Finance Committee on June 14th, 2006

[Garth Whyte]

We will.

[Garth Turner, Conservative, Halton, ON]

What's your position on harmonization?

[Garth Whyte]

We primarily support it. We supported the HST harmonization in the three Atlantic provinces. We'd like to see it in the fourth, and we think that should be pursued.

[Garth Turner, Conservative, Halton, ON]

In what regard? How actively are you doing that, in terms of harmonization?

[Garth Whyte]

Well, it leads to the window of opportunity if you can get provinces in a minority government to play, and I don't know if that's the case right now.

And you know--because you introduced the GST--how hard it is to get departments to play ball with the federal government to harmonize.

[Garth Turner, Conservative, Halton, ON]

Do your members want harmonization?

[Garth Whyte]

It's a 60-40 split sometimes. Our politics are the government's politics. It depends, because when you harmonize, you expand the base. So some people may be exempt right now or they may not be exempt. But by and large, we support the harmonization, yes.

[Garth Turner, Conservative, Halton, ON]

What are the lessons of lowering the GST? Because we're going to do it again, okay? It's going to 5%; count on it. So what can we learn from this exercise that we can apply next time—hopefully soon?

[Garth Whyte]

Well, I think we've learned by good practice.

First, you need to inform people; you do need some time for people to comply with it.

Second, 80% of our members strongly supported lowering the rate. We'll have to wait and see. After July 1, we'll do a review and find out what was involved, but we think right now it's going fairly smoothly.

[Garth Turner, Conservative, Halton, ON]

All right. In terms of the reduction to 5%, are there any instructions, is there any help you're giving your members in doing that? We know it's going to happen. After we're elected with a majority, of course, there's no question about it.

I wonder if you might comment on that.

[Garth Whyte]

Well, as we presented to you, we have a one-page handout that talks to our members about what you need to do to comply, how they should do it for the government.

You have more time, if you're going to reduce it to 5%. My personal recommendation is that you should challenge some of the provinces to harmonize. That's the only time you can do it, when you're lowering the rate. We would like to see that.

Third, give us some lead time so we can survey our members and talk to them about how we can do this, and we can see where they stand on harmonization right now in Ontario. It varies from province to province. P.E.I. would be quite interesting.

Those are three things off the top of my head that I think you could do. And fourth, give us more than four days' notice before we have to answer a question like this.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Turner.

Over to you, Mr. Christopherson, for seven minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Thank you very much.

It is a shame you've had such limited time to prepare, given the complexity of what we're dealing with.

I just wanted to take you back to figures 1 and 2 that you referenced. I couldn't help but be struck by the degree of improvement, quite frankly, given that I'm the critic for revenue and I sit on public accounts. We do a lot of criticizing; that's part of what our job is. But I have to say I was struck by this, and it looked good.

Do I take from that--because that was the macro picture you pointed to when you were asked for the macro picture--that by and large you're comfortable with the model, that you think the move to the agency model has served us well, us” being all of Parliament, all Canadian people?

[Garth Whyte]

Yes, we support the agency model. We think it is moving in the right direction. Of course, they had other priorities to focus on, other than compliance, but we think that should become a priority.

We're one of the strong advocates pushing for review of the act and parliamentary accountability. We really pushed for this. We think it's necessary. And we think ministerial accountability is necessary. But we think the agency approach is a good one.

There's one major reason, to go back to what Mr. Turner was pointing out. You want harmonization not just in the GST, but on collection with provinces and with the federal government. Provinces were not going to do it if it was done through a federal department. It had to be more of an agency, with a board to oversee it. I think that's the model. But they still have to be made accountable, and that's why we like the parliamentary accountability.

[David Christopherson, NDP, Hamilton Centre, ON]

Right.

As you well know, this is an actual review of the act itself, the mandated act. So we're not really into the regulations or the practices within. We're dealing with the legal structure, and the act that gives it legal effect. Will you be making recommendations for changes there?

I noted that most of the comments you made seemed to be directed to regulations or practices, as opposed to the actual structure.

[Garth Whyte]

The act still stands, as far as we're concerned. We were involved with the drafting of the act, and we think it's still appropriate.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay, good. That's fine. Then we can just chat further about the agency itself.

I don't know if you've had a chance to see the Auditor General's report.

[Garth Whyte]

No.

[David Christopherson, NDP, Hamilton Centre, ON]

It would always be interesting to get your feedback on that, given your level of expertise in this particular area. I think what you'll find more than anything is that I was trying to keep in mind her report and tie it to your findings, and it's very similar. The areas on the consumer side where there are problems are very much related to what the Auditor General found. So you may want to look into that.

I also want to draw your attention to figure 4. I was very pleased to see, if I'm reading this correctly, that both business owners and tax practitioners were commenting that it was the best improvement in terms of treatment by staff. So the actual people, the other Canadians who work in this agency, it would seem that their interaction, certainly with your members, is one of the best areas of improvement. I wonder whether you could comment on that and whether there is anything you can add to that as to why. Is there anything you can point to, or did it just sort of happen and you're thrilled with that?

[Garth Whyte]

If you go to the auditor section in particular, where you see an enhanced improvement in professionalism and attitude, that's not an issue for us. The issue is more one where I would talk to you and ask you for a ruling and you'd say, “Hi, my name is David.” You don't give your last name. Then I'd say, “Thanks. I wasn't clear on the phone, so I would like to talk to David.” They say, “David who?” And then they say, “Well, I'm John; you're going to have me today.” “Oh, but David said this other thing. Can you give me something in writing?” “No, we don't do that.” Where do I go? It's very difficult.

That's the frustrating part. It's not the person but the process. Also, even the staff have some problems. This tax act is very hard to administer.

We have other examples that we could give, like the $500,000 capital gains exemption, but I don't want to interrupt your question.

[David Christopherson, NDP, Hamilton Centre, ON]

No, that's fine. I don't really have an agenda. I'm not drilling into it.

[Garth Whyte]

That's good.

[David Christopherson, NDP, Hamilton Centre, ON]

If you're not looking to make changes here, then what we need to do is have this dialogue to help us understand.

It's on TV. People certainly have their feelings about the agency.

I would suggest to you--this is just speculation--that in most cases, if you want a change in attitude with the staff, change the attitude of the people who are managing them. It's amazing how that will do it. So maybe the whole move from one entity to another instilled a whole different outlook in terms of the service for Canadians, but also for the staff.

If you treat people with respect and decency, guess what? You get decency and respect back.

[Corinne Pohlmann, Director, National Affairs, Canadian Federation of Independent Business]

Yes, and I just want to comment on that, because I think we have found as an organization that our relationship with CRA has vastly improved over the last five years as well, since they became an agency. Just the GST piece that we did a few weeks back was a real testament to that. Within 24 hours we had a response on what we needed as well, so we could get it out to our members fairly quickly. I think that's part of that culture that's changing, and that's where the treatment of staff comes in.

[Garth Whyte]

But I do want to capture that major point. What we're doing here today is looking at the act, and I wouldn't want it written in the act, but it has to become a ministerial priority and a parliamentary priority that improved service is a number one priority.

You can't go after individual cases. There are certain things you can't get before the tax courts. But you can demand improvement on readability and accessibility of information. You can ask for an improvement, a reduction in paperwork and compliance burden, and that should be made a priority.

We have worked with the department, but there have been false starts quite a few times, partially because of a minority government. As you say, employees need to be given a mandate sometimes. They have a lot to do anyway, but if it were said that this is a priority, and it's a non-partisan priority, it would be quite powerful and you would see results. If they were required to report every year on the measurement, the reporting, and the reduction of paperwork and compliance burden, you would see results.