Finance Committee on June 21st, 2006

[The Chair, Conservative, Brian Pallister]

You have five minutes, Mr. Bouchard.

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

Thank you for your presentation and for appearing before us today, Mr. Dorais.

There are two taxation data centres in Quebec: one in Shawinigan and one in Jonquière. People who work there tell me that the agency has starting centralizing its services and as a result some services that were formerly offered in Shawinigan or Jonquière will be offered in Ottawa and Winnipeg, and this will significantly reduce the number of employees in these regions.

Have you considered a decentralized model that would be just as efficient and economical? At the moment, there seems to be just one model, the centralizing one, which would reduce the number of employees in the regions and increase the numbers in Winnipeg and Ottawa.

[Michel Dorais]

There is no centralization model. What is happening is that there are some movements in the way in which the work is organized. You are probably referring to the consolidation of pay and compensation services in Winnipeg and Ottawa. We combined a number of former compensation sites and concentrated them in these two locations.

However, other work is underway to identify which activities could be transferred from Ottawa to some of the regions. So there are transfers in both directions. Recently, we sent an entire appeal section to the Sudbury Tax Centre. Over the years, we will have to adapt, both in the regions and here at the head office, to a different distribution of the work in the interest of efficiency.

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

I would like to ask you another question.

You promote four values with your employees and your clients. I would like to ask about the value of respect.

This is what you say:

Respect is the basis for our dealings with employees, colleagues, and clients. It means being sensitive and responsive to the rights of individuals.

There is a petition circulating at the moment. I have received some cards telling me that in order to meet with an officer at the Revenue Agency, people have to make an appointment. People who do not make an appointment have to wait. In some cases, they're not even able to meet with an officer.

Does this approach seem to be in keeping with the value of respect that is one of the four values the agency is seeking to promote?

[Michel Dorais]

I think this approach actually proves our respect for taxpayers. That is a very important value. You refer to a change in procedure. We made the following decision. A taxpayer who goes into an office to discuss a problem and has to wait 30 minutes to see someone who cannot help him because he's not familiar with the particular area at issue, is badly served in our view. A taxpayer who telephones, explains his or her problem, makes an appointment to talk to an officer who can provide proper service is better served.

In our opinion, to a large extent, this is a question of respect.

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

You have two taxation data centres in Quebec. The one located in Shawinigan is bilingual; the one in Jonquière is French-speaking.

In the case of Jonquière, for example, is there a procedure for processing not only income tax returns in French, but also as in English? Is there a procedure to do that? What would have to happen for this to be possible?

[Michel Dorais]

You have caught me somewhat off guard. I thought returns were processed in both official languages in Jonquière as well.

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

According to the information I have, that is only the case in Shawinigan. If it is also now the case in Jonquière, that is recent.

[Michel Dorais]

Mr. Chairman, I would like to come back with the answer to that question later on, unless one of my colleagues has that information.

I'm sorry. We can come back with the answer.

[The Chair, Conservative, Brian Pallister]

That will be best, I think.

I'll just intervene here quickly, colleagues. This is, I hope, an indication of the improved level of service at the CRA: we now have available to you copies of the responses to the questions you asked the other day.

We'll continue with Mr. Del Mastro. You have five minutes, sir.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

In reviewing the survey by the CFIB, I found something particularly troubling. I asked the same question of the Auditor General and I'll ask it to you now. One of the things indicated was that their members are seeing an increased number of audits, and that these audits are lasting longer; they're seeing auditors more frequently, and the duration of the audits is much longer.

Is this harassment?

[Michel Dorais]

I certainly hope it is not. I'm not aware that the audits are actually taking longer or--

[Dean Del Mastro, Conservative, Peterborough, ON]

They're saying it's gone up to about nine days.

[Michel Dorais]

I will ask Mr. Baker to comment on that.

[William Baker, Deputy Commissioner and Chief Operating Officer, Canada Revenue Agency]

I've seen that result as well; the number of hours has increased for small and medium-sized businesses. We haven't been provided by the CFIB, to my knowledge, with any breakdown of the causes for that, but I could suggest a couple of things.

One is that there has been a tendency over the last while in the Revenue Agency to do what we call more full and complete audits of an organization, as opposed to just selective audits of certain issues. That way we get a better handle on the compliance issues, but as a consequence these audits could take a little bit longer.

We've also had a practice in the agency for the last number of years of providing the owner with more explanation behind the audit findings, because if the owner can understand why adjustments are being made or why there's a reassessment, it simplifies everything after the fact, including reducing the number of objections and appeals and what have you.

But at this point, frankly, I'm speculating, because we haven't been able to look behind that number to determine the causes.

[Dean Del Mastro, Conservative, Peterborough, ON]

The review and the information provided by the Auditor General indicate that revenues have escalated by 40% or some percentage in the mid-forties, but bad debts have actually escalated by about 85%. To me that indicates we may be putting too much resources into one area and not enough into another. Maybe we're not calculating risk adequately, or the way we're screening for risk may not be in line. Perhaps if we stopped auditing quite as much or for as long, we might have more resources to prevent the escalation of bad debts.

[Michel Dorais]

The member made reference to the balancing act that we constantly do. If we reduce auditing to increase collection, we'll reduce the assessment number. We may be able to collect more money; we always have to balance a finite number of dollars that we have available.

The AG raised some issues with collecting. We've taken note of the issue. We've already started acting upon it. Hopefully we'll be able to demonstrate some progress when she comes back to examine what we've done.

[Dean Del Mastro, Conservative, Peterborough, ON]

Finally, one of the things brought forward was the operating costs of the CRA in contrast to the total revenues it's bringing in. It's about $3 billion in costs to $300 billion in revenue, so it would appear to be about a 1% administration fee.

One of the things the Auditor General indicated, however, is that a fair amount of that revenue comes in with no effort on behalf of the department, or minimal effort, because of electronic filing. Do you have a breakdown of how much of the $300 billion in revenue is actually labour-intensive and how much of it is coming in electronically, by payroll deductions and so forth?

[Michel Dorais]

Unless my colleagues prove me wrong, I don't think we have that breakdown, for one very simple reason. We have to be careful of those aggregate numbers because we administer benefits as well. We administer various tax programs for provinces and for the federal government. We collect for various institutions. So all this is lumped into one figure. The $3.7 billion we spend each year is not spent only collecting taxes; it's spent on a number of things.

[Dean Del Mastro, Conservative, Peterborough, ON]

The reason I'm asking is that, first of all, I believe the CRA is probably too new an institution for us to really judge or come down too hard on. I think we need to take a little longer view. We're all looking to see improvement from the agency, and hopefully this is a viable option for other departments. I think it's kind of a prototype.

But one of the things I would like to see is whether we could get an indication, for our actual labour-intensive revenues, of what our overhead is on that percentage. Is it 5%? Is it 10%? If we move forward with additional electronic information, will we be able to improve upon that? Certainly, if that kind of information were available in the next review, we could say we've improved or we haven't.

[Michel Dorais]

We can provide some statistics. In fact, most recently our colleague Mr. Ralston, the chief financial officer, has been working very hard developing a methodology for unit costs that we can compare to see what the variation is in the unit costs. So we'll be able to provide some of that information.

[Dean Del Mastro, Conservative, Peterborough, ON]

Okay.

[The Chair, Conservative, Brian Pallister]

I know the committee will appreciate that information.

We'll move to Mr. Christopherson now, for five minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thanks, Chair. I appreciate that.

Hello again. It's good to see you all.

You don't have any actual recommendations for the bill itself, do you?

[Michel Dorais]

No. Our suggestion is that no amendment be made at this time, but that a further review be done four years from now.