Finance Committee on March 12th, 2008

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

Every day at CRA people approach CRA for a change in their taxes or their penalties or their interest. A large number are changed by the CRA staff themselves. They call them adjustments. When it gets to my level, they call it remission. But daily there are all kinds of changes of taxes going on.

This is the only one of this type that was brought to me. As I said previously to Mr. Turner, I'm not aware if there are other people out there who are in the same circumstance. If there are, they should apply to CRA.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

When you made your decision, did you inquire into whether there were other companies in the same situation? This creates a unique precedent. Were you informed as to whether the Department had knowledge of other similar cases?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

No, I wasn't.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Did you ask for information to be given to the public, to inform them about this decision? Kind of like in the case of a class action, other people who think they are in the same situation could have asked for the same decision to be applied to them.

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

The remission order is published in the Canada Gazette. There are people out there whose interest.... There are columnists in the financial papers, etc., who talk about this.

As I said before, we work on a voluntary tax system. We are not going to go out and say, “Is there anybody out there who wants to come and apply?” It's up to the individuals or the corporations to come to apply.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

For a majority of the public, the process followed for income tax is generally this: the Act is interpreted, a decision is issued, an appeal is filed, but the decision is upheld. I am not sure that many people know that the Minister has the power to reverse the decisions.

Do you think there could be more structure applied to that power, so that you could still reverse a decision, but other people in the same situation could also benefit from the decision?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

I'm not aware. You're referring to overturning decisions. I don't know what decisions you're talking about.

I have the power, under the Financial Administration Act, to provide remission in cases where the minister deems it justified. I haven't got the exact words, but that's the thrust of the FAA.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

The effect of your decision was to change the way things are done by the Canada Revenue Agency, the way these individuals' cases are handled. Do you think that in that situation the rest of the Canadian public should be informed of the change, just in case there are similar cases?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

As I said to you, the CRA staff makes decisions daily. They call them adjustments.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

We are talking about decisions of the Minister here.

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

Are you going to let me answer?

[The Chair, Conservative, Rob Merrifield]

Just let him answer.

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

Many times I've become aware of their adjustments or their lack of adjustments, and I offer opinions. The CRA employees still get their authority from the minister to offer adjustments. I don't think any political authority agrees every time with their staff. Otherwise, they'd be getting direction. Otherwise, their staff would be directing them instead of the minister directing the staff.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

People who have been in the same situation elsewhere in Canada did not get the same treatment because they did not go to the Minister to get the decision reversed. They were not informed about that practice.

Does it seem fair to you to apply a judgment only to one particular case rather than allowing other people in the same situation to get the same treatment?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

It is fair, as I said, under the same circumstances. If there are people out there or corporations out there in the same circumstances, they can apply to CRA. They don't have to apply directly to me, as the minister. They can apply to the CRA bureaucracy, and the CRA bureaucracy is aware of this remission order. So they don't have to apply only to me. They can approach anybody in the CRA.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Were you informed as to whether other people or companies, or employees of companies, had done the same thing to get the same treatment you gave in that case? That decision is important to you. You could have asked for follow-up. Has it been determined whether other people have relied on that decision to have the way their cases had been handled by the Canadian Revenue Agency changed?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

At this time I'm not aware of anybody. There might be some, processing through the department. I have no idea. I haven't been made aware of that yet.

It's like the other remission orders. Remission orders are remission orders. If they set some precedent, well then people can take advantage of it.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move on to Monsieur Mulcair.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you, Mr. Chair.

I am going to continue along the same line as my colleague, Mr. Crête.

I'll carry this part in English, Mr. Chair, so it will be quicker.

The minister said he took a decision based on his best counsel. And you know what? Having served for several years as a minister, I admire that.

Despite the fact that we are surrounded by strong people who are there to give us good advice, sometimes a minister has to take his own decision and stand on it. In fact, not only do I admire it, I actually agree with the substance of the decision.

But what I would like to know is based on what Mr. Crête was saying to you before. I took careful notes in the prepared statement that the minister made at the meeting. He talked about, in the French version,

fairness and consistency and an effective and fair system. He also referred later to what he called, in English,

the taxpayers' bill of rights.

Those are all very noble principles, but in our society there is a basic principle, that the law must be the same for everyone. Earlier, I heard the Minister say:

“The CRA bureaucracy is aware of this remission order”, leading us to believe that the bureaucracy would therefore follow. But it doesn't make sense to wind up in an arm-wrestling contest with your own bureaucrats. If they didn't like your decision because they advised you otherwise, they're not obliged to follow it when similar cases arise.

This notion of taxing people for phantom income is a fundamental issue of fairness. That's why I agree with your decision. But instead of having something aleatory or discretionary that will go on a case-by-case basis, why not solve the problem? Wouldn't that make more sense? Wouldn't that more objectively meet the criteria of equity, uniformity--your word not mine--fairness, and efficiency? Wouldn't that be a better solution, Minister?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

I'd answer that in two parts. If there are individuals in this potentially interim period who believe that they're unfairly taxed, then they can approach CRA. But I also said that the government is examining this issue now to see whether changes have to be made in the future. This is under active examination.

But people don't have to wait for that examination. As I said, if an individual feels he is in similar or the same circumstances, and wants to seek tax relief, then he can approach CRA.

[Thomas Mulcair, NDP, Outremont, QC]

I understand that, and the minister was clear on that before. But approaching CRA means approaching the bureaucracy. The minister is an elected member and he's a member of the executive. You can approach the bureaucracy. But who's boss? The minister is the boss, as the elected member, but there is an administrative boss called a deputy minister, and that deputy minister has given different advice. So you can be sure that the machine is going to listen to its permanent boss more than the transitory one.

There is a way for the transitory boss to effect the result that he correctly brought here. I agree with him. Change the law. Propose to your colleagues in cabinet that the statute be amended, and bring that before the House. You can count on our support, and I suspect you can count on the support of a lot of other people around the table.

We're not pleading against helping people who are being taxed unfairly for phantom income. We're pleading against the unfairness of a purely discretionary case-by-case approach. Why not solve the problem once and for all?

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

Because when you make formal changes to the tax act, you have to make sure that all the consequences have been worked through. This is being examined, and when a result is arrived at, if it's recommended that we change the tax law, then the tax laws will be changed. If they say on balance that it shouldn't be changed, then it won't be changed.

[Thomas Mulcair, NDP, Outremont, QC]

Who are “they”? You just told us proudly—and I backed you up on it—that you were the one making the decision.

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

It won't be the bureaucracy; it will be the cabinet.

[Thomas Mulcair, NDP, Outremont, QC]

Okay, “they” will act based on your advice. But what's your advice? Today, what's your advice?