Finance Committee on Nov. 24th, 2016

[The Chair, Liberal, Wayne Easter]

I call the meeting to order. Pursuant to Standing Order 81(5), we are examining supplementary estimates (B) for 2016-17, votes 1b and 5b under the Canada Revenue Agency, votes 1b and 7b under the Department of Finance, and vote 1b under the Financial Transactions and Reports Analysis Centre of Canada, referred to the committee on Thursday, November 3, 2016.

That's all to say that the minister is here to talk about the supplementary estimates.

Welcome, Minister Lebouthillier, and welcome to the chief financial officer, Mr. Huppé, and to Mr. Gallivan.

There is a point of order.

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

Thank you.

At the last meeting, we adjourned debate; however, it's my understanding of the rules—and I could be wrong—that it's at the beginning of the meeting that we deal with the motion that was adjourned.

[The Chair, Liberal, Wayne Easter]

That's not necessarily so.

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

That's fine.

[The Chair, Liberal, Wayne Easter]

A member who wants to pull it off the table can do so at any time. It's my understanding that it doesn't have to be dealt with immediately at the beginning of the meeting.

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

Okay.

[The Chair, Liberal, Wayne Easter]

I'd suggest that possibility might occur after we hear from the minister on the supplementary estimates.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll start, then, with the minister, and then the floor will be open to whatever might happen after that.

Minister, the floor is yours. Welcome.

[Diane Lebouthillier, Liberal, Minister of National Revenue]

Thank you, Mr. Chair.

I appreciate the opportunity to participate in the committee's study of the supplementary estimates (B).

I am joined by two senior officials from the Canada Revenue Agency: 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 and the agency's chief financial officer.

Mr. Huppé will speak briefly about the supplementary estimates in just a moment, but I would like to say a few words by way of introduction.

In May when I last to spoke to this committee, I was six months into my mandate as Minister of National Revenue. At the time, I gave an overview of some of the measures outlined in budget 2016 to help the Canada Revenue Agency combat tax evasion and tax avoidance.

Now, having served as minister for more than a year I have an even deeper appreciation of the challenges involved in these activities and the CRA's other business lines. As you know, the CRA is a client-focused agency that exists to serve Canadians. I am pleased to inform the committee that the agency is becoming fairer, more helpful, and easier to use.

The CRA is delivering on the government's commitments by effectively administering the middle class tax cut and the Canada Child Benefit. And it is taking definitive steps to combat aggressive tax planning and tax avoidance, improve services for taxpayers, and enhance the role of charities in our society.

The agency has accomplished a number of objectives on the compliance front—both at home and abroad—since my last appearance. They are taking concrete steps here in Canada to crack down on tax cheats. The CRA is currently conducting audits on over 750 taxpayers and criminally investigating 20 cases of tax evasion specifically linked to offshore tax havens.

Recently, the CRA launched the hiring process to add 100 new tax professionals to its already robust audit team. These individuals will assist in auditing high-risk multinational corporations and unravelling complex offshore schemes to crack down on tax cheats. It is a strategy that will collect an estimated additional $500 million in revenue over five years.

As for service to Canadians, the CRA makes sure taxpayers have access to the information they need about taxes or benefits—on its website, through its call centres, or through mobile applications. To respond to the public's needs the agency has added resources to its telephone service and is improving upon the clarity of correspondence with Canadians.

In addition, the CRA is streamlining its processing activities and creating three new national verification and collection centres. Canadians will experience faster, more efficient processing of their tax and benefit returns and better handling of calls to the call centre.

The Canada Revenue Agency has also made a significant commitment to the charitable sector by engaging with key stakeholders. The government has pledged to further clarify the rules governing a registered charity's involvement in political activities.

To this end, the agency recently launched online consultations with the public, and starting next week, will begin in-person consultations with registered charities. This consultation will result in a better understanding of the needs of charities and help identify ways to better communicate the rules governing political activities.

It is clear, Mr. Chair, that the Canada Revenue Agency is improving its service to Canadians and acting on its commitment to crack down on tax cheats. I am proud of the accomplishments of the agency's dedicated employees. But there remains much more to be done. Supplementary funding will help the agency enrich its programs in a number of ways.

It will enhance the agency's efforts to crack down on tax cheats. It will fund measures to improve communications with taxpayers and outreach to Canadians, and it will implement and administer the new home accessibility tax credit for seniors and people with disabilities.

I could go on, but instead I will yield the floor to Mr. Huppé, who will speak to the details of the supplementary estimates.

Thank you for your attention.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Madam Minister.

Mr. Huppé.

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

Good afternoon, Mr. Chair. Thank you for the opportunity to appear before the committee to present and to answer any questions that you may have on the Canada Revenue Agency's 2016-17 supplementary estimates (B).

Mr. Chair, 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 agency collects hundred of billions of dollars of tax revenue for the governments of Canada, and distributes timely and accurate benefit payments to millions of Canadians.

Through these supplementary estimates, the Canada Revenue Agency is seeking an increase of $146.1 million in its voted authorities for the following four items.

First, the agency is requesting $65.3 million, of which $40.1 million is to implement and administer various measures aimed at cracking down on tax evasion and combatting tax avoidance as announced and funded through budget 2016. The incremental funding will be used to hire additional auditors and specialists, develop robust business intelligence infrastructure, increase verification activities, and improve the quality of investigative work that targets criminal tax evaders. The remaining $25.2 million is aimed at enhancing tax collections, as announced in budget 2016.

Second, the agency is seeking $44.3 million to implement and administer various measures to further improve its capacity to deliver client-focused services for Canadians and Canadian businesses, as announced in budget 2016. These measures include improving telephone accessibility, delivering correspondence and other communications that are clear and easy to read, increasing outreach through the expansion of the community volunteer income tax program, taking the initiative to contact Canadians who are not taking advantage of the tax credits or benefits they are entitled to, and increasing the agency’s capacity to resolve taxpayer objections in a timely manner.

These supplementary estimates also seek $30 million related to the administration of the goods and services tax recognizing the deferral of a savings proposal originally identified as part of the Budget 2012 spending review.

The final item for which the agency is seeking incremental funding is $6.4 million to implement and administer the new home accessibility tax credit for seniors and people with disabilities announced in budget 2015, as well as to augment the agency’s audit and non-audit compliance programs. These initiatives include GST and HST examinations, aggressive tax planning teams, and an extension to the RRSP over-contribution program.

Also included in these supplementary estimates for information purposes is a net reduction of $108.4 million related to the agency’s statutory authorities. Largely, this reflects a revision in the timing of disbursements to the provinces under the Softwood Lumber Products Export Charge Act, 2006. In January, at the time the 2016-17 main estimates were prepared, the agency intended to make disbursements to the provinces of $128 million in 2016-17, once all final administration costs had been determined. This work proceeded quicker than expected, and the majority of this amount was ultimately accounted for in 2015-16, resulting in a $125.6-million reduction to the statutory authority being sought through these supplementary estimates.

This reduction is partially offset by an increase of $17.2 million in employee benefit plan amounts associated with new salary funding being sought through these supplementary estimates. Following the approval of these supplementary estimates, the agency’s revised 2016-17 authorities will total just over $4.4 billion.

In closing, the resources sought through these estimates will allow the Canada Revenue Agency 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,

as well as ensuring that Canadians have ready access to the information they need about taxes or benefits.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

I also want to thank you for providing the committee with a copy of your remarks, and your remarks on the estimates. I will admit that doesn't always happen. I'm sure every member of the committee is pleased about having received them so we can follow them.

Turning to questions, we have Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

You are right, Mr. Chair, and we thank you for your comments.

Madam Minister, Mr. Huppé and Mr. Gallivan, thank you for being here with us.

This year, we focused particularly on tax evasion and on the efforts you made in this regard and the additional funds devoted to fighting tax evasion. Since all members of this committee are members of Parliament, I would like to address client service in my first question.

During the years when Mr. Harper was in power, there were rumours that the regional Gatineau office would be merged with the Ottawa office. Ms. Lebouthillier, could you clarify the status of the regional Gatineau office?

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

In the mandate letter I received from the Prime Minister, I was asked to focus my efforts on all of the client services provided by the Canada Revenue Agency. The work to renew the services was done all through the year. To me it was important that we maintain the regional offices.

We kept the Gatineau office. We also added 500 administrative positions to the Winnipeg office. In Rimouski, we consolidated part-time positions and other positions in regional offices. To me and to everyone who works at the agency, it was also important to make an announcement in this regard. We have two years to work on the reorganization. This makes the employees feel more secure, and everyone knows where we are going. We will also work in cooperation with the unions on this.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you very much, Madam Minister. I think the people of Gatineau will be reassured by your words.

More generally, I want to speak about investments in client service.

People have noted that client service at the Canada Revenue Agency is faster and more modern, but I'm sure you will agree with me that there is still a lot of work to do in this regard. You are asking the Parliament of Canada to give you considerable sums to work on it. What are the highlights of your improvements to client service?

We are both members from Quebec. The people of that province sometimes feel that having to file an income tax return with Revenue Quebec and another one with the Canada Revenue Agency is a heavy burden to bear. Are there some efforts being made to coordinate things with Revenue Quebec? If so, are they part of the efforts aimed at improving client service?

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

Yes.

The Canada Revenue Agency is in fact working in co-operation with Revenue Quebec. In fact, we are consulting businesses about improving our services. We are consulting Revenue Quebec in order to provide more effective help to those who do business with the agency.

I am going to give the floor to Mr. Gallivan, who can provide additional information on this.

[Ted Gallivan, Assistant Commissioner, International, Large Business and Investigating Branch, Canada Revenue Agency]

Thank you, Madam Minister.

Mr. MacKinnon, I will speak more specifically about certain elements.

Part of the investment has been allocated to telephone lines, in order to ensure that people receive a reply in an acceptable time frame. In the first quarter of this year, we noted an improvement in response times of 4% to 7%, depending on the phone lines.

We also simplified correspondence coming from the agency. We had been having a long-term debate with lawyers and people from the communications service concerning our way of addressing Canadians. These are legal documents that contain a certain number of details. Since they have been simplified, we expect to receive fewer calls. We also created a telephone line for accountants, who receive more complex calls that can last longer.

In addition, we deal with disputes, those involving taxpayers who do not agree with their tax assessments from the agency. We invested more money there, because we know that the delays were not well received by citizens who had an issue with the agency. Investments were made in order to reduce delays in such cases.

[Steven MacKinnon, Liberal, Gatineau, QC]

Returns at the end of the fiscal year are now sent more quickly than in previous years. What efforts do you make in order to send income tax returns more quickly to taxpayers?

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

One factor is that we computerized our services, and we are continuing work on that. Last year, the number of people who used our electronic services increased by 2%. 84% of taxpayers now use it. This certainly is more conducive to taxpayers receiving returns as quickly as possible. As for improving electronic services, Mr. Gallivan could give you more information on the administrative aspect.

[Ted Gallivan]

In our opinion, we need to start the tax return season as early as possible. It starts very early, but the fact that some information is not available, such as information from employers, prevents some taxpayers from obtaining their returns sooner.

We are working with software developers so as to better integrate the information that is sent to the agency by third parties such as employers. We are making considerable improvements to the software so that all of this information can be made available to citizens who choose to send in their returns electronically. This is in our opinion an important partnership, and we have to make sure that that information is received in time to allow citizens to obtain their returns in a timely manner.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Aboultaif.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you.

Thank you, Minister, for being here today.

You announced an expansion of the operations of the CRA in Summerside, P.E.I., by 70 new jobs, yet you told 182 others that if they want to keep their jobs they must relocate to another province. We're hiring 70 and basically letting 182 leave home. That doesn't seem to be an expansion to me, to be honest with you.

I asked you that question in the House and I would like you to explain to me why you're taking jobs out of Prince Edward Island.

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

With regard to jobs, it is important to stop the decline in the number of workers in regional tax centres. As I mentioned a few moments ago, there is an across-the-board increase in electronic services. We have consolidated some positions. We had some part-time employees who are now full-time. We are working to provide better service to Canadians. We are working on reducing wait times, and in future, the agency will be offering more specialized positions.

Mr. Huppé could tell you more about this.

[Roch Huppé]

You referred to new jobs being created and some employees being offered the chance to move elsewhere. We're consolidating the different activities in different locations, so these folks are being offered a possibility to follow their current work. It doesn't mean that there will not be another job for that person in that location. The number of jobs in Summerside is actually growing. It's just that, as a first step, we always offer our employees the possibility of moving for their work, and then in most of these cases we will guarantee them a job if they choose not to follow their work, another job at their current location.