Finance Committee on Nov. 23rd, 2017

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

I am talking about all parliamentarians, parliamentarians as a group.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

So we could expect some consequences, such as a prison term.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

I certainly do not believe that you would like the Minister of National Revenue to be talking about your file, or about the file of any other parliamentarian. That would be completely inconceivable.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

That is exactly what the Prime Minister did. When he was being questioned about Mr. Bronfman, he said that he was satisfied with Mr. Bronfman's answers and with the tax structure that he had set up in the Cayman Islands. He cleared Mr. Bronfman quicker than you can say “tax haven”. Anyway, we are all looking forward to the results of the investigation you are going to conduct into the Prime Minister, so that we can find out whether he broke the law.

I would like to talk about another subject, the Auditor General.

As has already been mentioned, one of your commitments is to make the services more accessible. On the government's advertising site, you have put the objective for that mandate in the “ongoing commitment” category. I feel that the translation should be “don't give a darn” or “total failure”. All the results prove it: the Agency does not answer phone calls, and when it does, 30% of the callers receive incorrect information.

Do you record the calls when Canadians dial the general information number?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Our current telephone system does not allow us to record calls. We have to set up a new platform that will meet the needs of Canadians.

Commissioner Hamilton will be able to give you more details on the three measures that we will soon be implementing.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I am familiar with this area. I just wanted to know whether you record calls.

It seems that up to 30% of taxpayers are given bad information. If taxpayers think that they have been given bad information by the Agency and have suffered because of it, since you do not record the calls, they will have no mechanism to prove that your agency gave them the wrong information.

Will you commit today to compensate all Canadians who may have suffered financial hardship because of erroneous information provided by one of your agents?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

The agency has a program that allows people to challenge its decisions. I will invite the Commissioner to talk to you about the unique features of that program.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I am familiar with that program, Minister. I asked you whether you are prepared to compensate a taxpayer who may have suffered damage.

Taxpayers assume that the information they receive is accurate. They take it at face value and rely on it to fill out the forms. Then they are told that they didn't do it properly and that they owe the agency $200, $300 or even $2,000. What do you do in a case like that? Do you take the responsibility for that?

[Bob Hamilton]

An interesting part of the Auditor General's report deals with the quality of our answers. We are now focusing on training our staff so that they can provide proper answers to the questions. That's the first thing.

It is possible for people to file complaints and to appeal a decision made by the agency. We have a challenge mechanism that allows them to present a different perspective of a given situation.

With the new technology, we'll be able to record calls in the future, but for now, we are not able to do that. We are taking steps to improve training. When the new technology becomes available, we will be able to record calls, which will improve our services.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Before I go to Mr. Sorbara, Mr. Kmiec mentioned earlier that what was said at one of the meetings here was that we needed data.

My question is really to you, Commissioner, and I'll background this discussion this way.

All of us who were on this committee at every stop heard from people with type 1 diabetes or the parents of people with type 1 diabetes everywhere we went. They said that effective in May, from their point of view, there were changes to the approvals. There were more rejections. Yesterday some of us saw an application that said “denied” across it, and a section was circled.

From our point of view, it gets to the point of who to believe. We're hearing from CRA that there have been no changes. I'll tell you, though, that the public out there is saying there are. I can give you an example of a mother of two children, both with type 1. One has been rejected, and the other has been accepted.

Do you have any data you can provide us along the lines of the minutes we sent to you that shows turnaround times and acceptance and rejection of applications over the last couple of years? Has there been a change, or more rejections than were seen in the past? If so, why?

[Bob Hamilton]

I'd like to give you two parts to that answer. The first part is globally, with the disability tax credit overall, and the second part would relate to diabetes life-sustaining therapies. I'm also happy to provide this in writing to you. I won't go on at length on either of them.

On the first, globally, I gave you a couple of statistics, but we can track the disability credit claims acceptance rates over the last number of years, and they have generally been growing. I gave you figures of 765,000 taxpayers utilizing the DTC last year, which was an 8% increase over the year before. That amounted to about $1.3 billion in credits. I can give you those numbers, although they aren't specific to the point you just raised. I just want to tell you that we track those numbers overall, and we have good statistics on that.

Now, the disability tax credit is provided to people not so much based on the affliction they have, but on how it affects their everyday life. That's the way the legislation reads, and that's the way we administer it.

We don't collect data systematically on diabetes versus another type of disability that someone might have, so I can't give you statistics based on that narrow disaggregated number, and certainly not for the recent months.

The minister has asked us to look at how we collect data and how we could do better. At the moment, we are manually pulling some files, but this is a complicated process. We run a lot of things automatically, but we are looking to go in and manually pull files. We're in the middle of that, or not even in the middle. We're at the beginning stages of that, and we hope to complete it somewhere around the end of the year. We'll have a better estimate of what has been happening on that narrow range.

A question going forward for us is whether we should be doing that across the broader range of disabilities. We'll have to weigh that, but we have been asked, not only by you but by the minister, to see if we can do a better job collecting this data. I can't give you statistics on diabetes in particular, and not since May. I can tell you overall, as we look at the credit, that it has been increasing in use and in dollar amounts. It is projected to increase in the future, but those are projections.

We will be able to come back to you, and certainly we will look to bring that data forward to the disability committee so that we can talk about it and have a better understanding of what's going on.

As the minister said, we are always looking for ways to improve how we administer. We talk to medical practitioners. We try to communicate as effectively as we can with people about what the rules are, so we'll look forward to the data informing the committee's discussions and then moving forward from there.

[The Chair, Liberal, Wayne Easter]

What you can give us in writing will be important, but I think I speak for every member of this committee here when I say we all have constituents who have type 1 diabetes and who have been rejected. The disability tax credit is extremely important to them.

I'll probably ask Ms. Goldsmith-Jones to outline what she knows about the issue if we have time before the end of the meeting, but this is a serious issue, and for families out there who are getting rejected, our trying to explain to them just isn't adequate. We have people in tears on the phone who cannot understand why at one point in time they were accepted and now they're not, so something has to change somewhere. I don't know what it is, but I know what is happening—I'll say that—and I think everyone on this committee would agree with me that what is happening in terms of the rejections is quite unacceptable.

Go ahead, Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Ms. Lebouthillier, welcome to the Standing Committee on Finance. Thank you for your work to help the middle class.

I have a few questions today.

We just finished reading the CRA report, in which they outline several things for taxpayers here in Canada. We know that in the 10 years that the Conservatives were in power, a number of agencies faced cuts or reduced expenditures, or did not see their budgets increase, reducing the effectiveness of these agencies over a period of time. What I wanted to know was what our government is doing to make sure that agencies like the CRA are getting the resources they need to combat tax evasion or tax avoidance and to ensure that tax filers have confidence in the system that's in place.

Thank you, Minister.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

In our first two budgets, we have invested $1 billion. As we have repeatedly said, these are unprecedented budgets in which the government gave priority to the fight against tax evasion and aggressive tax avoidance. This has enabled us to hire 100 auditors. However, the Conservative government eliminated 50 auditor positions assigned to international tax evasion.

As of September 30, 2017, those funds had allowed the agency to conduct more than 990 audits and 42 criminal investigations related to financial structures abroad. Those activities are still ongoing.

That's the work those investments will allow the Canada Revenue Agency to accomplish in the next five years. The first budget, approved in 2016, covered the period ending in 2021. Budget 2017 provided for additional funds. This will help us work on tax evasion until 2022.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you very much, Minister.

I have a follow-up question relating to the tax gap here in Canada. Could you or one of the officials comment on what is being calculated, estimated, or worked on with regard to calculating the tax gap that exists in Canada at present?

Obviously, our government has undertaken a number of steps to ensure that all Canadians and all Canadian organizations are paying their fair share of taxes. Could we have some colour on that?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Unlike the Conservative government before us, our government decided to look into the tax gap. It was our promise to Canadians, and that's exactly what we are doing. We have taken a fact-based approach. To date, we have demonstrated our commitment to estimating the tax gap. We have actually published three studies since June 2016. We are continuing our efforts on the tax gap. That's what Canadians expect. In the summer of 2018, we will submit another report on the international tax gap.

I invite Commissioner Hamilton to give you more details on the issue.

[Bob Hamilton]

I will add just a couple of brief comments on the tax gap.

We have done three studies, as the minister has said, including one on the GST and one on personal income tax. We did the personal income tax study earlier this year, in June, and we estimated that the gap was about $8.7 billion. We did a similar one for the GST. Our hope is to do a similar one in the future on the corporate side.

We are taking action. Indeed, in June we invited experts from around the world to come here to have a seminar on the tax gap, because this is not easy for people to calculate. All jurisdictions will tell you that. It's a complex calculation and a bunch of assumptions, but we feel that we can contribute by trying, while recognizing that there may be methodological issues. However, we'll be open about that, and we'll construct something.

The next step in our process here, as the minister indicated, is to do an international tax gap estimate in the coming year, in 2018, and that is even more complicated. I can tell you that right now no other country does that. We'll see how it goes. We are going to try it.

Sweden tried it a few years ago. They don't do one currently, because the methodology is even more difficult, but we are going to try to do it. We'll do the best we can, make whatever assumptions we have, and do that. Then we'll complete the domestic side.

We are making progress here, but we're doing it in a way that recognizes that it is not a simple calculation. We have to be careful with how we treat the numbers and that we put all the proper caveats on them.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

Under the Income Tax Act, persons suffering with diabetes are entitled to receive the disability tax credit if their doctor verifies that they require 14 hours a week or more of life-sustaining therapy. Throughout the entire tenure of the previous Conservative government and up until a year and a half into the mandate of this particular minister, all diabetics whose doctor certified that they met that requirement received the tax credit. It saved them about $1,500 a year in taxes.

Then, strangely, in May, language like this started to appear, and I want to know if this minister approves of this language and whether she stands beside it. I quote: “An adult who independently manages insulin therapy on a regular basis does not generally meet the 14-hour-per-week requirement unless there are exceptional circumstances.”

This language has been used to deny the disability tax credit to literally thousands of suffering Canadians. These are just some of them. These are people who had been accepted for years.

Does the minister agree with the language in these rejection letters? Does she believe that those who administer their own insulin are unlikely to qualify for the tax credit, yes or no?

[The Chair, Liberal, Wayne Easter]

Go ahead, Madam Minister.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Let me say to everyone here, around the table, that the Income Tax Act has not changed when it comes to the disability tax credit. No changes have been made to the eligibility criteria for the disability tax credit.

In addition, I can tell you that, at the Canada Revenue Agency, we are currently working to improve our communications with people so that they are much more respectful, much easier to understand—

[Pierre Poilievre, Conservative, Carleton, ON]

A point of order, Mr. Chair.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

—and so that they are also in compliance with the legislation.

[The Chair, Liberal, Wayne Easter]

Madam Minister, I have a point of order, but I will say, Mr. Poilievre, that you haven't given the minister enough time to answer. What's the point of order?

[Pierre Poilievre, Conservative, Carleton, ON]

The point of order is that I asked if the minister agrees with the wording that her department is putting in rejection letters to people suffering with diabetes. So far, she hasn't even come close to addressing that question.