Finance Committee on May 25th, 2010

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

Okay. So what are those going to be?

[Filipe Dinis]

In terms of the budget measures that were established recently in the 2010 budget, we're in the process of arriving at an estimate for those.

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

What we've seen in the past, and it's one of the questions I have, is some of these little gimmicks the government's been putting into the tax return. I know it costs tons of money for your agency, and we don't see that anywhere.

For example, we know that with the advertising there was a whole bunch of money spent. I think it was $8 million, $9 million, $10 million, or up to $15 million by some accounts for advertising for tax-free savings accounts. Just the implementation of that, in my understanding, the computer program related to the tax-free savings account, the last time I checked, was about $20 million or $25 million. I lost count. In previous years we've had to invest all kinds of money, whether it be for the sports tax credit, fitness credit, the public transit credit. So I'm not sure if these gimmicks are worthwhile or if there's a cost analysis put together.

Finance says no, and you guys say, well, we just go ahead and plough through whatever the government decides to introduce as a tax measure.

[Filipe Dinis]

Mr. Chair, when we are asked to deliver on programs on behalf of government, we do our best to arrive at the proper estimates. We are an IT-enabling organization, so some of those costs are indeed IT-focused, for systems development. We do our best to obviously build on our reputation of being able to deliver on programs on behalf of government.

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

Do you have a cost estimate now on how much it has cost up to date to put the tax-free savings program in place?

[Filipe Dinis]

Mr. Chair, we do have the costs. We previously provided them to the committee. The costs for the tax-free savings account program were approximately $74 million to put it in place over a four-year period. That's the number we have previously provided.

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

Is there any cost-benefit analysis for that?

[Filipe Dinis]

We don't perform cost-benefit analysis, Mr. Chair. We basically estimate how much it would take to put the program in place and deliver it in an effective and efficient manner.

[The Chair, Conservative, James Rajotte]

Thank you.

You have one more round after.

Monsieur Carrier, la parole est à vous, s'il vous plaît.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you, Mr. Chair.

I have a question about tax returns filed electronically.

According to some reports that I have read, income tax returns filed electronically contain a lot of errors, because many invoices are not even submitted. I was wondering what your take on the situation was at the Canada Revenue Agency.

Have you studied the issue? Can you confirm that there are indeed a lot more errors or that false information is being submitted? Are you putting in place an additional program to verify information in the case of these returns, to ensure that every taxpayer is actually paying what they should?

[Filipe Dinis]

Mr. Chair, the agency has been growing. In the take-up on the electronic filing processes we're at approximately 58% right now. We have systems and processes in place to do validation and checks. I'm not in a position to comment on error rates; however, I am here to confirm that we do validation checks not only on the paper copies but also on the electronic tax returns that are filed.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Does that mean you will have to hire more staff? Under the heading “Internal Services”, the total operating costs are slightly less than last year's. So we do not see that you are hiring more staff to meet that need, which is more pronounced.

[Filipe Dinis]

Mr. Chair, the processes that I referenced in terms of verification and validation are well-established processes within the agency. They're risk-based. We don't have plans to hire any additional individuals to do those particular functions.

As I mentioned before, any new requirements for our operating vote would be related to any new initiatives, which would come forward to the committee for approval through the supplementary estimates process.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

I have another question. The current government has recently announced that it is doing away with tax breaks for the oil industry. So the government is sure to take in a lot more money. That affects you in terms of expenditures.

Were you consulted about that? Will you have to adjust your operations given that existing tax breaks already in effect are being eliminated? Furthermore, I would like you to confirm how much more revenue the government could collect as a result of eliminating these tax breaks.

[Brian McCauley]

If there are any estimates of the actual program impacts of the change of a tax credit or the withdrawal of any, they would be provided by Finance. We can certainly undertake to share the question with Finance.

In terms of administration, normally in those kinds of items, as members would know, we're consulted by Finance to ensure that we can actually administer at a reasonable cost. Something like a tax credit for a large corporation, where we're in auditing frequently with large corporations, would not ordinarily attract a lot of administrative costs, but that's something we can verify.

It would be the kind of thing that would be enumerated, as Mr. Dinis has said, Mr. Chair, in the supplementary estimates, in which we would have to specify exactly what the cost of each measure would be to administer.

[The Chair, Conservative, James Rajotte]

We'll go to Mrs. Block, please.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

Thank you for being here today with us.

I want to go back to a question that was asked about the fact that CRA abandoned the use of private collection agencies because they could save more money by doing it internally. Student loan debt was referenced.

What does doing it internally mean for CRA? Was there restructuring done within CRA? Are there different departments now taking care of the collection functions?

What did it mean for CRA?

[Filipe Dinis]

Thank you, Mr. Chair.

Basically, what it meant for the CRA was that we were able to leverage on the expertise and infrastructure we had already in place, which we've been using and continue to use, obviously, for our collections functions on the tax side. So there wasn't any major restructuring. There was, obviously, an increased focus on student loans, because that responsibility and accountability came over to us. We integrated it into our collections function within the agency, and now we're operating what we believe to be quite an efficient program administering the student loans and at the same time achieving some savings for the government.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

My second question builds on Ms. Hughes' questions about the ombudsman. First, your stated strategic outcome is that “taxpayers meet their obligations and Canada's revenue base is protected”. Under “Reporting Compliance”, the estimates say, “Activities for enhancing compliance include...increasing taxpayers' understanding of their tax obligations through outreach activities, client service, and education”.

Can you tell me whether there is any interplay between the taxpayers' ombudsman and the work you do in outreach and education.

[Filipe Dinis]

Mr. Chair, it's worth noting that when the taxpayers' ombudsman was established within the agency there was the development of a specific strategic outcome for that particular function and office. Just reading it quickly to you, it is that “Taxpayers and benefit recipients receive an independent and impartial review of their service-related complaints.”

There's a specific strategic outcome and also a program activity description reflected in these main estimates.

[Brian McCauley]

Specifically, though, obviously there's always a good dialogue between us and the ombudsman, and if he, as part of his report or analysis, identifies something wherein it would be a benefit to us to share more or better information with taxpayers on the front end, that's the kind of information we would look to him for and certainly would want to act on. It's still early days for him, but we're hoping that this would be one of the things we'd be looking to as a benefit to improve our programs, absolutely.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

I also note that you are requesting 31.7% less under reporting compliance than you were in 2008-09. Is this one of the reasons, that we now we have a taxpayers' ombudsman? Has compliance improved over time as a result of some of the education you're doing? Do you have any comments on that?

[Filipe Dinis]

The reflection on the decrease is likely as a result of some funding that we've received over the years to do specific compliance-related work that is sunsetting. Over time we see a decrease in some of the business lines, and that's often related to the sunsetting of funding that we get for a specific period of time, which may vary from a year to two to three years.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Do I have any time left?

Okay. I'm going to give it to Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

I'll be quick.

If I go to the public accounts and compare your actuals to your budget from last year, are we close? How far apart are we from what you asked for last year and what you actually spent?