Finance Committee on May 19th, 2016

[Steven MacKinnon, Liberal, Gatineau, QC]

As I said earlier when we get documents of this size and documents the size of those presented to us by the agency, we want to review them, perhaps add names, perhaps subtract names. With respect to the independent experts, surely even Mr. Caron would agree that those are not the only experts in Canada. There may be others. There may be fewer.

We want to a have a chance to review all the relevant documentation in the spirit of continuing the work we've undertaken to date.

[The Chair, Liberal, Wayne Easter]

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

If I'm not mistaken the suggestion was to move that to the steering committee and have the discussion there. I have no problem with that.

[The Chair, Liberal, Wayne Easter]

Are we voting on the amendment?

[Steven MacKinnon, Liberal, Gatineau, QC]

Question.

[The Chair, Liberal, Wayne Easter]

The question has been called on the amendment.

All those in favour?

Sorry, Nick.

[Nick Whalen, Liberal, St. John's East, NL]

I have a point of order.

I know someone on the list, so I would be in a conflict of interest in voting on the amendment. As a result, we're trying to sort out a replacement for me for this one vote.

[The Chair, Liberal, Wayne Easter]

We're voting on the amendment or we can go by agreement and send the whole issue to the steering committee if you would like.

[Raj Grewal, Liberal, Brampton East, ON]

We should send it to the steering committee and then it can come back here if there's an issue.

[The Chair, Liberal, Wayne Easter]

Do we need a motion? If it's agreed, we don't need a motion. Are we agreeing to send this issue to the steering committee?

[Some hon. members]

Agreed.

[The Chair, Liberal, Wayne Easter]

Then it shall be done. Thank you, all.

Would the other witnesses come forward?

The order of business is pursuant to Standing Order 81(4), main estimates 2016-17, votes 1 and 5 under the Canada Revenue Agency, referred to the committee on Tuesday, February 23, 2016.

We have before the committee, the Minister of National Revenue, as well as officials, Mr. Huppé, chief financial officer and assistant commissioner; Mr. Gallivan, assistant commissioner; and Mr. Trueman, assistant commissioner, legislative policy and regulatory affairs branch.

[The Chair, Liberal, Wayne Easter]

I believe, Minister, you have a statement to make, as well as Mr. Huppé.

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

Thank you, Mr. Chair.

I thank you for the opportunity to participate in the committee's study of the main estimates 2016-17.

I am joined by several Canada Revenue Agency officials: Mr. Geoff Trueman, the assistant commissioner of the legislative policy and regulatory affairs branch; Mr. Ted Gallivan, the assistant commissioner of international, large business and investigations branch; and Mr. Roch Huppé, the assistant commissioner of the finance and administration branch. Mr. Huppé will speak briefly about the main estimates and answer your questions, but I would like to say a few words by way of introduction.

I spoke earlier today to your committee about some of the proposed measures in Budget 2016 that will help the CRA combat tax evasion and tax avoidance. A secure tax base is the foundation for a healthy economy, a sustainable social infrastructure, and a strong democracy. I would like to add that the Government of Canada proposes two additional areas of investment that will also support the work of the CRA and my priorities as Minister of National Revenue. Those priorities are in my mandate letter.

Budget 2016 proposes to invest $351 million in the CRA's ability to collect outstanding tax debt, and $186 million to improve service to Canadians through better telephone access, easy-to-understand correspondence, and increased outreach for vulnerable and low-income Canadians. That is a total investment exceeding $1 billion over the next five years, a testament to the importance of the work the CRA does.

As you are aware, Mr. Chair, Canada's tax system is based on voluntary self-assessment and compliance. Within this system, the CRA plays a special role. It administers tax laws for the Government of Canada and for most Canadian provinces and territories, and it administers various social and economic benefit and incentive programs that are delivered through the tax system. The taxes collected by the CRA are critical to families, businesses, and communities. When Canadians meet their tax obligations, they are helping to fund health care, post-secondary education, social programs, infrastructure, and many other programs. This is why it is crucial that everyone pays their fair share of taxes, so that all Canadians can benefit.

In 2014-15, the CRA processed $469 billion in revenues and engaged with 31 million individual and corporate taxpayers. More than 92% of taxpayers file their taxes and pay the amount they owe on time. The CRA also delivers important benefits to many eligible Canadians. Last year, the CRA delivered $22 billion in benefit payments to 12 million recipients.

With new funding of $186 million, the CRA will be able to reach out to Canadians who may be entitled to benefits but not be receiving them. By offering services that are proactive, more helpful, and easier to use, the CRA will ensure that people who interact with the agency feel like valued clients, not just taxpayers.

We are confident that our proposed investment in the CRA's ability to protect the revenue base while improving service to Canadians will yield significant returns. It will also help ensure that our tax system operates as fairly and effectively as possible.

I would now like to turn you over to Roch Huppé, who will walk you through the CRA's main estimates.

Thank you.

[Roch Huppé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency]

Mr. Chair, good afternoon, and thank you for the opportunity to appear before the committee to present the Canada Revenue Agency's main estimates for 2016-17 and to answer any questions that you may have on the associated funding.

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

To fulfill its mandate in 2016-17, the CRA is seeking the approval of a total of $4.1 billion through these main estimates. Of this amount, $3.1 billion requires approval by Parliament, whereas the remaining $1 billion represents statutory forecasts that are already approved under separate legislation. The statutory items include children's special allowance payments, disbursements to the provinces under the Softwood Lumber Agreement, employee benefit plan costs, and the use of revenues received through the conduct of CRA operations pursuant to section 60 of the CRA Act for administered activities on behalf of the provinces and other government departments.

These 2016-17 main estimates represent a net increase of $280.9 million or 7.4% when compared with the 2015-16 main estimates authorities. The largest component of this change is an increase of $128 million in the projected statutory disbursements to the provinces under the Softwood Lumber Products Export Charge Act, 2006.

Other increases to the agency's budget include a $55.8-million adjustment associated with the enhancements to our compliance efforts aimed at improving the fairness and integrity of the tax system. These initiatives include additional T1 reviews, the corporate assessing review program, the non-filer program, employer and GST/HST delinquent filers, large business audits, underground economy specialist teams, and finally, enhanced offshore non-compliance measures.

There is an increase of $52 million of the forecasted payments under the Children's Special Allowances Act due to modifications announced in the 2015 federal budget, which saw the existing universal child care benefit increase from $100 to $160 per month for children under six years and a new $60 monthly benefit for children six and over, but less than 18 years old; and an increase in the monthly payment for each child eligible for the Canada child tax benefit, the national child benefit supplement, and the child disability benefit.

There is also an increase of $41.4 million related to accommodation and real property services provided by Public Services and Procurement Canada.

There is an increase of $25.7 million to implement and administer various new tax and benefit measures funded through budget 2015. These measures include the family tax cut, the children's fitness tax credit, the enhanced universal child care benefit, streamlining withholding requirements for non-resident employers, and automatic exchange of information.

Finally, we have the transfer of $19.6 million from Public Services and Procurement Canada as a result of a reduction in the CRA's accommodation requirements. The transfer is possible due to a number of initiatives undertaken by the CRA to achieve accommodation efficiencies, which resulted in a reduction in rental requirements of over 42,000 square metres of space, representing a total savings of $19.6 million.

There was also a $9.3-million statutory adjustment in the contributions to employee benefit plans.

These increases are offset by a $29.5-million adjustment associated with the sunset of funding for various measures announced in previous federal budgets; a $15.5 million adjustment for transfers to other government departments, and finally, an adjustment of $5.9 million in the forecast of cost-recovery revenues pursuant to section 60 of the Canada Revenue Agency Act for initiatives administered on behalf of the Canada Border Services Agency and the Province of Ontario.

The CRA's 2016-17 main estimates do not yet reflect the tax measures announced by the Minister of Finance in the March 2016 budget. Incremental funding requirements for the implementation and administration of announced tax measures are currently being evaluated by the CRA and will be presented to Treasury Board ministers through formal submissions in the coming months. Any incremental funding required for the 2016-17 fiscal year as a result of the Treasury Board submissions will be sought through the supplementary estimates process.

In closing, the resources sought through these 2016-17 main estimates will allow the CRA to continue to deliver on its mandate to Canadians by ensuring that taxpayers meet their obligations, that Canada's revenue base is protected, and that eligible families and individuals receive timely and correct benefit payments.

Mr. Chair, at this time, my colleagues and I would be pleased to answer any questions from committee members.

Thank you.

[The Vice-Chair, Conservative, Ron Liepert]

All right.

We'll start with Ms. O'Connell. I think we'll restrict it to five minutes because of the time.

Go ahead.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

Thank you again for appearing on the main estimates.

Minister, in your comments in regard to the $1-billion investment over five years to better customer service, you mentioned things such as the phone system, which is for sure something we raised here, and communication for our residents.

I'm curious about whether you will be looking at setting up a process—or has it already been done, perhaps?—to survey clients to find out how these systems can be improved. For example, in the case of a phone system issue, perhaps you could not limit hours to 8:30 a.m. until 4:00 p.m., or something along those lines, and maybe have more flexible times so that people don't have to call about their taxes from work, because it could perhaps be embarrassing or not appropriate.

Are you looking at these types of client service enhancements and not just at hiring more staff to be available under the status quo?

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

Since taking office as Minister of Revenue, I have visited offices throughout Canada. I can tell you that telephone service is not offered between 8 a.m. and 4 p.m.

Mr. Gallivan, who is more familiar with the improvements we are making, will be able to answer you on that point.

[Ted Gallivan]

You're correct. As the agency tried to preserve the audit horsepower in my current mandate, we cut back hours of service and degraded the response time. The money in the budget serves to re-establish it.

We had a discussion yesterday about additional rounds of public opinion research, so the agency is very open to suggestions from Canadians about how to improve services.

I think it's also worth noting that this was five-year funding. We're actively looking at call drivers and seeking to emulate call drivers and we remain hopeful that electronic services, which we continue to invest in, will help most Canadians as most Canadians move to e-services. We hope that's the way of the future, but we're absolutely committed to keeping phone service for those who prefer to interact with us by phone.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

Many of you mentioned throughout the testimony the different numbers of employees who will be hired, but could you, with this new funding, specify the number of employees being hired not specifically for tax avoidance but more for client services? Do you have that figure available?

[Ted Gallivan]

I think the most important measure would be our accessibility, in other words, how many callers get through on the first call. The investment in budget 2016 will allow us to hit 90%, and in some periods of the year it might even be higher than that. Again, you talked about weekends. In filing season, we put in weekend services. The agency's commitment is to answer 90% of those calls, up from the 80% target that we had previously.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

With regard to your overall client service improvement with these funds, are there specific plans for persons with disabilities to access the resources? They also tend to have more complicated taxes in terms of rebates, provincial or federal. That tends to drive a lot of questions in my office.

Is there contemplation of having specific client service employees to deal with persons with disabilities who may need more attention and care in dealing with their particular tax file?

[Ted Gallivan]

I would say that today we are being very sensitive across all our programs to persons with disabilities, from the accessibility of our website to the specifications we set for software developers who produce software, to the volunteer tax preparation program. Some people with disabilities need that kind of extra assistance to file their returns. We try to build in this sensitivity and support across all of our service programs so that people with disabilities receive the same service as other Canadians.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

I have one final question, Mr. Chair.

We heard testimony, not particularly on CRA or on this issue, but with the investments being made we've heard from numerous witnesses concerning the simplification of our tax system.

Do you feel that if this type of review were done it could work hand in hand with better use of resources? If people can understand their taxes in plain language and really understand better, would it help in the delivery of the program and the enhancement of client services that you spoke of?

[Geoff Trueman, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

Thank you for the question.

One of the most important things we can do at the CRA is simplify the forms and the process and the letters that taxpayers receive. The vast majority of taxpayers have a fairly straightforward interaction with the agency. To the extent that we can make sure that the forms and the messages that taxpayers receive are simple and clear, we can greatly facilitate their ability to comply and our ability to administer the Income Tax Act.

Going forward, that is certainly part of our service agenda.