as we all know, will only show the person who is speaking.

I have to indicate again, because I understand there have been some problems in the past, that people should not take screenshots or take photos of their screens. It's the same rules as in Parliament.

We have 12 witnesses today, but before I get to them we have a couple of motions that we need to adopt. We missed, when we were dealing with Bill C-224, giving the independents the opportunity to provide amendments so I'll read the motion we require and if somebody wants to move it, we'll move ahead.

That, in relation to Orders of Reference from the House respecting Bills,

a) the clerk of the committee shall, upon the committee receiving such an Order of Reference, write to each member who is not a member of a caucus represented on the committee to invite those members to file with the clerk of the committee, in both official languages, any amendments to the Bill which is the subject of the said Order which they would suggest that the committee consider;

b) suggested amendments filed, pursuant to paragraph (a), at least 48 hours prior of the start of clause-by-clause consideration of the Bill to which the amendments relate shall be deemed to be proposed during the said consideration, provided that the committee may, by motion, vary this deadline in respect of a given Bill, and

c) during the clause-by-clause consideration of a Bill, the Chair shall allow a member who filed suggested amendments, pursuant to paragraph (a), an opportunity to make brief representations in support of them.

That's the motion.

Does somebody want to move that? It is so moved by Mr. Ste-Marie.

(Motion agreed to)

Thank you.

The second motion we need to deal with is a budget to deal with the study of Bill C-224. Gabriel is not a very expensive guy, because we're only asking for $1,275 for this study. Does somebody want to move that budget? It is so moved by Ms. Dzerowicz.

(Motion agreed to)

We'll move on to witnesses. I believe everyone has the witness list before them.

From the Canada Revenue Agency we have Mr. Vermaeten, assistant commissioner, who has been here many times; and Mr. Gallivan, assistant commissioner. From the Department of Employment and Social Development, we have Elisha Ram, who is associate assistant deputy minister; Mr. Groen, senior assistant deputy minister; Mr. Perlman, chief financial officer and senior assistant deputy minister; and Atiq Rahman, acting assistant deputy minister, learning branch. From the Department of Finance, we have Tushara Williams, associate assistant deputy minister; Galen Countryman, director general; Evelyn Dancey, associate assistant deputy minister; Soren Halverson, associate assistant deputy minister; Alison McDermott, associate assistant deputy minister; and Mr. Jovanovic, associate assistant deputy minister.

I don't know if there are any opening presentations. You'll have to let me know.

Ms. McDermott.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

This might not have been done, but has there been any type of assessment about what would be the cost to CRA to retool, to readjust, if what is proposed in Bill C-224...? Has there been some sort of a costing to CRA versus what would be the cost savings in Quebec? Has anybody done that? I don't know if that's Mr. Marsland or Ms. Laroche, but do you know if that type of costing has actually happened?

Everyone is frozen now.

[Mireille Laroche]

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.

[Andrew Marsland, Senior Assistant Deputy Minister, Tax Policy Branch, Department of Finance]

Thank you, Mr. Chair.

Thank you for inviting me to speak to private member’s Bill C-224. I am pleased to be here.

Bill C-224 proposes to authorize the Minister of Finance to enter into an agreement with the government of a province under which the government of the province would collect the federal personal and corporate income taxes on behalf of the Government of Canada.

It also requires that employment-related impacts be mitigated.

Within 90 days of the coming into force of the act, the Minister of Finance must undertake discussions with the Government of Quebec in order to enter into an agreement within one year.

Upon entering into an agreement with a provincial government, the Government of Canada must renegotiate its agreements with foreign tax authorities to give the province direct access to all international tax information.

Perhaps by way of context, I will say a few words about the administration of income taxes across Canada. As the committee will be aware, most provincial income taxes are collected on behalf of provinces by the Canada Revenue Agency, as established under the long-standing Tax Collection Agreements.

Under the tax collection agreements, the federal government agrees to collect and administer provincial taxes virtually free of charge in exchange for which the provinces agree to maintain a common tax base between the federal and provincial systems. This helps to ensure harmonization of the tax systems and reduces complexity, both in administration and in compliance. At the same time, provinces and territories have the flexibility to set tax rates and to introduce credits to reflect their particular policy choices.

Quebec, of course, does not have a tax collection agreement for personal income taxes or corporate taxes, and Quebec and Alberta don't have one for corporate income taxes. As such, these provinces administer their own provincial tax systems that are not required to adhere to a common tax base.

Over time, in the absence of adherence to a common tax base, different and reasonable policy choices have been made with respect to how various categories of income or expenditures are treated for income tax purposes. Consequently, it's important to consider how these differences in policy approaches contribute to the respective compliance burden faced by taxpayers in different provinces. In other words, the question of compliance burden goes beyond who is administering the law or the tax, but also, importantly, involves elements of the system itself.

Finally, as the committee is aware, while the focus of the bill is on tax administration, beyond the collection of taxes, the Canada Revenue Agency delivers benefits to Canadians, such as the Canada child benefit for individuals, and the scientific research and experimental development program for corporations. More immediately, over the past 12 months, the agency has played a critical role in the timely delivery of a range of emergency relief benefits to Canadians, individuals and businesses, leveraging the agency's role in tax administration across the country.

Along with our colleagues from the Canada Revenue Agency, we'd be very pleased to answer any questions that the committee may have.

Thank you.

[The Chair, Liberal, Wayne Easter]

We will call the meeting to order.

Welcome to meeting number 19 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of January 27 of this year, 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.

Today's meeting is taking place in the hybrid format pursuant to the House order of January 25, and 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. So that you are aware, the webcast will always show the person speaking rather than the entirety of the committee.

Today's meeting is also taking place in the new webinar format. Webinars are for public committee meetings and are available only to members, their staff and witnesses.

I'd like to take this opportunity to remind all participants in this meeting that screen shots or taking photos of your screen is not permitted, similar to rules in the House of Commons.

With that, I'd like to welcome our first witness, who is Gabriel Ste-Marie. This is his private member's bill, Bill C-224.

We will go to witnesses from the CRA and Finance in the second hour.

We are starting later, and we have an experimental vote on the other system at 7:15 Ottawa time, but I'm told we will have time to get two hours in.

The first hour will go to Mr. Ste-Marie.

Mr. Ste-Marie, the floor is yours. Welcome.

Federal-Provincial Fiscal Arrangements Act

[The Speaker, Liberal, Anthony Rota]

Pursuant to order made on Monday, January 25, the House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-224, under Private Members' Business.

The House resumed from January 26 consideration of the motion that 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 read the second time and referred to a committee.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I will try to speak quickly.

I am proud to support Bill C‑224, which would authorize Quebeckers to file a single tax return.

Some people may be wondering what I am talking about. Quebeckers have to file two tax returns a year, as though filing a single tax return were not already hard enough for many Canadians. Quebec is the only province with a confusing system that requires two tax returns.

Conservatives are proud to support Quebec's desire to require only one tax return to be filed by Quebeckers. It is a reality in other parts of Canada that people only have to file one tax return, and for a lot of people, I think filing one tax return is quite enough.

The government member who spoke before me, in a desperate effort to justify the government's opposition to this concept, trotted out this old Liberal trope that centralization means efficiency, that the more the federal government does, the more efficient it is going to be and, by the way, let us also worry that there will be less work for federal employees, not seeming to notice the inherent contradiction in those arguments.

On the Conservative side, we believe there are many worthwhile things that we could have employees at Revenue Canada do. Perhaps the government could finally support a Conservative idea, which is to give CRA a duty of care when it comes to serving Canadians and maybe redeploy those employees just to have the additional time and flexibility to provide greater service and response and care to people who have questions and issues.

Really, it is just fundamentally, philosophically wrong that the Liberals always think that centralization is efficiency. On the Conservative side, we understand the value of subsidiarity, of having services delivered at the level closest to the people, that it is practical to do so. We believe in empowering provincial governments and municipal governments; respecting the role of families, of communities and of individuals; respecting individual rights and not thinking that the federal government taking more and more power for itself away from individuals, away from families and away from provincial and municipal governments is the way to go. Government is not always the solution, and bigger government, national government, is not always the solution when provincial governments and municipal governments are closer and more responsive to people.

I had many other comments to make, but I will simply say that I am proud to support this bill at this stage.

I look forward to the study that is going to take place at committee as we further work to refine it and to operationalize these principles of subsidiarity and respect for provincial governments that are a key part of what Conservatives stand for.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, we acknowledge at the outset of this debate that the intent of the proposed legislation is appealing. It is only when we look at what it would mean in practice that its problems become apparent. These problems are significant: higher costs for taxpayers; inconsistent administration across jurisdictions; less capacity to move quickly, efficiently and effectively to support Canadians through emergencies like COVID-19; the need to renegotiate existing international tax treaties and agreements; employment disruptions; and job losses.

These adverse impacts may not have been taken into consideration when Quebec's National Assembly passed its motion back in May of 2018 calling on the federal government to allow the Province of Quebec to administer a single tax return. They also may not have been taken into account when Bill C-224 was drafted. However, it is our duty and obligation as representatives of Canadians to take them into account now. Canadians rightfully expect their governments to administer taxes and deliver programs in a fair, efficient and cost-effective manner. It is in this regard that Bill C-224 falls well short of this intent.

Let us take a moment to revisit these shortcomings. First and foremost, Bill C-224 would likely entail higher overall costs for Canadian taxpayers. That is because the Government of Canada collects and administers not only federal income taxes, but also income taxes of all the provinces and territories, except for corporate income tax in Alberta and personal and corporate income taxes in Quebec. This results in savings for taxpayers because a single tax administrator at the national level creates efficiencies and economies of scale that lower overall taxpayer administration costs. If a province were to assume responsibility for the collection and administration of federal income taxes, these efficiencies would be reduced, increasing costs to taxpayers.

Moving in the opposite direction and creating an additional layer of tax administration, as proposed in Bill C-224, would have the opposite effect. It would create inefficiencies, decrease economies of scale and increase overall per-taxpayer administration costs. It is an unavoidable fact that the cost of tax administration is driven by fixed investments in the technology and office space needed to administer taxes, and the administration of federal income tax by the Province of Quebec would not help lower these fixed costs in the province. Rather, these fixed costs would have to be incurred instead by both CRA and Revenu Québec.

Canadians would be right to ask who would pay for the increased costs that could arise from such duplication in investment and administration, and the Premier of Quebec has at least been forthright in providing the answer for them: the Government of Canada. The Premier of Quebec has made it clear that his government would seek reimbursement for costs associated with the administration of federal income taxes. Canadians may be curious about how much this will cost them, but in this respect, we have seen no proposed cost implications. Determining what the additional costs would be depends on the scope and scale of the tax programs transferred to Quebec and the outcome of the negotiations between governments.

However, based on experience of when the administration of sales tax was transferred from the Ontario government to the federal government following the harmonization of the GST and PST, and given the much greater scale of this change, it would be expected that the transition costs alone would be at least $800 million, and likely more than this. This does not include increased costs from the loss of economies of scale for CRA or the costs associated with the renegotiation of our international agreements, even if our international partners were willing to entertain such negotiations.

What we do know for sure is that Bill C-224, by effectively creating a separate tax administrator for federal taxes in Quebec, would reduce the consistency of tax administration nationally. Doing so would impair CRA's administrative capacity, and therefore the federal government's ability, to deliver timely and effective support to Canadians in the face of sudden national challenges and emergencies, as we have seen in the case of the COVID-19 global pandemic.

Bill C-224 would hobble our efforts at supporting Canadians not only nationally, but indeed internationally. Canada has over 100 international tax treaties and agreements that protect Canadians against double taxation and assist in addressing international tax evasion and avoidance. These treaties and agreements specify the Minister of National Revenue as Canada's competent authority, and we have no sense that our international partners would be interested in changing this arrangement. In fact, it is entirely possible that they may not want to interact with two or more separate tax administrations in their many treaties and agreements with Canada. The renegotiation of these treaties and agreements could take years and expend significant financial resources that could be put to better use at a time when we are confronted with challenges like the immense ones posed by COVID-19.

Bill C-224 would also introduce new complexities and costs related to the administration of federal benefits and programs, including the Canada child benefit, the Canada pension plan and employment insurance, given the significant links between these programs and the administration of personal income tax.

Last but not least, the bill could have a negative impact on jobs in communities that depend on them. There are currently between 4,800 and 5,500 CRA employees in Quebec, depending on the time of year, serving at 14 offices throughout the province. Around 60% of them are women. There are also many CRA employees working outside of Quebec who work on federal taxes for Quebec residents. Bill C-224 would inevitably change some of their employment situations. The impacts this carries with it are not just at the personal level, but also at the family and community levels.

While Bill C-224 would require the Government of Canada to carry these costs, it provides no detail or accounting in terms of their skill, which could be significant. Such an open-ended deal could lead to similar demands from other provinces seeking federal funding for the creation of their own tax administrative systems, leading to an inefficient patchwork of separate tax administration programs across Canada. This would lead to challenges similar to those I have just outlined but on a wider scale, with even higher per-taxpayer administration costs.

As I said at the outset, Canadians rightfully expect their governments to administer taxes and deliver programs in a fair, efficient and cost-effective manner. For all the reasons I have outlined today, Bill C-224 falls well short of this goal. Rather than lowering costs for taxpayers and supporting further efficiencies, it would take us in the opposite direction. That is why our government cannot support Bill C-224.

While we remain open to improving tax administration in Quebec, we can do this while maintaining Canada's role as the administrator of the federal income taxes in Quebec. We will continue to work together with Revenu Québec, with which we have a long-standing collaborative relationship, to find ways of streamlining the filing of taxes to ensure better harmonization of our respective tax administrations and make filing easier for Quebec taxpayers.

We are always open to making things better. However, for the reasons I have outlined today, Bill C-224 does not deliver on this front.

[Stéphane Bergeron, Bloc, Montarville, QC]

Mr. Speaker, I can tell by his applause that my colleague from Joliette is enthusiastic, which stands to reason because he is the author of the excellent Bill C‑224.

I heard my NDP colleague say some things are missing from the bill, so I am counting on all my colleagues to collaborate in an effort to improve this bill and make sure it covers everything it needs to. I would not want to run into any trumped-up arguments along the way about how some little thing is missing here or there to justify opposition to the bill. If the purpose is worthy, we need to find solutions.

I think there are solutions to each of the objections raised so far. I will come back to that in a bit. Before I begin, Mr. Speaker, if I may, I would like to start my little timer to make sure I keep to my limit.

Anyway, I would once again like to salute, thank and congratulate our colleague from Joliette, who introduced the bill before us today.

This is an issue that keeps coming up in Quebec, and the Quebec National Assembly has now come to a consensus about it. This is something that the Government of Quebec is now calling for. In that regard, we know that the Premier of Quebec and the Prime Minister have had the opportunity to discuss this issue.

However, the federal government always seems to drag its feet. We are therefore going to talk about it and ask why the federal government is so reluctant, especially given the fact that this is not, constitutionally speaking, one of its responsibilities, as we will also see. The federal government took over this responsibility in 1916-17, given the circumstances at the time, which is understandable. However, the government conveniently forgot to relinquish that responsibility later, so now it is still overseeing a jurisdiction that is not its own and has been doing so for just over 100 years.

Quebeckers agree that there should be a single tax return. Why? Because that will result in significant savings not only for the government but also for businesses and taxpayers as individuals. We are talking about an annual cost of over $400 million. That is what two tax returns cost. A single tax return would save a lot of money and would also be more efficient. I will give some examples in a just a moment.

I listened to my colleague from the NDP talk about tax evasion and tax avoidance. The current system of having two entities that do not share information does not help with the fight against tax evasion and tax avoidance. To answer this argument, I would say that, on the contrary, the proposal made by our colleague from Joliette would have a clear benefit and would be very appropriate for achieving this objective being pursued by our colleagues in the NDP, among others. Lastly, we would avoid confusion in data transcription from having to do everything twice, which can cause problems in that area as well.

Here is a question I am sure I will be asked: If having a single tax return is a good idea, why not have the Government of Canada administer it, as it does for the other provinces? My answer is that this overlooks the fact that Quebec is a nation. I am not just saying that to insist on our status. The fact that Quebec is a nation has even been recognized by the House.

Quebec, as a nation, should have a certain degree of fiscal autonomy so it can implement programs and policies that reflect its aspirations, needs, special status and distinct character.

As I mentioned a few moments ago, this would also overlook the fact that this power falls to Quebec and the provinces.

Fundamentally, under the Canadian Constitution, this power falls under Quebec's jurisdiction. Why did the federal government stick its nose in once again? During the First World War, the federal government asked if it could collect income taxes to help pay for the war effort. The provinces saw no problem with that. A century later, the federal government is still collecting income taxes.

When Maurice Duplessis created an income tax in Quebec, he did not do it just to show up the federal government because he thought we were distinct. He simply wanted to exercise Quebec's constitutional jurisdiction over taxes.

For some time now I have been hearing members, including my NDP colleague who spoke before me, put forward the legitimate argument of keeping jobs in Mauricie and Saguenay—Lac‑Saint‑Jean. It is an argument worth considering, since families rely on those jobs. However, it is a fallacious argument because where there is a will on both sides, there is a way.

The best evidence of that is when the Government of Quebec took back control of labour, which the federal government had controlled until then. The two governments sat down and negotiated in good faith. It all went smoothly, with no job losses, and I believe the same can be done in this case.

The argument is that the federal government collects the taxes for all the provinces. That is fine, if the other provinces are willing to accept this intrusion into their jurisdictions. I would like to point out, however, that in Quebec, it is the Quebec government that collects the GST for the federal government. How is that possible? The two governments negotiated and arrived at a more efficient and economical solution. That is a good example.

The Government of Quebec has proven that it can do a good job for the federal government. If it can be done for the GST, why not for income tax? I therefore do not think that last argument holds water. When the Quebec government began collecting the GST, no jobs were lost. As long as there is goodwill on both sides, I am confident that we can come up with solutions.

I do not mean to be disingenuous, but the Canada Revenue Agency has had some fairly bad press lately. I have heard some negative comments about Revenu Québec, but I should point out that Revenu Québec has not been in the news for unfavourable reasons in recent years. I will leave it at that, because I do not want anyone to claim I am being disingenuous.

I heard my colleague mention the discussions on the resolution the NDP adopted in Sherbrooke, as well as the political and constitutional future of Quebec and Canada. However, that is not what we are talking about here. This falls under the jurisdiction of Quebec and the provinces in accordance with the Canadian Constitution. This is not about separatism or federalism. It is about respect for the Constitution, which is so important to our federalist colleagues.

When the Constitution works for them, they bring it up often. However, when the Constitution does not work in their favour, for example with respect to the provinces' exclusive jurisdiction over health, they ignore it and do not mention it much. It is out of respect for that Constitution that my colleague from Joliette has asked for Quebec to be allowed to collect income taxes for its government and for the federal government, as it already does with the GST.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Mr. Speaker, I am pleased to rise today to speak to Bill C‑224. I want to start by talking about the NDP's past involvement with this bill, which would authorize agreements with the provinces to collect income taxes.

This bill is at second reading. As members know, it will theoretically be sent to a committee, which will hear testimony and propose amendments. The bill will then return to the House at report stage and third reading. The bill still has to go through several steps. It is not complete, but I will come back to that.

The bill seeks to authorize the federal government to enter into agreements with Quebec and the provinces for the purpose of tax collection. We will vote in favour of this at second reading. We support this today just as we have supported it in the past. The NDP has always advocated for things or steps that improve our Confederation, which is why the NDP was the first political party to advocate for an official languages act, at a time when English was virtually the only official language in the country, with a few exceptions.

Second, the NDP was the first party to support the democratic principle of Quebec's right to self-determination.

The rights of official language minority communities, especially those of Canada's francophone communities, have increased significantly in every province where the NDP has been in power, be it my province, British Columbia, Saskatchewan, Manitoba or Ontario.

The Sherbrooke declaration was brought forward by our former leader Jack Layton. We have always advocated for Quebec's ability to decide, with compensation, how it wants to manage certain programs that the federal government wanted to implement.

The NDP, the former member for Sherbrooke, Pierre-Luc Dusseault, and other members were the first to propose that Quebeckers should fill out one tax return instead of two.

I lived in many parts of Quebec for years, including Saguenay–Lac-Saint-Jean, the Eastern Townships, Montreal and the Outaouais, so I know that filling out two tax returns really complicates things. At one point, I even had to take classes in Sherbrooke to understand all the intricacies of two tax returns. I asked lots of questions, so I finally figured it out. The time it takes people to understand these complexities could be better spent in the community, at work or with family.

The principle is important, and we support it. Now we need to concentrate on the repercussions. I feel the bill is lacking in that regard. I really hope we can talk about that in committee so we can improve the bill.

When talking about this bill, no one wants to talk about the employees who will be affected once it comes into effect. We are talking about 4,700 jobs in Quebec, primarily in the Saguenay—Lac‑Saint‑Jean region, which I know well, and the Mauricie region. The jobs of these loyal and very talented public servants seem uncertain at this point.

Other parties have also introduced similar bills in the House of Commons in the past. Pierre‑Luc Dusseault, the former NDP member for Sherbrooke and former national revenue critic, proposed some amendments. Those amendments, which were rejected, were intended specifically to protect those jobs. It is not as though there is a shortage of work.

The Parliamentary Budget Officer tells us that we are losing $25 billion a year to offshore tax havens. Wealthy and affluent Canadians, as well as large corporations that make huge profits, regularly use these tax havens to avoid paying taxes in Canada. This is not fair to Canadians, especially since we do not have the resources to create programs and services that could really help ordinary Canadian families.

We could do great things with that $25 billion a year. Like the current Liberal government, the former Conservative governments did not do anything at all to put an end to all that special treatment, which means that a lot of our collective resources are slipping through our fingers, despite the efforts Canadians are making by paying their taxes.

That brings me to the improvement of the health care systems and the implementation of standards in long-term care facilities to support safe living for every senior. We are seeing the impact of the pandemic and the lack of resources and investments that could improve our health care systems and accomplish many other things. When we think of it that way, we can no longer afford to lose $25 billion a year. These 5,000 public servants who are currently working for the Canada Revenue Agency could be tasked with closing all the existing tax loopholes.

These employees contribute to their region's growth. We are talking about a total payroll of $150 million in Mauricie. I am very familiar with the region as I have been there many times. I am also familiar with the Saguenay—Lac‑Saint‑Jean area because I lived there for several years. That is where I learned to speak French. There is no nicer accent than the Saguenay—Lac‑Saint‑Jean accent. We are also talking about a total payroll of approximately $150 million in that area. We cannot ignore the economic impact that the loss of those jobs could have on the Saguenay—Lac‑Saint‑Jean and Mauricie regions.

As we examine this bill, we also have a responsibility to assess the impact it would have on employment and the payroll throughout Quebec and the regions. We agree that a committee should examine this important bill, but we also need to ensure that we talk to the public servants who are affected by this bill. We need to implement a strategy to ensure that no jobs will be lost and that the tax loopholes that are costing Canada a lot of money will be closed.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Speaker, I am pleased to rise virtually in the House today to talk about an issue that is so important to many of my friends in Quebec.

It is absolutely my pleasure to rise today 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.

Before I get into the substance of my remarks, I would like to address the very learned comments of the previous speaker. When we talk about Canada and the great country that we are, yes, Canadians believe in a strong Canada. There is no doubt about that. However, that does not mean that we do not also believe in provinces having a certain amount of autonomy and freedom to do the great things they do.

I would be remiss if I did not address the provincial governments and the provincial workers who are also doing a fantastic job. I would particularly point out our front-line workers, many of whom work for our provinces and who are doing a fabulous job, including our nurses and doctors, keeping our country safe.

I would like to directly address the member's comments and say that Conservatives will always stand for a strong Canada, but we also believe in respecting provincial jurisdiction and provinces' right to a certain amount of autonomy.

Getting to the substance of my remarks, as the shadow cabinet minister for national revenue and having been a previous practitioner in the area of taxation, tax season is an extremely stressful and confusing time for many Canadians across this great land of ours. I can confirm that in my practice, and also in my role as the shadow cabinet minister for national revenue, Canadians have learned the hard way, unfortunately, many times, that the income tax system is far too complicated. If anyone doubts me, they should go online or better yet pick up a copy of the Income Tax Code. They will see that it is about yay thick or so. Average Canadians should try to open it up and read it. I defy average parliamentarians to try to grab that Income Tax Act and even understand the first 20 pages in it. It is incomprehensible. It goes from subcomponent to the subcomponent to the subcommittee of this to the subpoint of this, and ongoing. It is a difficult book.

Anyone who knows me knows that I have long since been an advocate of simplifying the tax code. We need to flatten it. We need to make it fairer and more compassionate for Canadians across this great land of ours.

One area in particular that I would call out would be the fact that in order to understand and comply with the income tax rules, people have to understand the various rules and exemptions, and exemptions to the exemptions, and exemptions to exemptions. It is incredibly difficult. I cannot say in strong enough terms that the Income Tax Code is burdensome to Canadians. It is in fact a competitive disadvantage to Canadians, to Canadian businesses and, perhaps most regrettably, to charitable organizations. We need a Canadian Income Tax Code that is better, flatter and fairer to Canadians.

COVID-19 has been a trying time for our country. I would like to agree with the previous member that the CRA has done many great things. I know for a fact that many of our public service workers literally worked around the clock to make sure that the CERB and other benefits came out. Even as the government dawdled, the public service was there to push out those important cheques that people relied on.

I have to say that I have a real concern that with the CERB originally, there was some miscommunication. It went back and forth about whether the CERB was taxable or not. The government has come out and clearly said that in fact the CERB is taxable. I have to tell all Canadians right now that there were no source deductions taken.

Some Canadians might not be aware that when they get a paycheque, the government takes a deposit against their future taxes, and that is called a “source deduction”, which is why, at the end of the year, they do not owe $2,000, $5,000, $10,000 or $100,000 in taxes. The government matches the deposit they pay versus what they actually owe. For many Canadians, it means they get money back in the form of a tax refund. Unfortunately, with respect to the CERB, the government did not take that source deduction, which means that Canadians will owe tax on it. They will effectively have to pay a portion of that CERB back.

I am surprised and, quite frankly, disappointed that the government has not gone out and told people about this. As people get ready to file their taxes, and tax season will soon upon us, I want to make sure that Canadians are aware of that. It is of critical importance, because it is estimated that throughout this pandemic 47% of the labour force turned to the CERB during the pandemic, which is one in four Canadians. Those Canadians who had additional income outside the CERB could very well owe additional money to the Canada Revenue Agency. We want to make sure that point gets out there.

I also want to mention that there are a couple of things going on right now with respect to the CRA and its audits. Like I said, the public service has worked hard to get benefits like CERB out to Canadians, and I am appreciative of that. Nonetheless, I would call upon them to exercise restraint with respect to audits, as we called for in our motion when the CRA attempted to audit small business owners on the wage subsidy during the middle of the second wave of the pandemic, which was particularly acute in some provinces such as Ontario and Quebec. Please, let us allow our Canadian business owners and Canadians get back to work without the fear of an audit coming to them.

Getting back to the substance of the issue, the challenges caused by the Income Tax Act are particularly acute in Quebec. In fact, Quebec is currently the only province in Canada where residents are required to submit both a federal and provincial tax return. On top of dealing with the pandemic and, of course, the devastating impact it has had on the provincial economy, the residents of Quebec also must file their income taxes, not once but twice.

Members who have filed an income tax return, and I am sure all of have, would know that it is a painful experience. I cannot imagine having to do that twice in one year. People in Quebec have rightfully, to my mind, expressed a desire to simplify their tax filing experience and file a single tax return. In fact, the Assemblée nationale du Québec adopted a unanimous motion calling upon the federal government to allow Quebec to administer a single tax return.

Some critics may present a strawman argument that if Quebec collects its income tax, it may not remit it to the federal government. Aside from the obvious insult to the Government of Quebec, this is a disappointing argument. Quebec has been a faithful member of our great confederation and remitting money to the Canadian government year after year for decades, including, notably, the HST and not once, to my recollection, has it missed a payment. I believe in the Province of Quebec, I believe in the civil service of Quebec, and I believe them to be more than capable of administering this.

My colleague, the hon. member for Joliette, has proposed Bill C-224 which would authorize provincial governments to collect federal income tax on behalf of the federal government, effectively simplifying the tax filing experience for residents of Quebec, but we do have some questions with respect to how the bill would be implemented. For example, we want to make sure that CRA employees are protected and that there would never be any job losses as a result of this legislation. We want to make sure that the Province of Quebec will do as great a job as the CRA will do in administering and collecting these taxes. We are more than happy to discuss this at committee. I look forward to a productive discussion with expert testimony.

As the shadow cabinet minister of national revenue, I am very happy to support Bill C-224.

We will always stand up for Quebec and the rights of Quebeckers.

The House resumed from October 28, 2020 consideration of the motion that 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 read the second time and referred to a committee.