Finance Committee on June 14th, 2006

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much for your input.

Thank you, Chair.

[The Chair, Conservative, Brian Pallister]

I want to thank you for your questions, Mr. Christopherson.

Mr. Pacetti, you have five minutes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

Good afternoon, Mr. Whyte. We've met before, and I always appreciate your input.

Just for your information, the committee is here, and any time you do want to forward to us some of your studies or some of the items you're working on, you should let us know.

I think you were aware that we were working on the CRA. Even if we didn't decide to study it at the last minute, you could have provided us with some details, because these are issues on which I think you're in closer contact with the people than we are at different times. So any time you want to forward something through the clerk, I think it would be appreciated by the committee members.

Most of my questions have been covered by my colleagues. I don't want to get into a political discussion, but just to understand your members in terms of owners, why would they think the reduction in GST would be more advantageous? I understand from a retailer point of view, but for a business owner who is selling and purchasing, the effect is zero, because it's a consumer tax, not necessarily a business tax. They are getting their money back on the inputs.

[Garth Whyte]

First off, the overall tax burden is our members' number one issue.

Secondly, we asked them, “What are the big issues you want reduced?” Number one was personal income tax, and number two was fuel. Number three was corporate income taxes, but closely behind that was the GST. Consumer spending helps drive this economy, and I think they saw this as--

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I understand that, but for a business owner it's a net effect of zero, pretty well, because he's getting back the GST that he's paying or collecting--correct?

[Garth Whyte]

A lot are, but not all.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

There's an obvious advantage for retailers, because they're probably going to increase their sales as a result of the reduction, or we're assuming so.

Because we are looking at the act, and because I wasn't here when we implemented this act, I'm wondering if we could put in items such as asking for availability of information, simplicity of information, and the willingness to provide information. Could we put that in the act? Could we ask that certain levels of service be maintained, or are there any standards that we could put into the act?

[Garth Whyte]

I think you probably could, at least a reporting requirement, that they would report on the state of this with the aim of reducing where possible. I think you could do that.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

With your expertise and your knowledge and background, would you be able to provide us with something? I'm not sure when we're going to be writing the report, but I guess the sooner the better.

[Garth Whyte]

Sure, we could look at it, but we would definitely want to work with the agency to do that, because they are the experts, really.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Fine, and that brings me to my other question that you brought up before, where the CRA doesn't seem to be working in conjunction with the Minister of Finance and it seems to be two separate departments. But I asked the question a few times.

We don't know what the budget is going to cost and what the burden will be on owners and individuals to be compliant with this new budget. Do you have any concerns, or how do we improve this? How do we make CRA more of an influential body for the Minister of Finance to actually consult, or the Department of Finance to actually consult the agency.

[Garth Whyte]

By and large, they do, but I do think lots of times there's a political announcement. I think, though, there are a lot of low-cost victories or benefits that can be brought about just by improving the information in the tax act. Sometimes there is a disconnect with the announcement versus the implementation of that announcement.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Disconnect? Where do we attach the pieces? Why is it getting more complex? I understand that some of the decisions are political, but let's try to make this easier for people if we can.

[Garth Whyte]

I'll give you a quick answer. There have been three budgets in fourteen months, and that's not including the one that didn't happen. Think about that. There have been so many different changes. How do you keep up with those changes?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But does the CRA keep the Department of Finance up to date as to what the recommendations should be?

[Garth Whyte]

I'm sure they work hand in glove, but often, though....

I think what we're putting on the table here is a lowering of the overall tax burden.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I'm not asking you what they do. What I'm asking is what happens. Do you sit down with CRA and then you actually sit down with the Department of Finance, and then you realize there's a disconnect? I'm just asking how, from your experience.

[Garth Whyte]

Again, I'll go back to the GST. It's a 1% reduction in the GST. No one was thinking about the compliance side of it. We brought it to the table. We did a quick survey. We said, “Oh, did you realize that you have to change your catalogues, you have to change your cash register, you have to change these things?” Then the revenue agency said yes, they knew about it. Therefore, we need more time. So there's the actual tax announcement, but then there's the implementation of that tax announcement, and often that is the case.

On the GST, when it was first introduced, it wasn't the rate exclusively that was the issue. It was the compliance burden that was the issue. So that's where I think, if there's a message here....

CRA often identifies itself as a collector of revenue. We see them as a major player in the economy, because they're the ones that implement these policies. Sometimes there are good policies that are so complex that they're not even implemented, and I think that's one thing we could look at.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you.

[The Chair, Conservative, Brian Pallister]

To continue, we'll have Mr. Bouchard. You have five minutes, sir.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

You have evaluated the quality of certain agency services over a period of a few years. I did not see this in your documents, but you mention payments.

Have you studied or evaluated the idea of reducing the paperwork for payments? Can we say that the Canadian government has made some efforts to simplify the paperwork for SMEs?

When I meet small business owners, they tell me that they are tax collectors for the government, that they are working for the government, even though they own their own company.

You carried out studies from 2001 to 2004. During that period, was this paperwork burden reduced at all? Could you suggest some ways to simplify the forms so that the small enterprise owners whom I meet can tell me that things have improved, that they are working less for the government and more for their own business?

[Garth Whyte]

Sometimes it has been done, and it's been hard to inform people that it's been done. I think CRA tries to do this a lot. They used to have a small-business advisory committee. We see it as such a significant issue that we've made it one of our top priorities. We did a major report, which we distributed across the country.

I'm co-chairing, with Industry Canada, a paper burden reduction committee, which I think CRA should follow. The committee sets out a ten-step process based on what other jurisdictions are doing, what other provinces, including Quebec, have done, what the Dutch have been doing, what other places have been doing, and what works.

The first thing this report, which I can table with the committee, does is to make it a priority. You have to have a long-term commitment and a shared vision, and you have to have champions that will do it and make it a point.

The second thing is that you have to measure it. If you don't measure it, you can't improve anything.

Third, you have to set targets. For example, our report said we wanted to reduce from 40% to 20% the number of people who identified readability and simplicity of information as being poor. And there are specific areas where you can do that. We have some examples. I don't want to use up all the time, but we've got lots of examples of where we think things can be improved.

Finally, we think rather than just making a cultural shift, there needs to be an actual priority assigned within the commission, saying that we want to make sure that we're going to improve service--even though it's been good. Information on some consumer rights needs to go out to various taxpayers, saying here's what you need to know: you have a right of appeal, you have a right of notice. There are a bunch of things that could be linked to this.

So we think there are quite a few things that could be done.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I have two questions about client services.

I do not know whether this applies to SMEs, but the agency has changed its way of dealing with individuals. Now, appointments must be made. Previously, a citizen would go to an office, and after waiting for some time, he could meet an agent. This procedure was changed and now there are appointments. Does this also apply to small business owners who want to meet an agent of Canada's Revenue Agency? Must they make an appointment?

On the other hand, I would like to know whether you will evaluate the wait time for telephone calls. When a company phones an agent of Canada's Revenue Agency, is there a long wait time? Have things improved? I would like to know what is going on, because I have heard comments about this, but these come from agency employees who say that the wait time is longer, and that fewer services are being offered.

I would like to hear what you have to say about this.

[The Chair, Conservative, Brian Pallister]

Unfortunately, unless you can answer that question in about ten seconds, Mr. Whyte--

[Garth Whyte]

I'll let Corinne.