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.

[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.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Mr. Speaker, it is my turn to rise and speak to Bill C-224.

I would like to start with a summary of what we are trying to achieve for Quebeckers in the House today. The goal is simple.

Quebeckers have to send in two tax returns. Both businesses and individuals have to submit one tax return for Quebec and another for Ottawa. The only people happy about that are the accountants, because they are the only ones making money off the situation.

Before hearing my colleague's speech, I was planning to fully support Bill C-224. However, some of my colleague's remarks were a letdown. He seems to see “Ottawa” and “Liberals” as synonymous. He says that Ottawa does this and that, Ottawa is centralist, Ottawa is this or that, but, actually, that is how the Liberals are.

Mr. Harper's government recognized the Quebec nation. We gave Quebec a UNESCO seat. We are willing to recognize provincial jurisdiction. We are willing to give Quebec the means to do more within the existing system, but the Liberals, which my colleague conflates with Ottawa, patently are not.

I think it is important to make the distinction for me to be able to support Bill C-224. I do not want to appear argumentative or nitpicky, and I do not want to pick fight. We must not do that today. We are working for Quebeckers, to simplify their lives and reduce paperwork.

A few moments ago, the Liberals said that the Canada Revenue Agency could not have responded to citizens as it did during the pandemic if it were not administering Quebec's tax returns. That struck me.

Two weeks ago, the Canada Revenue Agency sent a letter to some of our constituents, telling them that they may have been the victims of fraud and they needed to call a certain number. However, when people call that CRA number, there is no answer. The CRA advises citizens that they may have been a victim of fraud, asks them to call to reassure them, but then does not answer. If that is their only argument for not having a single tax return in Quebec, they will need to work on that.

My colleague's bill is simple and has two major elements. First, it seeks to amend current legislation in order to authorize Quebec to provide Quebeckers the possibility of filing a single tax return. Second, and this is very important, it calls for negotiations to begin between the two levels of government so that we can achieve that goal. It is simple.

We just need to negotiate. If the Liberals are not happy after the negotiations, we will stop there. However, why not go further? Why not just start the negotiations with this bill? That is how I see this bill. It is a first step that would allow the Government of Quebec and the federal government to work together to achieve the goal of having a single tax return for Quebeckers.

I am in favour of it. Many Quebeckers are in favour of it. The Conservatives have long been in favour of it. This is not the first time that the House has debated a single tax return for Quebeckers.

The Conservative Party's position is very clear, and especially so since the first meeting of our national caucus in Saint-Hyacinthe in May 2018. All Quebec members of the caucus voted in favour of creating a single tax return. On May 15, 2018, the National Assembly of Quebec voted unanimously in favour of a single tax return for Quebeckers. In August 2018, when we held our national convention in Halifax, all Canadian Conservatives said that Quebec should be allowed to have a single tax return. There was near unanimity, with 90% of party members—almost 3,000—agreeing that we initiate negotiations between the federal government and the Quebec government to create a single tax return.

This led my colleague and the member for Richmond—Arthabaska, whom I hold in high regard, to table a motion in the House on February 5, 2019, which is somewhat similar to what we have before us today. The motion was as follows:

That, given:

(a) the House has great respect for provincial jurisdiction and trust in provincial institutions;

(b) the people of Quebec are burdened with completing and submitting two tax returns, one federal and one provincial;

(c) the House believes in cutting red tape and reducing unnecessary paperwork to improve the everyday lives of families; therefore,

That was the ultimate goal. I will continue:

the House call on the government to work with the Government of Quebec to implement a single tax return in Quebec, as adopted unanimously in the motion of the National Assembly of Quebec on May 15, 2018.

We lost the vote on that motion, but it is interesting to see how MPs voted, especially Quebec MPs: 19 MPs voted for the motion and 45 voted against it. The 19 were Conservative MPs from Quebec and Bloc Québécois MPs. The NDP voted against the motion even though it had said in its much-touted Sherbrooke declaration that it would give Quebeckers a single tax return.

Once a new leader was elected, it was over. There was no more talk of a single tax return for Quebeckers, and the NDP moved on to other things. That is where it ended. Today, the NDP representative hesitated once again, saying that it was because of jobs and all that. It was in the Sherbrooke declaration though. It was clear that the NDP wanted a single tax return.

However, what worries me are the Liberal MPs from Quebec. Why did they vote against the motion and why are they once again, from what I can tell, planning to vote against my colleague's Bill C-224 for a single tax return for Quebec? Do they not want to cut red tape? Do they not want to make Quebeckers' lives easier? What is the problem?

The bill is very simple. We are getting the discussion going. I think this is something that needs to be done. We need an opportunity to discuss. I find it hard to believe that in 2020, two governments cannot find a way to consolidate everything into one document. I think that is very easy to do, and Quebec is asking we do so. This negotiation needs to happen. Quebec is big enough and mature enough to do it.

Ironically, I was a bit surprised to see the results of the vote. The only members from other provinces who voted in support of our motion for a single tax return in Quebec were from Alberta and Saskatchewan. I thank my colleagues who voted in favour. That was very kind. The votes from the NDP and the Liberals defeated the motion to create a single tax return in Quebec.

Business representatives in Quebec and Quebeckers all agree on this, and that was made clear on our tour. We want to make things easier for Quebeckers.

Today, I think the two levels of government are able to agree. The GST collection issue proved that it is possible to have administrative agreements between the two levels of government to make it work. There is no need to worry that Quebec will not send the money to Ottawa. The GST money has always made it to Ottawa. All it takes is an administrative agreement.

When we talk about international treaties, everything depends on the type of agreement that is made with Quebec. We are not trying to give Ottawa's taxation power to Quebec. We just want to allow Quebec to tell Ottawa that it has sent the document to Quebeckers on its behalf and that it is forwarding what they said, along with a cheque. That is what we mean by a single tax return for Quebeckers. It is as simple as that.

I hope that this time, the people across the way and the NDP will abide by the Sherbrooke declaration for once, because this bill states that it will preserve jobs. They told us that if we had agreed to amend the motion to say that jobs would be protected, they would have voted in favour of it. Now it is in Bill C-224. They have no choice.

[Marie-France Lalonde, Liberal, Orléans, ON]

Mr. Speaker, I am pleased to take part in today's debate on Bill C-244, a private member's bill.

This bill was introduced by my colleague, the hon. member for Joliette, after the National Assembly of Quebec unanimously adopted a motion on May 15, 2018, calling on the federal government to allow the province of Quebec to administer a single tax return.

The purpose of the bill is to authorize the Minister of Finance to enter into an agreement with the government of a province so that it can collect the federal personal and corporation income taxes on behalf of the Government of Canada.

At first glance, the bill's intent is appealing. Not only is the idea of a single tax return appealing to those who have to file two returns, but a single tax return could also be more efficient for governments to administer and more cost-effective for taxpayers.

That is why we have tax collection agreements, or TCAs, between the federal government and the provincial and territorial governments. Under these agreements, the federal government collects and manages income taxes for all provinces and territories, with the exception of Quebec's personal and corporate taxes and Alberta's corporate taxes. Only affected taxpayers in these two provinces have to deal with two tax administrators.

As I mentioned, these taxpayers would find the idea of dealing with a single tax administrator appealing. The question is how we can deliver this in a way that results in a single administrator and administrative efficiencies like those provided by existing TCAs.

Canadians expect their government to administer programs in a fair, efficient and cost-effective manner. To that end, Bill C-224 deserves to be carefully considered.

One consideration is the fact that Bill C-224 would likely result in higher total costs for Canadian taxpayers. Existing TCAs produce cost savings for taxpayers because transferring the administration of several provinces and territories to a single tax administrator, namely the federal government, creates economies of scale and reduces the administrative cost to each taxpayer.

Going in the wrong direction, as proposed in Bill C-224, would have the opposite effect. The structure of tax administration costs is mainly dominated by investments in fixed costs for technology infrastructure. Having Quebec administer the federal income tax would not help reduce those fixed costs in the province, because they would still have to be covered by both the Canada Revenue Agency and Revenu Québec.

As the Premier of Quebec clearly indicated, his government would seek to be reimbursed for the cost of administering the federal income tax. However, at this point, it is difficult to estimate the overall cost impact on the federal government, because it would depend on the scope of the tax programs transferred to the provincial government and the outcome of negotiations on various issues.

Bill C-224 would also make tax administration less consistent across the country, which would reduce the CRA's ability to respond quickly and effectively to major logistical challenges at the national level, such as rolling out the emergency measures needed to support Canadians during a crisis like the COVID-19 pandemic.

The bill would also be detrimental to Canada Revenue Agency employees who work in and outside Quebec. In Quebec, the 14 provincial CRA offices employ from 4,800 to 5,500 people, depending on the time of year, for example during the busy tax season, and about 60% of these employees are women. Changing their employment status, which would be inevitable with Bill C-224, would have consequences for them personally and for their communities.

Furthermore, this bill would require mitigation measures for employment taxes, and those costs could be quite high.

Bill C-224 could also impact Canada's ability to fulfill its obligations under existing international tax agreements and conventions that identify the Minister of National Revenue as Canada's competent authority. Our international partners may not be willing to modify those agreements or mesh their operations with two or more distinct tax authorities.

Canada has over 100 such tax agreements, and renegotiating them could take years and require considerable resources. In addition, if Canada no longer had access to provincial citizens' tax information, that would hinder its ability to fight international tax fraud, which is an important priority for our government and for Canadians.

The bill could also open the door to similar action on the part of other provinces, which might be quite interested in the proposed model if the federal government had to cover the provincial costs of administering federal taxes. That would result in similar challenges on a larger scale and increase the administrative cost per taxpayer.

In conclusion, Canadians expect us to take into account all these important considerations. Our government is open to improving tax administration in Quebec to ensure the best possible results for Canadians in terms of fairness, efficiency and value for taxpayers and governments, including those of Quebec.

We will continue to work with Revenu Québec, with which we have collaborated for a long time, 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 will make it easier to complete Quebec taxpayers' tax returns. We are always willing to improve the situation.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

moved 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.

Mr. Speaker, I must say I am proud to rise in the House today to introduce the bill on a single tax return administered by Quebec. I see this bill as a test for the federal Parliament. Is Ottawa capable of giving Quebec some freedom? Is Ottawa capable of being open to Quebec? Is Ottawa capable of offering Quebec reasonable accommodation? These are the questions this bill asks the House.

As this Parliament has recognized, Quebec is a nation with its own language, culture, values and way of doing things. The problem with the Quebec-Ottawa relationship is that every time Quebec asks Ottawa to accommodate its way of doing things, Ottawa gets irritated, leading to a lengthy tug-of-war. Ottawa generally wins, because otherwise it drags on even longer, since Ottawa is mad.

This Parliament's vision is that of the English Canadian nation. Its government is the one in Ottawa. Its philosophy is to have unilateral policies across the country. When Quebec asks to opt out of a program with compensation, it shatters the English Canadian dream, and that irritates Ottawa because, as a nation, Quebec wants to be able to create and administer its own policies and programs in its own way. The government of my nation is the one that sits in the National Assembly in Quebec City.

Here are some examples from the past and present to illustrate my point.

When we think about this tug-of-war, we think about things like infrastructure, social housing, health care funding with federal standards, the fiscal imbalance, the aerospace industry, the manufacturing industry in international treaties, and the petro-currency. We think about artificial intelligence and our agriculture, particularly supply management. We think about the forestry industry, our forestry regime, language, and the defence of the French language, particularly the application of Bill 101 to federally regulated businesses. We think about Quebec's pharmaceutical industry, Ottawa's philosophy of giving everything to oil, and our rail industry, which was abandoned in favour of Siemens and jobs in California. We think about funding for Muskrat Falls and our exclusion from shipbuilding contracts and from the last three trade agreements, which were signed at the expense of critical sectors of Quebec's economy. We think about Ottawa's complacency toward web giants and the use of tax havens. We think about all of the problems with the CRTC, the Internet and cell networks, and the culture and media file.

Frankly, we are not masters in our own house here.

Since the 1980s, we have had the unilateral repatriation of the Constitution, which took place without Quebec and against its will. After that, we had Meech and Charlottetown, which were again a tug-of-war. We can go back even further in time, from the conquest to the occupation of Quebec by the Canadian army in peacetime, to Confederation, the Act of Union, and the merger of Upper Canada and Lower Canada, with its representational bias towards Upper Canada. The Quebec nation, which was called “Canadian” and then “French Canadian” at a given point, was systematically subjected to the will of the English Canadian nation at the expense of sovereignty.

Those were a few examples of the Quebec-Ottawa relationship drama. I will repeat that, in general, Ottawa refuses to let Quebec make or tailor its own policies in its own way. The result is that Ottawa rejects the sovereignty of the Quebec people within the federation. With the Clarity Act, Ottawa outright rejected sovereignty for the people of Quebec. That is a denial of the right of a people to its sovereignty and self-determination in 2020. Welcome to Canada.

This is the context for the bill on a single tax return, to be administered by Quebec. We are not talking about a revolution. It is a simple accommodation that will make life easier for the people and businesses of Quebec. Quite simply, filing one return rather than two eliminates the duplication of effort.

This bill has been universally acclaimed in Quebec and received unanimous support at the Quebec National Assembly. It was backed by all parties: Coalition Avenir Québec, the Liberal Party, the Parti Québécois and Québec solidaire. Premier François Legault at the Quebec National Assembly then made an official request to the current Prime Minister here in the House.

The polls show the same thing. An overwhelming majority of Quebeckers support this bill. All of corporate Quebec Inc. supports it, including chambers of commerce, the Conseil du patronat du Québec, independent business owners and the Quebec CPA Order, just to name a few. The same is true on the union side. The Syndicat de la fonction publique du Québec has been calling for this for many years, with the support of the Centrale des syndicats du Québec. That is a big deal. The bill is good for Quebeckers.

The Research Institute on Self-Determination of Peoples and National Independence has conducted studies on the subject and concluded that having one tax return instead of two would save $425 million a year. Individuals would save $39 million, businesses would save $99 million, and $287 million would be saved by eliminating bureaucratic duplication. We are not saying that federal public servants do not do as good a job as Quebec public servants, but they are doing the same thing twice. Our taxes are paying for the same thing to be done twice. Come on.

One extremely important part of this bill as introduced and worded is that it would enable Quebec to crack down on tax havens on its own, rather than be limited by what Ottawa is doing, which is, to all appearances, nothing. This is a pretty simple bill. There is nothing revolutionary about it. It respects the Quebec nation and saves everyone time and money.

When we suggested this idea to the Liberals, they said, why not just let Ottawa handle it? Here was more evidence of the English Canadian nation's desire to unilaterally impose its way of doing things and reject any kind of accommodation for Quebec. Quite simply, taxation is not even a federal jurisdiction; it is Quebec's responsibility. However, the point here is efficiency.

After years of negotiation, Quebec managed to come to an agreement with Ottawa regarding the collection of sales tax from businesses. That was about 30 years ago. Before that, Ottawa collected its GST, and Quebec collected its QST. For the past 30 years, Revenu Québec has been collecting the GST and the QST at the same time. It makes for a lot less paperwork for businesses and generates significant savings. The advantage is that Revenu Québec is present in every region of Quebec, and the system works well. It is a success, and nobody has any complaints.

The preposterous idea presented to us, that is, to have Ottawa collect income tax and have Quebec collect sales tax, makes no sense at all. That would do absolutely nothing to resolve the issue of administrative duplication. If we want to be efficient, everything should be collected by the same body, namely Revenu Québec. Corporate taxes, as well as their employees' taxes, should all be administered in one place. Otherwise, Quebec City and Ottawa would have to communicate to determine who took what amount. This means more duplication, when the whole point is to get away from such duplication.

The idea of a single tax return administered by Quebec is not a new one. For example, 16 years ago, in 2004, Quebec's Liberal finance minister, Yves Séguin, said, “There is no reason to maintain two competing tax collection systems.” That was from a Liberal finance minister in Quebec, who was a federalist. He also said, “The real, most well-established tax administration in Quebec is Revenu Québec.” The logic is impeccable.

As I was saying earlier, on January 17, 2019, the Premier of Quebec, François Legault, acted on the unanimous resolution of the Quebec National Assembly and, for the first time ever, made a formal request from the Government of Quebec to Ottawa. This bill is an opportunity to finally say yes to Quebec. This is a momentous occasion.

I would like to digress for a moment to reassure Canada Revenue Agency employees who work in Quebec. We drafted the bill in such a way as to ensure that all jobs in Quebec would be protected. That is the spirit of the bill, and that is what we want. I went to Jonquière to meet with CRA employees. I have been in contact with employees in Shawinigan. That is really our intention.

Quebec does not have its fair share of federal public servants in Quebec. The Bloc Québécois will continue to call for fairness in this regard.

Clearly, the bill seeks to prevent useless duplication. Why pay two people who do the same job instead of paying just one? We propose to reassign jobs and keep positions in the region.

I would also like to remind members that a single tax return will not lead to the Canada Revenue Agency disappearing from Quebec. For example, the 1,300 CRA employees in Shawinigan do not process tax returns. They are responsible for various administrative tasks related to the department's operations. There is nothing preventing the employees from continuing to do the same work.

Even when Revenu Québec becomes responsible for processing tax returns and collecting taxes, the federal government will continue to maintain the registry of the seven million Quebec taxpayers and their tax information. The agency will have to assign more employees to deal with Revenu Québec so as to ensure that the amounts transferred correspond to the taxes collected for every taxpayer. The agency will continue to pay Quebec taxpayers the tax credits to which they are entitled, such as the child tax benefit or the electric vehicle purchase credit. This is the kind of work that can be done from the Jonquière centre.

To be clear, the idea is to avoid duplication. There are so many needs in the public service, and it is so concentrated in Ottawa, that there is room to protect every job. Jobs are important in the regions.

We anticipate that Revenu Québec will hire more people to administer the new tax return, but also, and this is interesting, that it will create a new international tax unit, an area of jurisdiction that is largely missing in Quebec right now and that would help it fight tax havens. That is an extremely important component.

We will see a significantly closer relationship between Revenu Québec and the federal government for sending the taxation data and taxes collected to Ottawa.

As I was saying, the federal administration is highly concentrated. For example, Ottawa has 50% more federal public servants than the entire province of Quebec, and that includes the public servants in Gatineau. It makes no sense for it to be concentrated like that. It is not surprising that the federal programs are so ill suited to regional realities. These programs are disconnected from the rest of the world.

To summarize, we are debating a simple bill. There are two tax returns, and we want to have just one. This will make things easier for people and businesses. It will save us $425 million a year because individuals, businesses and governments will not have to do everything twice.

This bill has unanimous support in Quebec and in the Quebec National Assembly. This bill will allow Quebec to combat the use of tax havens more effectively. This bill will protect CRA employees. We drafted it in such a way as to make sure that happens. The question is whether the Canadian government will once again vote against my nation's legitimate desire. Let the debate begin.

[The Chair, Liberal, Ginette Petitpas Taylor]

No. Thank you so much for that. That's great.

Perhaps now we can proceed through each item. To be efficient with our time, we could maybe just go through them item by item, and if there are no questions or comments, we can dispose of them fairly quickly. We'll be able to address the ones for which there is debate.

Does that sound appropriate to everyone?

We'll start off, then, with Bill C-210. Does anyone have any issues or comments about that one? No.

Next is Bill C-238.

I see there are no comments, so we'll move right along to Bill C-224. Good.

Next is Bill C-215. No comments.

Next is Bill C-204, and now Bill C-229.

I'm not going to jinx it, but we're on a roll.

Now we have Bill C-218 and a motion, M-34.

Next we have Bill C-214, Bill C-220, Bill C-221, Bill C-222 and Bill C-213.

I love working with women.

Next is Bill C-223, followed by M-35.

Now we have Bill C-206, Bill C-216, Bill C-208, Bill C-205, Bill C-237, Bill C-225, Bill C-228, Bill C-236, Bill C-230 and Bill C-232.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

moved for leave to introduce 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.

Mr. Speaker, I am honoured to introduce in the House 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. I thank the member from Montarville for seconding my bill.

Tax season is approaching, and citizens and businesses in Quebec will have to file two income tax returns, with two different types of statements, two types of net income and two types of schedules. Everything needs to be done twice. Is it possible to simplify the lives of citizens and businesses by having them file a single income tax return? That is what we are proposing. It would be administered by Quebec, since Revenu Québec is present in every region and already manages the collection of GST and QST. Quebec finance minister Yves Séguin, a Liberal, was the one who first proposed this approach, which now has the support of every member of every party in the Quebec National Assembly.

This law would also enable Quebec to fight more effectively against the use of tax havens, since Ottawa is dragging its feet in that regard. We want to ensure we can protect and maintain all regional jobs.

We believe it is entirely possible to secure those jobs by reclassifying the public servants and putting them in other jobs that are currently understaffed.

The Research Institute on Self-Determination of Peoples and National Independence conducted a study. A single income tax return would save $425 million for individuals, businesses and the public administration. Can we stop making citizens, businesses and the public administration do everything twice? I am confident that we can.

(Motions deemed adopted, bill read the first time and printed)