Evidence of meeting #199 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chair.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Blake Richards  Banff—Airdrie, CPC
Clerk of the Committee  Mr. David Gagnon
Gillian Pranke  Deputy Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency
Bob Hamilton  Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
Peter Fragiskatos  London North Centre, Lib.
Geoff Trueman  Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
Ted Gallivan  Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
Daryl Boychuk  Expert Advisor, Tax Legislation Division, Tax Policy Branch, Department of Finance
Trevor McGowan  Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance

11:20 a.m.

Liberal

The Chair Liberal Wayne Easter

Welcome to you all. Thank you for coming.

I believe, Mr. Hamilton, you have a few opening remarks, and then we will go from there to questions. The floor is yours.

11:20 a.m.

Bob Hamilton Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency

Good morning, Mr. Chair.

Thank you for the opportunity to appear before the committee to present the CRA's 2018-19 supplementary estimates (B) and the 2019-20 interim estimates, and to answer any questions you may have on either of these funding requests.

I won't reintroduce everybody, as you have already done that, but I have with me today officials who can help me to answer any of the questions you have.

Mr. Chair, as you are aware, the CRA is an organization that serves Canadians and is responsible for the administration of federal tax programs and certain provincial and territorial tax programs, as well as the delivery of a number of benefit payment and other programs.

The CRA is committed to serving millions of Canadians each year through the administration of Canada’s taxes and benefits. The CRA works to administer taxes fairly and in a way that provides Canadians with the information they need to comply with their obligations. We strive to build Canadians’ trust and confidence in Canada’s tax and benefit administration.

The CRA is committed to improving its services and to providing Canadians with a world-class administration. I would note that recently we launched the current tax filing season. The CRA is working to ensure that Canadians know about new and updated services available to them to help them prepare their taxes.

Now I'll provide the committee with a brief overview of the supplementary estimates (B) and the interim estimates.

On the supplementary estimates (B), the agency previously tabled 2018-19 main estimates and supplementary estimates (A), including statutory estimates such as employee benefits. Through these estimates today, supplementary estimates (B), the Canada Revenue Agency is seeking an increase of $18.3 million in its voted and statutory authorities for the following four items:

First, the agency is seeking $13.1 million in incremental funding to administer the federal fuel charge, including the climate action incentive.

Second, the agency is also seeking $374,000 to respond to the recommendations of the Report of the Consultation Panel on the Political Activities of Charities, which includes support related to legislative changes to the Income Tax Act. This funding is primarily for outreach and communications with charities.

Third, the agency is seeking a transfer of $2.9 million from Global Affairs Canada for the global knowledge sharing platform for tax administrations. The platform supports capacity building in developing countries and will equip them to deal with the global challenge of international tax evasion and aggressive tax avoidance.

Since 2016, the agency has successfully operated a knowledge sharing platform prototype to ensure it responds to stakeholders' needs. The funding is required to develop an end-state platform modelled on the prototype. The platform will meet global expectations with respect to platform stability and information security, and serve to better support future growth and modifications. It will provide access to virtual classrooms, communities of practice and a broad library of global best practices in tax administration. This is an example of Canadian leadership and innovation.

Last, also included in the supplementary estimates is a statutory increase of $1.9 million for employee benefit costs associated with the additional funding from the Treasury Board submissions being sought through these estimates.

If approved, these supplementary estimates would increase the agency's 2018-19 authorities to $4.6 billion.

We are now moving on to the 2019-20 interim estimates. In order to begin the 2019-20 fiscal year, the Canada Revenue Agency is seeking a total of $869 million through the interim estimates. This represents the funding required to cover expected payments that will occur in the first quarter of the fiscal year for ongoing operations. The funding being requested as part of the interim estimates is roughly one-quarter of the voted appropriations that will be sought by CRA through the 2019-20 main estimates.

Approximately $4.4 billion in total funding is anticipated through the 2019-20 main estimates. Of this amount, $3.5 billion requires approval by Parliament. The remaining $967.4 million represents statutory forecasts that do not require additional approval, such as contributions to employee benefit plans and children's special allowance payments.

In closing, the resources sought through these estimates will allow the Canada Revenue Agency to continue to deliver on its mission to administer tax, benefits, and other programs, and to ensure compliance on behalf of governments across Canada.

At this time, Mr. Chair, I'd be pleased to respond to any questions the committee may have.

11:25 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Mr. Hamilton.

We'll go to five-minute rounds, because we are running a little tighter on time than we expected.

Mr. Fragiskatos.

February 28th, 2019 / 11:25 a.m.

Peter Fragiskatos London North Centre, Lib.

Thank you, Mr. Chair.

Thank you to the officials for being here. Thank you for serving the public. I'm sorry about this morning's delays, but that sometimes happens in this committee and in other committees.

In any case, I'm quite interested in the global knowledge sharing platform. Since I only have five minutes, I have just a couple of questions on that, though.

What was learned from the prototype that you mentioned, Mr. Hamilton? I take it that it was started in 2016, as you said, in small form, and from there obviously lessons have been gained as to how to expand it.

What is the broad purpose of the global knowledge sharing platform? In the end, what are we trying to achieve with it? It sounds like a great way to facilitate contact between Canadian officials working on tax and those in the developing world, but could you go into those two things?

11:25 a.m.

Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency

Bob Hamilton

Yes. Thank you, Mr. Chair.

I'll elaborate little bit on the knowledge sharing platform, which I might refer to as the KSP. It started a bit before I arrived at the agency. The people who started it were very foresightful in what they did. It's an example where the agency showed innovation and contributed to a broad, global agenda.

Currently, I am the vice-chair at the forum of tax administrators, which is a group of about 50 tax jurisdictions around the world. One project that we, as Canada, lead is building capacity in developing countries. On your question of what we are trying to achieve with this thing, there's a movement.... As we look at the base erosion and profit sharing initiative of the OECD and the countries involved, this is imposing demands on all jurisdictions—developed and developing—to be able to have systems and rules in place to be able to better coordinate our activity as we try to battle global tax evasion.

Developing countries can find particular challenges in this area. Sometimes their tax systems are not as sophisticated as ours. Being able to implement the systems and rules in their jurisdiction requires building up their capacity.

As the forum of tax administrators, we have tried to contribute in the ways we can to transfer knowledge and some of the best practices we have, and share those experiences with developing countries as they try to build up their tax systems. It is not that we're perfect, but we certainly have things to share that should be helpful to these countries.

It certainly has a benefit for developing countries to the extent that we, as donors, can help them build their tax systems. It also helps us, as developed countries, and Canada in particular. In order to run the global tax system, it works better to the extent that we have good information sharing and good coordination. The better all of the countries' tax systems are, the better able we are to battle tax evasion on the global front.

That is the purpose of it. It's something that Canada has shown leadership in.

The KSP in particular was started as a prototype by CRA. It's part of the broader effort. We at CRA took the initiative to build the prototype. We took it to the point we could. The experience is that there is a demand for it. Lots of countries are tapping into it in its current prototype form to see what training material we might have and how they can access the expertise, documents and guidance that we have in developed countries.

This goes on. It's a web-based platform. It's an innovative way to transfer knowledge that's different from sending a person. We could send someone from Canada to these countries. There is still a demand for that, but this is a way of electronically disseminating that information.

11:30 a.m.

London North Centre, Lib.

Peter Fragiskatos

Mr. Hamilton, I'm sorry to interrupt—

11:30 a.m.

Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency

Bob Hamilton

Countries like it and the demand is there. The pilot was successful, and now the next step is to grow it so that it's a more stable platform that can take on more countries and more content and be more useful globally. To do that, we have to invest in the systems and the infrastructure.

That's the statement I have.

11:30 a.m.

London North Centre, Lib.

Peter Fragiskatos

I appreciate your passion. You're clearly very passionate about it. The program's merits speak for themselves.

You mentioned best practices. Could you elaborate on one or two best practices that will be shared, in terms of knowledge, with folks in developing countries?

11:30 a.m.

Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency

Bob Hamilton

Mr. Chair, you could think about something like audit practices. How do you go in and audit a major multinational corporation? What are some of the things we have learned in that regard? That would be an example. What sort of system do you need to put in place?

Even in something like technology, it would be what kinds of IT you need to get the information you need and use it effectively.

Those are a couple of things on transferring our knowledge to these countries.

11:30 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you both.

Mr. Richards, you have five minutes.

11:30 a.m.

Banff—Airdrie, CPC

Blake Richards

Thank you.

I have a few questions. Hopefully I'll have time for most, if not all of them.

I want to start by asking if any of you have had a chance to see or read a couple of reports that have come out recently from different organizations. One of them is the Canadian Federation of Independent Business's February report. The other is Restaurants Canada's state of the Alberta industry overview. Are you familiar with those reports, and have you read them?

11:30 a.m.

Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency

Bob Hamilton

Mr. Chair, am I familiar and aware of them, yes, but do I recall the details of them at this moment? No.

11:30 a.m.

Banff—Airdrie, CPC

Blake Richards

Let me just give a couple of details from them that I think are relevant. Then I have a couple of questions that relate to this.

In one report, we see that 87% of small and medium-sized enterprises oppose the carbon tax. Seventy per cent disagree that carbon pricing is a good way to reduce emissions and address climate change. Also, 83% indicated that they've already done all they can to reduce their carbon emissions. Eighty per cent think that they cannot pass on those costs to their customers. Seventy-one per cent felt that the introduction of a carbon tax will actually make it harder for them to make further investments to reduce their emissions.

In regard to the restaurant report, it indicates that about 10,000 restaurant jobs have been lost in Alberta since 2015. That's obviously based on.... There are already razor-thin margins in that industry, and one of the biggest extra costs that's been imposed upon them, of course, is related to the carbon tax and the fact that energy use is a pretty significant cost in restaurants, as is the shipping for a lot of the products they use. They feel that in many cases that's pushing them to the point where there is just no profit margin left.

We're being asked here to approve $11 million in new spending on this Liberal fuel charge and carbon tax. In fact, exactly what we're being asked for in supplementary estimates (B) is $10.8 million in funding to administer the federal fuel charge. Further, the Department of Finance is requesting $385,000 for pricing carbon pollution and supporting clean growth.

My questioning is around that. Can you tell me why CRA is requesting almost $11 million to administer the fuel charge? Are there new regulations that require this money?

11:35 a.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Hamilton, I believe the figure is $13.1 million to administer the federal fuel charge—

11:35 a.m.

Banff—Airdrie, CPC

Blake Richards

It's even worse, then, than what I said.

11:35 a.m.

Liberal

The Chair Liberal Wayne Easter

—just so we're clear on the numbers, because they were in Mr. Hamilton's remarks. I don't expect that Mr. Hamilton will get into the policy decisions, but into the decisions that the CRA must make with regard to administering the federal fuel tax.

Go ahead, Mr. Hamilton. I'll not take that time from you.

11:35 a.m.

Banff—Airdrie, CPC

Blake Richards

Actually, maybe I'll just add to that as well, because I'm not sure how much time I have left.

11:35 a.m.

Liberal

The Chair Liberal Wayne Easter

You have lots of time. I'm going to give you back the time I took to clarify that.

Let Mr. Hamilton answer the question first, and then we'll come back to you.

11:35 a.m.

Banff—Airdrie, CPC

Blake Richards

Mr. Chair, I might add to it, because I think it might be helpful to allow him to answer these all at once.

11:35 a.m.

Liberal

The Chair Liberal Wayne Easter

Okay. Go ahead.

11:35 a.m.

Banff—Airdrie, CPC

Blake Richards

While you're explaining what that request is about, can you also indicate whether you consulted with small businesses about that? It's pretty clear, with regard to some of the stats I just read, that there are quite significant concerns amongst small business owners about the carbon tax and fuel charges. Could you give me some indication as to what consultation, if any, was done with small business owners and what their feeling was when this was being proposed or suggested?

11:35 a.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Hamilton, the floor is yours.

11:35 a.m.

Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency

Bob Hamilton

Thank you, Mr. Chair.

I will separate this into two parts. There is the question of, is carbon tax, pollution pricing, the right thing to.... Policy question impacts...it's not something for me at the CRA to respond to. The issue is that there is law that needs to be administered, and that's where the CRA comes in. How can we best administer the fuel charge and the climate action incentive?

The money we have requested is to allow us to do a professional job of administering that regime, so on the $13.1 million, there's a variety of issues that we need to get in place so that we can administer these, whether it's the systems we have to put in place to be able to record and track transactions, some of the awareness that we are putting forward to make sure people are aware of their responsibilities and obligations, or just the ongoing cost of administration. That's what we are asking money for today.

In terms of consultation, again I would separate it into two. Someone else can answer the question of what consultations took place for the development of the policy overall. For our part, we do consult with businesses about the administrative matters so we ensure they are aware of their obligations, and we try to take into account any issues that come up. If you'd like to go into that more, I could ask Geoff Trueman to elaborate on some of that, but that's the basic reason we're asking for the money in the CRA's role in this.

11:35 a.m.

Banff—Airdrie, CPC

Blake Richards

My time is short.

11:35 a.m.

Liberal

The Chair Liberal Wayne Easter

Yes, you're out of time, but do you want Mr. Trueman to answer? You'll have a second round. We'll have time.