Evidence of meeting #150 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was approach.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kami Ramcharan  Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency
Frank Vermaeten  Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency
Ted Gallivan  Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
Geoff Trueman  Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
Paul Rochon  Deputy Minister, Department of Finance

4:15 p.m.

Liberal

The Chair Liberal Wayne Easter

I will call the meeting to order, pursuant to Standing Order 81(4), we are studying the main estimates, 2018-19: votes 1 and 5 under Canada Revenue Agency, votes 1 and 5 under Department of Finance, vote 1 under Financial Transactions and Reports Analysis Centre of Canada, and vote 1 under Office of the Superintendent of Financial Institutions, referred to the committee on Monday, April 16, 2018.

For the first hour we have Minister Lebouthillier, the Minister of the CRA, plus officials from the Canada Revenue Agency.

Minister, my apologies for the moment, but we have to deal with a couple of hopefully small items before we start, because we have to get this information to the budget liaison committee by tomorrow.

You have before you the 11th report of the Subcommittee on Agenda and Procedure of the Standing Committee on Finance. I'll read through that and see if there's any discussion.

Your Subcommittee met on Monday, April 30, 2018, to consider the business of the Committee and agreed to make the following recommendations:

1. That, in relation to the statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the Committee dedicate additional meetings based on the updated remaining lists of witnesses; and that, for one meeting, officials from the Financial Transactions and Reports Analysis Centre of Canada be asked to appear right after the consideration of the Order in Council appointment of Nada Semaan.

2. That, notwithstanding the motion adopted by the Committee on Wednesday, March 28, 2018, concerning the deadline for the lists of witnesses for Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018, and other measures, members of the Committee be allowed to provide up to five additional names by Tuesday, May 1, 2018.

We have those names now.

3. That, in relation to the Committee's pre-budget consultations in advance of the 2019 Budget, the Chair submit to the Subcommittee on Committee Budgets of the Liaison Committee preliminary submissions of travel to Canada (Toronto, Oshawa, Quebec City, St John, Charlottetown, Winnipeg, Edmonton, Victoria, Whitehorse) and the United States of America (San Francisco Bay Area and Silicon Valley, California, Houston, Texas).

Is there any discussion? Does somebody want to move that?

4:20 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

I so move.

(Motion agreed to)

4:20 p.m.

Liberal

The Chair Liberal Wayne Easter

The second item that you have before you is the request for the budget dealing with Bill C-74, which is the budget implementation act before Parliament. It relates to witnesses' expenses in Toronto, Victoria, and Montreal; video conferences; and working meals. The total requested is $39,800. Is there any discussion?

It is moved by Mr. Dusseault.

(Motion agreed to)

Thank you, Minister. The floor is yours and welcome.

May 3rd, 2018 / 4:20 p.m.

Gaspésie—Les-Îles-de-la-Madeleine Québec

Liberal

Diane Lebouthillier LiberalMinister of National Revenue

Hello everyone, and thank you for the opportunity to appear before the Standing Committee on Finance to discuss the main estimates.

I would also like to thank the agency’s four assistant commissioners who are with me today: Ms. Kami Ramcharan, Mr. Ted Gallivan, Mr. Frank Vermaeten, and Mr. Geoff Trueman.

At the Canada Revenue Agency, putting tools and services into the hands of Canadians, so that they can easily file their taxes and receive the benefits to which they are entitled, is what drives the work we do.

As Minister of National Revenue, I made a commitment to the Prime Minister on behalf of all Canadians to adopt an approach focused on our clients, the Canadian people.

The needs of Canadians and the environment in which the agency operates are constantly changing. That’s why the agency must adapt and improve its services on an ongoing basis. This is true both for people who file electronically and for those who file on paper. Regardless of how Canadians choose to interact with the agency, we have made improvements.

Allow me to list some of the ones that are already benefiting millions of Canadians.

More and more Canadians are filing their taxes online. This year, more than 90% of the approximately 24 million returns Canadians filed were completed online. My Account, the agency’s digital portal, now has more than 7.9 million users.

Enhanced digital services, such as Auto-fill my return and Re-FILE, allow Canadians to file or edit their tax returns online.

You may also have noticed that you can now access your notice of assessment instantly. In fact, the Express Notice of Assessment is now available in certified tax software.

The agency is also simplifying its communications. Indeed, providing Canadians helpful information depends on the use of clear, simple, easy-to-understand language. In 2017, the agency simplified the language it uses in most of its correspondence to Canadians. The Clerk of the Privy Council, in his 25th report on service excellence, commended the agency for this effort.

Responding to the questions of Canadians is also a key service that the agency must absolutely provide by phone. That is why we have an action plan to improve the quality of the services that our call centre agents provide. During the recent tax-filing period, the agency hired additional agents, and more than 3,000 of them were able to answer questions from Canadians.

In addition, we have increased the number of self-serve options to help callers get the information they need more quickly and easily. These improvements and other new measures, such as better training for agents and the implementation of a new telephone platform, will allow more callers to have access to telephone queues, which means fewer lines will be busy.

As I mentioned earlier, it’s also important to continue meeting the needs of Canadians who use traditional methods to file their taxes. This year, we’ve made it easier for those who choose to file on paper to do their taxes by mailing approximately two million forms and guides directly to them.

In addition, people can now make tax payments in person at any of the 6,000 Canada Post outlets. This new in-person payment service makes life easier for taxpayers who live in remote areas and who may not be close to a bank or have easy access to Internet service.

Another new telephone service that was launched this year is File my Return. This service helps Canadians with low or fixed incomes, whose situations remain unchanged from year to year, to file their income tax returns by answering a few questions through an automated phone service. This year, we sent out more than 950,000 invitations to Canadians who may be eligible for this new service.

Lastly, I’d also like to highlight the important work done by volunteers from the Community Volunteer Income Tax Program, the CVITP. This program has been around for a long time, helping eligible people who have modest incomes and simple tax situations file their returns. The funding announced in Budget 2018 will allow the program to open more year-round tax preparation clinics, which will help more Canadians access the benefits to which they are entitled.

To conclude, I’d also like to briefly touch on the agency’s recent accomplishments in fighting tax evasion and aggressive tax avoidance. The agency has taken concrete and effective steps to crack down on tax cheats. It has broadened the scope of its tools for improving its risk assessment systems. It can now assess the risks associated with all multinationals every year.

These improvements, as well as those made to other systems, provide the agency with more relevant information to better identify large businesses and individuals who may be participating in aggressive tax avoidance schemes or avoiding tax laws.

Moreover, with the implementation of country-by-country reporting, as of this year, the agency will automatically have access to information from other jurisdictions. As of March 31, 2018, audits of more than 1,112 taxpayers were underway with respect to offshore non-compliance, and the agency was conducting criminal investigations into over 42 tax evasion cases. In 2016–2017, the agency’s efforts resulted in 37 convictions, over 50 years in jail terms, and $10 million in fines imposed by the courts.

And I’m pleased to inform the committee that the fiscal service improvements offered to Canadians will not stop there, because this is an ongoing process. The agency must absolutely ensure that Canadians receive the benefits to which they are entitled. That is my priority. Budget 2018 announced the implementation of a measure to automatically register individuals for the Canada Child Benefit. Accordingly, I am pleased that approximately 300,000 additional low-income workers will receive the benefit.

Let me end by saying that improving service delivery to Canadians will continue to drive our efforts. This will ensure that Canada’s tax system is fair, helpful, and easy to use.

I will now yield the floor to Ms. Ramcharan, who will speak about the main estimates.

Thank you for your attention.

4:25 p.m.

Liberal

The Chair Liberal Wayne Easter

Ms. Ramcharan, go ahead.

4:25 p.m.

Kami Ramcharan Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Good afternoon, and thank you for the opportunity to appear before the committee to present Canada Revenue Agency's main estimates for 2018-19 and to answer any questions that you may have on the associated funding.

As you're aware, the CRA is responsible for the administration of federal and certain provincial and territorial tax programs, as well as for the delivery of a number of benefit payment programs. Each year, the agency collects hundreds of billions of dollars of tax revenue for the Government of Canada and distributes timely and accurate benefit payments to millions of Canadians.

As the minister mentioned earlier, in order to fulfill its mandate in 2018-19, the CRA is seeking a total of $4.2 billion through these main estimates. Of this amount, $3.3 billion requires approval by Parliament, whereas the remaining $0.9 billion represents statutory forecasts that are already approved under separate legislation.

The statutory items include children's special allowance payments, employee benefit plan costs, and, pursuant to section 60 of the Canada Revenue Agency Act, the spending of revenues received for activities administered on behalf of the provinces and other government departments.

These 2018-19 main estimates represent a net increase of $41.8 million, or 1%, when compared with the 2017-18 main estimates authorities.

The largest component of this change is an increase of $89.8 million to implement and administer various measures to crack down on tax evasion and combat tax avoidance. This represents the incremental 2018-19 funding for measures announced in budget 2016 and budget 2017. The majority of these resources will fund new GST/HST measures aimed at preventing tax evasion and improving tax compliance, the expansion of existing compliance and verification measures, and the expansion of business intelligence activities and improved strategies that promote enhanced compliance.

The CRA is currently on track to meet the incremental revenue-generating commitments associated with these measures.

Other increases to the agency's budget include $11.8 million to support the introduction of a new tax regime related to the legalization of cannabis, including adjustments to our systems. The funding will also be used to start processing early licence applications, so that cultivators and manufacturers are authorized to provide legal cannabis on the implementation date.

These increases are partially offset by a $21.5-million reduction in statutory contributions to employee benefit plans, and in the forecast of cost recovery revenues, pursuant to section 60 of the CRA Act, for initiatives administered on behalf of provinces and other government departments; a $17.1-million adjustment associated with changes in the funding profile for the various measures announced in previous federal budgets; a $16.2-million adjustment related to accommodation and real property services provided by Public Services and Procurement Canada; and finally, a $5-million reduction in forecasted payments under the Children’s Special Allowances Act.

It should be noted that CRA's 2018-19 main estimates do no reflect incremental resources for the announcements made by the Minister of Finance in the February 2018 budget. The funding required for the implementation and administration of these measures is currently being evaluated and will be presented to Treasury Board ministers through formal submissions in the coming months.

In closing, the resources being requested through these estimates will allow the CRA to continue to deliver on its mandate to Canadians by making it easier for the vast majority of taxpayers who want to pay their taxes and more difficult for the small minority who do not, and by ensuring that Canadians have ready access to the information they need about taxes and benefits.

Mr. Chair, at this time we'd be pleased to respond to any questions you may have.

4:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Ms. Ramcharan.

We'll go to five-minute rounds. That way, we can get everybody in.

We'll start with Ms. O'Connell.

4:30 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you, Mr. Chair.

Thank you all for being here.

Minister, a large part of the main estimates increase is in relation to the tax avoidance and evasion measures being taken. Can provide some more details on the focus?

You mentioned some statistics and the good news in terms of the work the CRA is doing. Can you elaborate on what the main estimates increase on tax avoidance and evasion is going to look like, moving forward?

4:30 p.m.

Liberal

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

I thank my colleague for her question.

To begin with, I would say that our government is the one that has decided to invest in fighting tax evasion and tax avoidance. The budgets allocated in 2016, 2017 and 2018 to fight tax avoidance and tax evasion amount to nearly $1 billion. Over the past two years, we’ve been working to create a structure that will allow us to fight tax evasion and tax avoidance.

Auditors are currently being hired. The Canada Revenue Agency is able to assess 100% of large multinationals. I would also like to thank the committee, which recommended tightening the rules regarding the voluntary disclosures program. That is being implemented. Thank you very much for your recommendations.

We have also targeted four countries a year, we work with the OECD, and we have signed more than 60 information disclosure agreements, country by country.

4:35 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you for that additional information.

Minister, in previous appearances early on in your mandate, one of the things you spoke to this committee about was your commitment to improving the customer service to Canadians when dealing with CRA. I know there have been a lot of investments and you've made a lot of key decisions. Ms. Ramcharan spoke about some of the main estimates and making things easier for Canadians.

Since you started your mandate and the focus on customer service, can you talk about some of the improvements that have been made to provide Canadians better access to quality responses when they contact the CRA?

4:35 p.m.

Liberal

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

Thank you for your question.

As mentioned in my mandate letter, customer service is a priority for our government. Budget 2018 will allow us to make concrete improvements through investments of more than $200 million in agency services. This considerable amount of money has allowed us to make significant improvements to the Community Volunteer Income Tax Program.

I had the opportunity to tour the offices of the Canada Revenue Agency, and everywhere I stopped, I made a point of meeting the volunteers. They mentioned that they had been left to their own devices and had received little support over the years. This has become a priority for me. As we know, volunteers work with the most vulnerable. We will therefore continue to work towards that end and take into account the information provided by volunteers across Canada.

Furthermore, thanks to new investments, we are working to modernize our digital and telephone services. We have restored postal service for seniors. Many people live in the regions and don’t have access to Internet. I think it’s very important to invest in services, contrary to the previous government, which had decided to reduce them.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you both. We'll turn to Mr. Kelly.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Minister, how much money will the CRA receive under Treasury Board's central vote 40?

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

That's more for Ms. Ramcharan.

4:35 p.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

It is approximately $80 million from central vote 40, which is related to budget 2018 for this year.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Thank you.

Until we see the final wording of the bill that is voted on, there's uncertainty around whether or not those funds are legally bound to how they're spelled out in the annex to the budget. For example, Minister, can you commit today that the $33.3 million allocated to fix the call service debacle will, in fact, be used for that purpose?

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Who do you want that to go to?

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

It's to the minister, please.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Go ahead, Ms. Ramcharan.

4:35 p.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

What I can say with regard to that is that we can't commit to the exact numbers that have been provided for you in that centralized vote. We need to be able to develop our Treasury Board submissions to justify the dollar amounts we're seeking. In order to do that, we will have the opportunity to make a case to access those funds.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

What do the plans to fix the call centre system consist of at this point, since they were not in the main estimates or in this money that may not be legally bound to the department?

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Vermaeten.

4:35 p.m.

Frank Vermaeten Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency

I'd be happy to set out our plans to improve the call centres. The improvement is already happening, and I'd say it's happening quite rapidly. The first thing of course is to hire more call agents. That process has begun, and that's been extremely helpful.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Is there no plan that's ready to go to Treasury Board? Is this still a draft and being considered at this point, Minister?

4:40 p.m.

Liberal

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

As I mentioned earlier, our government is really the one that invested in call centres. I did a tour of Canada Revenue Agency offices across the country. I’ve met with employees over the past two years. When the Auditor General tabled his report to the agency, I wasn’t at all surprised to learn what was going on, because staff had already told us about the outdated system and the absence of investment under the Conservatives.

Implementing a telephone system that meets customer demand and providing training to employees will allow us to deliver the quality services Canadians expect.