Finance Committee on Oct. 18th, 2012

[Michael Conway]

There are various things that could be done. The government could encourage corporations to spend cash by offering incentives to investing in infrastructure that includes Canadian productivity; encouraging manufacturers to upgrade more efficient and environmentally sound equipment, for example; pursuing PPPs, private partnerships, with the government, because involving the business community has proven to be a good thing; and, as part of that review of the tax act, looking at the CCA classes. Perhaps some of them can provide accelerated CCA in order to target the investment, as is most appropriate.

[The Chair, Conservative, James Rajotte]

Thank you.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Just one clarification. I heard directly that Mr. Marston was actually asking the government—

[The Chair, Conservative, James Rajotte]

There are no points of clarification, as you know, Mr. Jean.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

—or thanking the government for lowering the GST. I thought that's what he was saying.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

No, that's not what I'm saying.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

I will take the next round, as the chair.

Mr. Dolan, I want to start with you. I have read through your brief. Your responses to the questions were very detailed. You did answer some of my questions about the registered disability savings plan, RDSP. I've had families approach me in my constituency who talked about some of the changes. Actually, in the budget implementation acts we address some of these measures. So I appreciate some of your clarification on that.

I did want you to talk about the tax credit definition, if you could just expand on that. I didn't see it in your responses to your questions, but you did raise it in your opening statement.

[Tony Dolan]

Are you talking about the eligibility for the tax credit or—

[The Chair, Conservative, James Rajotte]

Yes.

[Tony Dolan]

The point I was making is it's important for us—and it's in the discussions we had with Mr. Flaherty—to make the disability tax credit fully refundable for persons who are not employed. It works for persons who are employed because they get the benefit of the tax credit. But to have the disability tax credit as a refundable tax credit for persons who are not employed, like the—

[The Chair, Conservative, James Rajotte]

Sorry, I thought that was your third point. I thought there was a point you made before that with respect to the definition of the tax credit. Did I mishear you on that?

[Tony Dolan]

I'm not sure.

The point I was making is to tie the eligibility for the disability tax credit to the Canada Pension Plan disability benefit. There are two separate systems right now in place for making persons eligible. If one is disabled, if one is, as I am, in a wheelchair, and permanently disabled, the chances of me being eligible for the disability tax credit...well, I am, but then I have to apply separately for the Canada Pension Plan disability tax credit. I must go through another medical assessment to show that I am eligible.

[The Chair, Conservative, James Rajotte]

Okay, I appreciate that.

I want to follow up with Mr. Conway.

As you know, I'm very supportive of the recommendation you made with respect to a review of the tax system, and in fact it was a recommendation of the committee last year. I think we do need to perhaps get some detail of what this review should look like, what kind of review it should be.

I think you used the phrase “tax force”. Do you want something similar to, say, a Red Wilson panel, in terms of the review that was done there? We've had a number of reviews, as governments. There are things like royal commissions. Some people are saying it should be similar to the Carter commission many years ago.

Can you put some meat on the bones of your recommendation, in terms of what you see the review doing?

[Michael Conway]

I'll ask my colleague to respond.

[Peter Effer]

There are a lot of great minds in Canada. What we see is getting some of those great minds around the table and providing a mandate to eliminate, consolidate, and streamline the tax system in such a way that we can reduce administration costs around the country. That's really the framework.

[The Chair, Conservative, James Rajotte]

Do you want a longer, larger review like a royal commission, or do you want something smaller and perhaps shorter in terms of timeline, like a task force or a competition policy review panel? Feel free to be specific because we want to know exactly what you are proposing here. Or is it up to us?

[Michael Conway]

Frankly, we will take anything because nothing much has been done for a while. A royal commission would do a more comprehensive job, but there is some urgency to it. There are basically trade-offs. Either one would be better than nothing. We're certainly willing to actively participate in either one as the government sees fit.

[The Chair, Conservative, James Rajotte]

I want to follow up on your suggestion with respect to the auditor incentive system. Can you clarify how it is a type of incentive? I have heard this from constituents, but, as Ms. McLeod says, my understanding is they don't vary the salaries according to how many audits they do. I'm sympathetic to what you say, that we shouldn't have a system to encourage just numbers; we should have a system that encourages results or goals, as you said, Mr. Conway. Could you explain what that incentive system is?

[Michael Conway]

Trevor Effer deals with it every day.

[Peter Effer]

It's metrics. The metrics is TEBA, tax earned by audit. It's a statistic that is tracked by the CRA of respective reassessments. We are suggesting that the appropriate statistic would be, as Mr. Conway indicated, the goals. Let's talk about dollars settled as part of audits.

I'll take an example. I was in a CRA day with an organization. Someone from the CRA stood up in front and indicated they had reassessed $1 billion. My first question to myself was, how much did you keep? If you kept $1 billion, we really need to listen. If you kept nothing, then we really need to change the system. Our point is we don't really know what that number was, whether or not the system was working well. It's strictly more of a—

[The Chair, Conservative, James Rajotte]

Because you don't know how much they did keep, not because you didn't know how much they should have kept.

[Michael Conway]

Another way to look at it is the amount of time between the assessment, the discussions, and how long it takes those disputes to be resolved, whether they escalate to Tax Court and then get dismissed, and all the time and money wasted by both sides of the house if it goes all the way to Tax Court and ultimately it's dismissed. That's a lot of wasted time for the government and taxpayers. What we do know—there are statistics out there—is that the number of notices of objection has noticeably increased over the years without necessarily a commensurate increase in cash in the government's pocket. The key is they should be measuring the ultimate. They shouldn't be incenting the CRA just to bring anything up.

[The Chair, Conservative, James Rajotte]

I agree with you in principle. I will have to follow up with you. My time is off and I cut everybody else off.

[Michael Conway]

You have to cut yourself off, too.