Thank you, Mr. Chair.
Once again, it is a pleasure to appear before you. This time, it is to speak to you about our point of view on Bill C-48.
First of all, I wish to say that we support the tabling of the bill and that we encourage you to move swiftly to pass this important piece of legislation. The bill deals with a massive backlog of unlegislated tax measures. Its passage would, in our opinion, bring greater clarity to the tax system and strengthen the integrity of our laws.
We do of course have some concerns about the way in which technical amendments to the Income Tax Act are managed by the government and Parliament.
I will speak today about the process-related issues and briefly focus on three particular themes: where we have been, what we have learned, and where we go from here.
There are a few things we do know. For many reasons, most of them quite legitimate, it has been more than 11 years since an income tax technical bill was passed by Parliament. This delay has created, obviously, a significant backlog of unlegislated tax measures—400 of them, as estimated by the Auditor General in 2009.
What have we learned? We all know these delayed technical amendments cause serious difficulties for taxpayers, businesses, professional accountants and their clients, and of course for government. These include lack of clarity and certainty in tax legislation, inability of Canadians to self-assess or correctly calculate taxes, higher costs for taxpayers to obtain professional advice to comply with tax law, absence of appeal rights for taxpayers for unlegislated measures, less efficiency in doing business transactions, and likely a greater cynicism about the fairness of the tax system.
This past December, CGA-Canada convened a summit on tax simplification, which some of you attended, and brought together 60 stakeholders, public officials, and thought leaders on tax policy. Many well-informed recommendations were generated during that day in the areas of compliance, tax planning, and policy-making, but a majority of participants expressed concerns about the lengthy delays in legislating technical tax amendments and agreed that this situation should not be permitted to happen again. Based on this idea, one of the chief recommendations stemming from this forum was that legislation be brought forward in a timely manner.
You are now tasked with the challenge of having to scrutinize this mammoth piece of legislation, almost 1,000 pages in size, which represents about one-third of the length of the entire Income Tax Act. This is no small feat. The complexity and scope of these highly technical measures put an enormous strain on the oversight abilities of parliamentarians.
How can we improve the situation?
Clearly, there is a need for a better process to deal with passing tax amendments. In the debates on Bill C-48, members from the government and opposition spoke about the need for Parliament to regularly adopt technical tax legislation in a timely manner so the situation does not repeat itself.
CGA-Canada has proposed that a process be introduced that would bring discipline to the manner in which technical tax amendments are legislated.
We understand that, as a matter of basic housekeeping, the intention was that government bring forward an annual technical bill of routine amendments. However, only four income tax technical bills have been enacted since 1991.
We know there have been some discussions in the House Debates and at committee about our suggestion to introduce a sunset mechanism. We think this should still be adopted, despite some of the opposition. What we mean by a sunset mechanism is that if a tax policy change is announced but is not incorporated into legislation within what we say is a reasonable period of time, the measure would lapse. This measure, although drastic according to some people, would create the necessary discipline to bring forward tax amendments, say within a period of 24 months, as opposed to sitting like this one for more than a decade.
We urge you, as members of the Standing Committee on Finance, to seriously consider this proposal. We really do think it would bring fairness, clarity, certainty, and transparency to tax legislation. We think this is what good governance and responsible public administration are about. We believe it is in the best interests of all Canadians, and it should be a priority for Parliament.
We thank you for your time and would be pleased to participate in the question period.