Finance Committee on March 1st, 2007

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

I have another question, before my time runs out. It's a quick question.

Concerning your point on the funding to implement the national initiative to address interprovincial tax avoidance, how does that address Quebec? Is there a mechanism there for Quebec as well, or are you just talking about the western provinces?

[William Baker]

No. The measures related to the provincial income allocation would be for those provinces primarily with which we have corporate tax collection agreements, to make sure we're doing the right thing to ensure the proper allocation. So this would generally not affect Quebec, and it would not affect Alberta or Ontario on corporate tax, because they are not signatories to the agreement.

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

Yes, but you mentioned that you were making sure that corporations in B.C. did not pay tax in Alberta. So how does that...?

[William Baker]

Take, for instance, a financial institution. It could be headquartered in one province but have subsidiaries or other activities in another province. It can become fairly complex for our auditors to ensure that, at the end of the day, the proper province is getting the proper amount of revenue from that particular tax entity. So this is designed to strengthen our ability to do the—

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

No, I understand. So it would also affect Quebec, would it not, and Ontario?

[William Baker]

We work with all the provinces on this. Obviously Quebec is involved, because many companies do work across the country. So the short answer to your question is yes, Quebec would be involved.

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

That's all I'm looking for.

[William Baker]

This particular investment is primarily addressed to those provinces with which we have tax collection agreements.

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

Just before I let you go, can you provide me with...?

Mr. Chairman, on a point of order—

[The Chair, Conservative, Brian Pallister]

No, sorry, no point of order, Mr. Pacetti.

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

Yes, there is a point of order. I just want to know if the department will provide us with a breakdown of—

[The Chair, Conservative, Brian Pallister]

I was just going to interject and ask that. Thank you, Mr. Pacetti.

Mr. Baker, it struck me that you were about to answer Mr. Pacetti's earlier question in terms of elaborating in somewhat more detail about costs and breakdown, and so on. Would you like to proceed to do that now?

[William Baker]

Sure.

Without going on at length, there were many measures in the 2006 federal budget that impacted the Canada Revenue Agency. They related to income tax; they related to corporate tax; they related to the GST. They related to a number of new tax credits, several of which I managed to enumerate before the committee, all to say that this is the amount we've identified as required to allow us to serve Canadians properly with these tax changes.

We do have details, and we'd be pleased to provide members of the committee with the breakdown that gets us to the $30 million related to the federal budget.

I should also point out that whenever we identify amounts required by the Canada Revenue Agency to implement tax measures or anything else, we have to go through quite a rigorous process with the Treasury Board Secretariat and the Department of Finance to ensure that the amounts are fair and reasonable in light of the changes that need to take place. But certainly we will endeavour, with your concurrence, Chair, to provide that breakdown to members of the committee, and we could do that in very short order. It's effectively the sheet I'm looking at right now.

[The Chair, Conservative, Brian Pallister]

I'd like to offer the assistance of our staff to have that copied and made available to committee members right now, if that's feasible.

Thank you.

We'll move on now to Mr. Paquette.

[Pierre Paquette, Bloc, Joliette, QC]

Is the reference to CSA payments in fact a reference to the $1,200 taxable benefit that the Conservatives...

[William Baker]

Absolutely. The 2006 budget is where the universal child care benefit was articulated. Part of it was the cost associated with mounting the universal child care benefit. That's for 2006 overall. For the purposes of supplementary estimates (B), I do not believe there's any additional amount for that tax measure. It was in supplementary estimates (A), so supplementary estimates (B) do not address the universal child care benefit.

[Pierre Paquette, Bloc, Joliette, QC]

Mention is made of $18.5 million for payments to private collection agencies pursuant to section 17.1 of the Financial Administration Act.

How much money do private collection agencies take in on behalf of the Canada Revenue Agency?

[William Baker]

With the Chair's permission, I'd like to turn the floor over to my colleague.

[James Ralston, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency]

The amounts for private collection agencies refer to when we took over the duties of collecting student loans. In particular, the program prior to this coming to the agency employed private collection agents. This is still the only situation where we use them. For collecting income tax debts we use our own collectors.

On the amount, the accounting for the loans and the recoveries is still performed by the responsible department, HRSD. We provide a service for getting in touch with the debtors, but we don't collect the money. The money is still remitted to the sponsoring department--

[Pierre Paquette, Bloc, Joliette, QC]

What amount are we talking about?

[James Ralston]

Those amounts would have to be obtained from HRSD. They don't flow through our books, because of the nature of the service we're providing. We're not asked to provide an accounting service, just a collection service.

[Pierre Paquette, Bloc, Joliette, QC]

The funding to prepare for, implement and administer the Softwood Lumber Agreement is listed at $9,292,000. What percentage of this total amount is attributable to preparation and implementation, and what percentage to administration?

Some of the costs are one-time expenses. once the system is up and running. What do you estimate the cost of administering the agreement will be versus implementation costs?

[William Baker]

I can only refer to our administrative costs. I do not have figures on additional costs that may be incurred by the Department of International Trade, for instance.

The $9.3 million that the Canada Revenue Agency is seeking through supplementary estimates (B) is related specifically to those tasks we are charged with administering. These include administering the quota and export charge. We will also collect and administer the new export charge and make disbursements to the provinces--and the charge collected over the course of the application of the agreement.

I should point out that all of the $9.3 million will be offset by revenue from the export charge, so this is a budgetary matter. The overall impact on the fiscal statement would be zero because there's an offset on that.

[Pierre Paquette, Bloc, Joliette, QC]

I would imagine that next year, the amount will be less than $9 million. Procedures will be well-oiled, equipment will have been purchased, and so forth.

[William Baker]

Mr. Chair, I'll ask my colleague to provide a bit more detail, with your permission.