Finance Committee on Feb. 10th, 2009

[Martha Hall Findlay, Liberal, Willowdale, ON]

You're welcome.

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

That's very generous of you.

We continue to receive correspondence with respect to people who are in the unfortunate position of having been paid in stock options, being taxed with their stock options, and now finding that their stock options are worthless. Nortel is a classic example, but there are many others.

From time to time, various members on both sides of the House have worked on administrative fixes. What can you tell us about the state of these administrative fixes? What are you doing to anticipate what will essentially be a huge rush on these problems going forward, as people's portfolios and stock options just melt in front of their very eyes?

[William Baker]

Once again, sir, this will be a consideration of the Department of Finance in setting tax policy going forward. That question would best be directed to them.

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

This is kind of amusing: when you talk to Finance, they say the administrative fix is with the Canada Revenue Agency, and then the Canada Revenue Agency says, no, it's policy. Meanwhile taxpayers are caught in the centre, watching this tennis match between Finance and CRA. So it's not a very satisfactory response to say that we have to go and talk to the Finance boys and girls.

I take it, then, that really your answer is, “We don't know; we're not responsible.”

[William Baker]

Canada Revenue Agency is responsible for administering the tax policy that is set by the government, and ultimately Parliament, both federally and provincially. We take the policy as it's defined and administer it to the best of our abilities.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McKay.

We'll go to Mr. Menzies, please.

[Ted Menzies, Conservative, Macleod, AB]

Thank you again, Mr. Chair.

The wage earner protection program is seeking appropriations of $316,000. My question is based on the fact that we've recognized that there are going to be some serious concerns going forward with corporate bankruptcies and wage earners not being protected, so in this budget we've allocated $50 million to that program to protect those individuals. What kind of impact is that going to have? What are we going to see as numbers next year? Is $50 million enough, in your view, considering past history?

[James Ralston]

First of all, the program is under the responsibility of the Minister of Labour, and it's going to be administered primarily by Service Canada. We have a relatively small role to play, which is simply to try to recover amounts paid from the bankrupt estates or, if an overpayment is made to an employee, to recover that. There are really only those two, what I would characterize as very specific elements of the much larger program. I sense that your question was more about the bigger program, and I think it would have to be directed towards the Minister of Labour or Service Canada.

[Ted Menzies, Conservative, Macleod, AB]

Is your role simply a tax implication role, then, regarding those wages that are sought?

[James Ralston]

I think they're capitalizing on our ability as a collection agency again--

[Ted Menzies, Conservative, Macleod, AB]

Okay.

[James Ralston]

--in dealing with bankruptcies and putting forward the crown's claim on the bankrupt party and that sort of thing. I think that's why we were chosen for this role.

[Ted Menzies, Conservative, Macleod, AB]

Okay, good.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Does he have some time left, Mr. Chair?

[The Chair, Conservative, James Rajotte]

He has about two and a half minutes left.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

I have one short question. Sorry--I meant to ask it before. It's on Canada student loans and consultation. I don't know whether you can answer the question or not.

With the industry that was out there and with whatever number of agencies you had, was there consultation with them when this process started? Obviously that was going to have some impact on their business. If so, how was that carried out, and how extensive was it? I don't know if you can answer that or not.

[William Baker]

Obviously the proposal was developed in the context of the strategic review, which is a budget-setting exercise, which naturally has to occur with a degree of confidence around it. Certainly industry concerns would have been a consideration in making the ultimate decision.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Was industry spoken to? Were they consulted as part of that process?

[William Baker]

As part of due process in developing a budget proposal, budget secrecy would have applied in that particular case. I can tell you that since the announcement, some companies have expressed interest. As you mentioned earlier, there were several involved. For some this was such a small part of their business that they kind of accepted it at face value.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Okay, thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Hawn.

I'm going to take part of the next Conservative spot to ask one question.

Advertising was raised by a number of members here in both this panel and the previous panel. One of the issues that we may study as part of a future study under Monsieur Laforest's motion is the issue of fiscal literacy or how you educate Canadians. In the previous panel they made the reference that the Privy Council Office is primarily responsible for determining what the government advertises on. Does CRA come forward with recommendations and say that on these certain issues we ought to do a public information campaign, whether it's net filing or some other issue? How does your department decide to recommend what you should be doing a public information campaign on?

[William Baker]

In a typical year, as CRA, we would identify some needs for communication to the public, and we would be in a position to put forward some proposals. At the same time the government would want to make sure that certain of its policy initiatives were advertised. As you alluded to, that whole process is managed by the Privy Council Office to ultimately determine what to advertise and for which amounts.

But, yes, there is scope if we want to put forward a proposal. For instance, the CRA has long been a strong advocate of electronic filing. For both Canadians and Canadian businesses, it's cheaper, there are fewer mistakes, and we can issue the cheques faster. That's something in which we have an interest in making sure Canadians understand, in fulfilment of our mandate. That tends to be an annual feature of the advertising campaign now.

[The Chair, Conservative, James Rajotte]

I have just one follow-up to that, because certainly when we deal with constituents with tax problems, one of the things they'll often say is that they didn't know that's what the law actually said. But as you well know, ignorance of the law is no excuse for not obeying the law.

If there's some part of Revenue Canada that is not being understood or if there is clearly some misunderstanding by the public, does CRA then make an effort to rectify that?

[William Baker]

A core part of our mandate is to make sure that people understand the law. It isn't just with respect to the amount of tax they pay. We administer many benefit programs, such as the child care benefit, the child tax benefit, and all of the credits, and we want to make sure people are aware of those as well so they can benefit.