Finance Committee on May 5th, 2009

[John McKay, Liberal, Scarborough—Guildwood, ON]

I understand that.

So following this bouncing ball, we essentially have to call your ministers in and say, both to the Minister of Finance and to the Minister of Revenue, what are you going to do, because you, as officials from the policy department, aren't prepared to announce any changes in policy, and you, as officials from Revenue, are not prepared to recommend an exercise in discretion? Is that where we're at?

[Ted Menzies, Conservative, Macleod, AB]

I have a point of order, Mr. Chair.

[The Chair, Conservative, James Rajotte]

A point of order, Mr. Menzies.

[Ted Menzies, Conservative, Macleod, AB]

With all due respect, Mr. McKay, I think these are questions for question period. We set the policy, these people carry it out. Let's keep to why we've asked these individuals here, and that's to deal with the main estimates. Ask us the questions about policy decisions, but these people shouldn't have to answer that.

[The Chair, Conservative, James Rajotte]

All right, thank you.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Has he used up my time?

[The Chair, Conservative, James Rajotte]

Your time is already over.

Mr. McKay has posed a question, and if the officials wish to, they can answer. But if they feel it's outside the parameters in terms of their responsibility....

Mr. Ernewein.

[Brian Ernewein]

I'm sorry, I'll be very quick.

No, we're not in a position to offer anything more than we already have.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Kramp, please.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Actually, I'd like to address a concern from a number of people, not just in my riding but across this country, to our CRA folks. It's with regard to the aboriginal situation with reserve capacities and exceptions that are made and not made with collection.

Do you have any estimate of the amount of tax that is not collected from the sale of products sold through off-reserve purchases by reserve sources, for example, cigarettes, fuel oil, furnace, gasoline, or lumber? When people buy product like this on reserve but sell it to off-reserve sources who obviously would not be ordinarily eligible to purchase them, do you have any estimates for the amount of tax loss on this?

[William Baker]

No, I don't have any estimates on that.

In the case of contraband cigarettes, for instance, there have been some estimates used, but they have not differentiated contraband that may have emanated from reserves versus non-reserves.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Yes, but what about legitimate product? Gasoline? Fuel oil? Diesel? Propane? Lumber? Computers?

[William Baker]

Our compliance activities are designed to address any non-compliance around those laws. We could look and see what results we may have with respect to audits and so on that have been carried out in that area, but I'm not equipped to have that answer today.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

It would be interesting to pay some attention to that. It is estimated to be not in the millions, but in the billions and billions of dollars. I can tell you anecdotally, from personal experience, that in many of these situations it is absolutely over the top. This is not a question of trying to deal with a particular individual or a group or a circumstance. Even as Mr. McKay and others around the table have stated, what we're looking at is similar and same treatments for tax laws to be administered. There appears to be a very wide variance.

I'm just bringing that to your attention, and I would certainly hope that at some particular point you could have some investigation done to see if this is a problem to the extent that it is believed to be a problem by many sources in the House.

[William Baker]

May I make just a couple of points on that, Mr. Chair?

We do have an active compliance program of audits investigations. Whoever the taxpayer is or whatever the entity is, it looks at cases in which we have reason to believe there's non-compliance. We take the necessary measures in that case, particularly with respect to sales.

You may be aware as well that for many years now the government has had an initiative to encourage first nations groups to implement a first nations sales tax. That is an opportunity to address that issue, because effectively they collect their own tax. The revenue remains on-reserve, but it does allow the opportunity for a level playing field. That's certainly something both our colleagues in Finance and the CRA encourage first nations to consider.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you.

Slipping over to another question on the status of your delinquency accounts, do you have a breakdown in a couple of areas of the amount of arrears in terms of corporate versus personal? Basically, do you have a 30-60-90, or an uncollectible amount? Do you have breakdowns that you could either present or anecdotally tell us about?

[William Baker]

We have more detail on that than you would ever want to know. I'm not carrying it with me today, sir, but I'd be happy to provide the committee with a breakdown of it.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

I think it would be helpful to committee if you could provide us with it at some point.

On the same subject, where are you going with your projections on delinquency? Obviously we're into a changing economic time. Have you revised upward your projections of what your arrears will be? If you haven't, why not?

[William Baker]

Well, it's certainly a situation we're looking at, particularly for the individual taxpayers. What's happening in the economy tends to lag a little bit in terms of how it's reflected in the tax debt. We're watching it closely.

It's also important to know that our tax collection program is not static. We've invested, and are continuing to invest, a considerable amount of money in what we call our integrated revenue collections project, which is designed to improve our capacity. It's going to make the whole collections function smarter in terms of identifying risk earlier and taking appropriate action.

We're going to have two factors at play. We'll probably have an economic situation that may create more accounts receivable; at the same time, we're attempting to transform our business to be more responsive.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

As a quick comparison, how do we rate with other countries around the world from the point of arrears and collection?

[William Baker]

We're all about the same. I can say that because there is a forum with the Organisation for Economic Co-operation and Development that looks at debt collection, and we're a member of it. We all live the same life.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Ms. Hall Findlay again.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thanks, Mr. Chair.

I have a couple of questions on the public-private partnership program.

This was announced with not inconsiderable fanfare in 2007. Not much happened; in fact, there was nothing in 2008-09. I understood that a little while ago, a corporate shell was incorporated to be the office. Now, we have a significant amount of money, and I would like to ask about the details of it.

We have a little over $10 million for payments to the corporate entity, PPP Canada Inc., for operations and program delivery, and almost $73 million for payments to the company for fund investments themselves.

I don't know who I can address this question to specifically. Could whoever is best positioned elaborate on what the $10.1 million will go to? It strikes me as being a fairly significant amount of money for the operation of an office. Also, could you provide details on what seems to be a very specific number--$72.8 million--for fund investments, and what that money has been allocated for?

[Paul Rochon]

I'll let my colleague Richard Botham, who's the general director of our economic development and corporate finance branch, answer the question.

[Richard Botham, Director, Microeconomic Policy Analysis, Economic Development and Corporate Finance, Department of Finance]

I don't have a specific breakdown of the $10 million and all the expenses it would be used against. If that's something you'd like particular detail on, I can follow up.

In general, the expenditures are being undertaken to establish, as you say, a new corporation. The expenses will involve hiring staff and creating office space. The corporation is being established this year. This will be the first year of operations, so some new expenditures are being undertaken for that purpose. If you want details on how that money is being spent, I'll have to provide them at a later date.