Finance Committee on May 3rd, 2017

[The Chair, Liberal, Wayne Easter]

Thank you both.

For the last question while the minister is here, Mr. Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you, Mr. Chair.

My thanks to the minister for being here. That's very kind of her.

I would like to ask you a question that has two parts.

The Canada Revenue Agency's budget includes a $51-million adjustment in forecasted payments under the Children's Special Allowances Act. This is due to an increase in the per child benefit amount under the new Canada child benefit program, implemented in July 2016.

The Children's Special Allowances Act pays government money when children are held in the care of the state, so essentially, instead of the money going to the children, it actually goes to provincial governments and agencies. The state, though, seems to be a very poor type of parent, because I've met individuals who have been bounced around from foster family to foster family in my riding, up to 77 times. One individual I met last week was in over 100 foster families throughout his life, in 18 years, which is an incredible number.

I was just wondering why we give the money to the state. Why does it not go to these children who need it most, who don't have the social and family structures that many of us enjoy? Why do we give it to governments that really don't need it? Why not place it in a trust, so that these children—at some point in the future, when they turn 18 or 21—can access these funds to pay for education or for housing? Often, what happens is they end up in a homeless shelter, where I meet them, because they're kicked out of foster families when they turn 18 and they're not valuable to anyone anymore.

That is not to say there are not good foster families, but it seems we are doing a disservice to some of these children, and so I was wondering if your deputy ministers had any intention of looking at this and trying to understand what problems are related to this.

Then I just had one final question related to that. Could you give the number of people in the country who are actually using the Canada child benefit? Have all families applied? What is the penetration rate related to that program?

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

You have two questions.

I'll answer the first one about the $51 million for children in the care of the state, of foster families or people other than their parents.

Yes, the money is earmarked for the state, because child services and foster care fall under provincial jurisdiction. The money makes it possible to provide assistance to the children, because they have specific needs when they are young and live with those families. That's what the money should be used for.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

You say “should”.

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

It is understood that we cannot allocate the money directly to the children. It is allocated to the provincial governments, which in turn look after managing the social services.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

The problem is that families or agencies take the money to pay for trips to Las Vegas or somewhere. They abuse the system, and the money doesn't go to the children. I know it's not your fault, because it's the responsibility of the provinces, but I'm wondering whether you could study it together, to ensure that the money actually goes to those who need it.

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

I take note of your remarks. I can't give you more information, because these areas are under provincial jurisdiction.

The other question that you asked me is whether all the families have received the Canada child benefit. I will take this opportunity to convey a message that's important to me. I say this wherever I go.

Those who have not filed their tax returns are not entitled to the Canada child benefit or any tax credits. At the meetings I have, when I go to indigenous communities and when I meet with community organizations—I do some fieldwork, because it's important for me to involve the public—I tell those in charge that it's important that they talk to their people. That's the responsibility of every elected official, be they in Parliament, the provinces, municipalities and grassroots organizations, which are much closer to people and families. I tell them to check whether the people have filed their tax returns so that they are entitled to the Canada child benefit.

This is not about penalizing people. For those who have not filed their tax returns, they may go as far back as 10 years for some programs. So some people have received $15,000 or even more in tax credits, from the money they were entitled to. I therefore strongly encourage you to check in each of your ridings with your organizations and to ensure that the people file their tax returns so that they get what they are entitled to.

In terms of the agency, as long as I'm there, it will not make money on the backs of the poor. However, when it comes to the wealthiest who hide their money abroad, let me tell you—and I have said it before—I will not let them off the hook.

[The Chair, Liberal, Wayne Easter]

Thank you both for that round of questions, and your passion, Minister, in that answer.

That ends the rounds with the minister.

Minister, I think we will turn to the officials. First of all, thank you and the department for your response on tax avoidance and tax evasion. The department has accepted our 14 recommendations. We appreciate that. I would say there is maybe a take-away, that is, the document on the eligibility requirement for campgrounds in order to claim the small business deduction. I think on that one, what you're hearing from members of the committee is that the CRA should proceed with caution. We're hearing too many complaints, and I don't mind saying that. We've heard your answers. We respect them. All I would say is, maybe the CRA should proceed with caution in that area.

With that, Minister, thank you very much for your presentation. All the best.

Do any members have questions for the officials? We do have a few minutes.

Mr. Dusseault.

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

First, the section on page 56 of the 2017-18 departmental plan is planned human resources. I know that it's linked to the main estimates, of course. So for 2017-18, the total planned full-time equivalents is 39,392. We see the number go down between 2017-18, 2018-19 and 2019-20, when it's still under what was planned for that year.

Could you explain the drop in total planned full-time equivalents in all the departments when resources are being invested in the Canada Revenue Agency, $444 million in budget 2016. That's not counting the $521 million in budget 2017, I think.

So why do we see a drop between 2017-18, 2018-19 and 2019-20?

[Roch Huppé]

Those decreases are because of our delays in preparing the documents. You gave budget 2017 as an example. Clearly, the FTEs are not included in the budget yet, but they will be starting next year.

Over the years, when we receive funds from previous years and the related forecasts, some funds expire. So the FTEs are removed and the new FTEs are restored depending on the new investments. Until the budget decisions are made, we don't have the right to make forecasts about the FTEs in future years. We rely on the authorities we have at this time of the year, considering all the decisions made so far.

It is normal that, for most departments, those figures go down over the years and are adjusted as the new budget decisions are confirmed. If we have funds that are supposed to expire and we think they will be renewed, we don't have the right to keep the FTE figures in our reports. We have to wait for the official renewal, which is usually done through the budget.

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

I understand what you're saying, but that does not explain the fact that the amount of $444 million should indeed be taken into account. But we see no difference between 2016-17 and 2017-18, and it stays at the same level of 39,392 FTEs.

The same is true for page 53 of the 2017-18 departmental plan. In 2016-17, it was $943 million, in 2017-18, it was $930 million, in 2018-19, $918 million, and in 2019-20, $917 million. I don't see the $444 million anywhere. I understand that we cannot count the $521 million, but we should be able to see the $444 million.

[Roch Huppé]

What you would see is the breakdown of the $444 million. Those numbers would be included and there would clearly be an increase. Except that there are other initiatives with funding coming to an end. For instance, budget 2012 expired recently. Efficiency measures at that level and other funds have expired and might be renewed. Basically, it's the net amount of everything that comes in and all the measures that come to an end. You are seeing the net amount.

If you saw all the details, the breakdown of those numbers, you would see that the figures connected to the $444 million are included, but over the years, there are other initiatives with funds expiring.

[The Chair, Liberal, Wayne Easter]

You have time for a last question, Pierre. Are you done?

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

Yes, that's all for now.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Aboultaif.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I would first like to thank you, and then go back to the question that was asked by my colleague, Ms. O'Connell, on the tax gap.

I do understand fully that you've probably been hesitant to come up with any figure in that regard. However, to go back to this point, one thing that struck me, Mr. Gallivan, when you were talking about the ROI, was that you didn't seem to be very keen or confident that the ROI is going to be satisfactory from a business stance. At the end of the day, this is a huge investment by taxpayers to the CRA, so if you're hesitant on the ROI, that means you're not releasing any figures on the tax gap.

I can see it from a taxpayer's perspective. At least come up with some figures—you must have some idea about the tax gap—and then when you finish the investigation and the study on it, you can come back to Canadians with some of that. I'm hoping that with you I can get a better answer than I would be getting from the minister.

So far, we haven't been able to get anything from the minister, although I've addressed her in writing. After 45 days, I have nothing back. It's the same answer that she gave today. Could you please elaborate on this at some point?

[The Chair, Liberal, Wayne Easter]

Mr. Gallivan.

[Ted Gallivan]

First, I'll go back to this idea of revenue generation. We have a number that we call revenue impact. Last year, it was just under $13 billion, at $12.8 billion. This year, it is well over $13 billion. That number is up roughly 46% over the last four or five years.

Tactically, that's successful. We're getting more taxes for the Canadian public. Strategically, if we continue to find people not complying, we haven't deterred them. The other number we have is the $460 billion that comes in voluntarily, overall. That's the number that really needs to go up. In other words, if we continue to perform audits and we continue to find that taxpayers are non-compliant, there must be something about how we audit or the consequences of audit that isn't getting through, which goes back to the point about criminal investigations and extra penalties for preparers.

In terms of the tax gap, our challenge is about how we allocate those resources. How much do we resource to multinationals? How much do we resource to small and medium-sized businesses? How much on aggressive tax planning? We have to make those judgments, so for us, it's more a question of identifying the eight or nine different tax gaps. How much is in the underground economy? How much is offshore and moving it around? Therefore, for us, it's not necessarily determinative to know how big it is. It's the relative size because our job is to reallocate those resources.

For those countries that do have a measure of tax gap, we have consulted those tax authorities and they haven't found performance lists. Their results aren't up by 46%, after they started measuring the tax gap, so we have been reluctant. Now, under this new government, we have been working and taking steps to understand those challenges and find solutions, so the Department of Finance and the CRA partnered last year to release a number on GST. We're holding a conference this June with experts, academics, and statisticians to understand how we can produce something that might be useful—for you and for the agency—that would make us more transparent.

If we had the answer, the agency would have done it sooner, so now, all I can talk about is our process to come up with an answer.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'm not specifically asking you to reveal your strategy, although you have the right to do so. If you don't, that's up to you. However, there is almost $1 billion between last year's budget and this year's budget for CRA. That's a very significant number. Do I understand from what you just said that you haven't found where you can allocate that money? How are you going to distribute that money into different areas? Where are your priorities? At the end of the day, you've been in business from before this government. Now, we'll continue for as long as it takes, so where are the priorities and how are we going to tell Canadians that this is going in the right direction with a significant investment that you're getting of about $1 billion for two years?

[Ted Gallivan]

The budgets were quite specific and quite clear that our points of focus were multinational enterprises, aggressive tax planning, particularly offshore tax planning, criminal investigations, and the underground economy. In fact, we were able to increase our level of focus on all of those areas, while at other times and in other years, we've had to make reallocation decisions, so those sectors are the sectors that we're focused on.

I had also talked about making increased use of technology and data. We now have access to electronic funds transfers over $10,000. Country-by-country reporting by multinationals is coming in two years. Something called the common reporting standard, to which 100 countries have signed on, will give us worldwide banking information on Canadian citizens around the world.

In addition to those priority areas, our priority approach is to leverage data to be much more targeted, so we're not on the doorstep of compliant small businesses, but really focus on those that are most aggressive.

The final thing that I'll say is a big focus is on the promoters or facilitators, like those firms' accountants or lawyers who are the facilitators and the wholesalers.

Hopefully I have answered your question.

I'll come back to the ROI, again, this year in my branch, we had a target of $380 million. We're at $500 million. We are confident of being able to meet those revenue generation targets.

What we want to do is meet those targets and deter to ensure there are sufficient consequences that we don't see the same people still non-compliant two or three years down the road.

[The Chair, Liberal, Wayne Easter]

Thank you both and thank you for the thorough explanation on that point, Mr. Gallivan.

We will turn to the vote on the main estimates for the Canada Revenue Agency 2017-18.

CANADA REVENUE AGENCY

Vote 1—Operating expenditures..........$3,173,383,552

(Vote 1 agreed to on division)

Vote 5—Capital expenditures..........$59,363,678

(Vote 5 agreed to on division)

[The Chair, Liberal, Wayne Easter]

Shall I report votes 1 and 5 under the Canada Revenue Agency, less the amounts voted in interim supply, to the House?

[Some hon. members]

Agreed.

[The Chair, Liberal, Wayne Easter]

Thank you.

We will suspend for a few minutes and then go into committee business.

[The Chair, Liberal, Wayne Easter]

We'll reconvene.

Pierre, I think you have a motion.