Finance Committee on May 7th, 2013

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

That's outstanding, and again much of the effort that was directed to the paperwork, which must have been just a mountain at one point, now can be directed to the other areas that probably need more manpower, and that is if there's investigation or if there is follow-up or something. Have I understood that correctly?

[Mark Perlman]

Yes, we've been focusing a lot of attention on the entire compliance continuum, which includes the auditors, the compliance audits, our enforcement people, our collections people. And of course as we do more compliance, this creates additional appeals, so we also focus attention on ensuring that we clear out our appeals inventory.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I read somewhere that as a result of the free-up of manpower, you were able to assist other government agencies and lighten their load somewhat. Did I get that right?

[Mark Perlman]

I'm not aware—I'm not sure what you're referring to.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We'll leave that.

The other thing that we hear oftentimes is that we're advertising too much, but again I see that there's a reduction of $1.5 million in advertising. Can you maybe talk about that for a minute?

[Mark Perlman]

There is a reduction. The results almost speak for themselves, as we've been seeing Canadians filing more electronically.

The focus of our advertising campaign has been fostering Canadians' awareness of tax relief measures and encouraging Canadians to file electronically. I think you may have seen the more recent ads: file your taxes online and get your refund faster. I think that's been a key message that we've been using at the agency, and I think people have really benefited. I know when I filed my return electronically, I got my return in approximately eight days, whereas the paper returns take about six weeks by the time everything is put in there. So it's a tremendous amount.

Our campaign this year is, as I mentioned, focused on tax relief measures, increasing the number of Canadians who claim their benefits and credits, and also working with private and not-for-profit organizations. So it's not just about television and radio ads, but it's how we use the Internet, how we use other forms of media, and how we leverage our partnerships with other organizations to get the message out.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Van Kesteren.

Mr. Rankin, please.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Mr. Chair.

Welcome, witnesses, and thank you for attending.

I'd like to talk about compliance. You talked about the compliance continuum, Mr. Perlman. I also want to talk about uncollected tax debt, in the short time available.

First of all, on compliance, you talk about a net decrease in the main estimates of $98 million, and I understand from the 2013-14 report on plans and priorities that the reporting compliance program is facing a funding cut of nearly 11%, $120 million between 2012-13 and 2015-16. That's nearly $120 million. The number of FTEs in the program is going to be cut by more than 300 between the current budget year and 2015-16. So that, plus the accounts receivable and returns compliance being cut by another 14%....

First of all, is that accurate? Do I have the accurate information? If so, how does that plug into the compliance continuum, these cuts that you've talked about? Won't it make it even more difficult to achieve compliance with these cuts?

[Mark Perlman]

I would like to answer that question. You do have it right. One of the issues with the way the main estimates are portrayed is we can only portray the numbers that we have known to date. So when you talk about the $120 million for the compliance area, there is a difference in there where there are amounts that we know in the current year that we don't know in the future years. An example of that is maternity and severance allowances. Of that $120 million, $79 million of that is actually for maternity and severance. Then we have another $19 million of that amount broken down for miscellaneous items, such as a reduction of the cost of accommodations. The remaining $21.7 million is from measures arising from the budget 2012 spending review that we talked about.

[Murray Rankin, NDP, Victoria, BC]

That's the general point about the deficit reduction action plan.

[Mark Perlman]

That's the deficit reduction action plan.

[Murray Rankin, NDP, Victoria, BC]

What about the international auditing program? Ms. Nash talked about tax havens, and the ministers told us in the House that they have not cut—in fact, they've increased—the auditors in the audit programs. But looking at figures released in an order paper question to my colleague Mr. Casey by the minister on February 14, it shows that the number of auditors doing international audit programs have declined significantly from 2008-09, and likewise the auditors in the aggressive tax planning program have declined. Yet the claim is that there's more. Isn't it just shuffling people around? The number of people doing this in the international auditing section has in fact decreased. Is that not right?

[Mark Perlman]

The question 1174 that you're referring to goes back to 2005-06 and shows a significant increase overall from, let's say—

[Murray Rankin, NDP, Victoria, BC]

Yes, but from 2008-09, it's 459, and in 2012-13, it's 422. On aggressive tax planning, it's 500 in 2008-09, and it's down to 468. Is that correct?

[The Chair, Conservative, James Rajotte]

Okay, let's let Mr. Perlman answer.

[Mark Perlman]

I understand your question. This is where we need to do things...I'm reluctant to say “smarter”, but one of the things we do is we always look at the way we're doing work. In the audit program area, while you may have seen a reduction overall in those areas, there is no aggressive international tax planning. It's actually a combination of those two programs and people working together. What we did do is we realized that we wanted to focus our attention on the higher-value items. As a result, while the salary budgets have basically stayed the same, you're seeing the number of FTEs going down, because we're actually bringing specialists who are working on higher-profile files to be able to generate greater revenue. That's the direction we've been going in.

[Murray Rankin, NDP, Victoria, BC]

Can I talk about uncollected, undisputed—

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Murray Rankin, NDP, Victoria, BC]

It's the $29 billion that the Auditor General last Tuesday told us was not being collected. Much of this $29 billion is expiring because of the limitation period in 2014. Therefore, thereafter there's no ability to collect that. The Auditor General said that was unsatisfactory. I'm wondering how you're going to deal with all of that money that's not been collected as of 2014. Is staffing up? How are you going to deal with it?

[Mark Perlman]

You're referring to the collections limitation.

[Murray Rankin, NDP, Victoria, BC]

Yes.

[Mark Perlman]

Actually, we are aware of this situation. We have put a number of measures in place. We are in the process of putting a system in place that the Auditor General has mentioned, but that will be in place in, I believe, 2015-16.

[Murray Rankin, NDP, Victoria, BC]

That will be in 2016?

[Mark Perlman]

Yes. In the meantime, we as an agency have invested in many interim measures that will allow these debts to be collected. The 2014 date that you're talking about is if no action has been taken against the file. The discrepancy arises because as long as routine collection activities have taken place, that clock actually starts again. As a result, you'll see that a large number of those files that people may have thought were expiring in 2014 really aren't.

[Murray Rankin, NDP, Victoria, BC]

Thank you.