Finance Committee on May 3rd, 2017

[Ted Gallivan]

We have a number of reciprocity protocols with the provincial ministry, especially in terms of services and observation. We are trying to bring the information together. I feel that our online services allow us to do more of it.

With some Canadian provinces, people can interact with both levels of government in a single online session. We are also working with our systems to permit the exchange of data as much as possible. We have to help Canadians operate in a consistent fashion, and on their own.

[The Chair, Liberal, Wayne Easter]

Thank you.

Minister, there are four questioners. Can you stay?

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

Like us, all the committee members around this table want to work to provide a better tax system for Canadians. So I will be happy to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Minister. We appreciate that.

We'll give everybody a couple of questions.

Mr. Richards, go ahead.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thank you.

Minister, I guess I'll continue. I had a chance to share with you the perspective of the interpretation bulletin. Maybe you've had a chance to reflect on that. By the way, that was from August 2016, so it was not a Conservative government. It was in fact your government.

I will reiterate that in our last budget in 2015 we initiated a review of these rules, and there was a reason why that review was initiated. Twelve of the 13 submissions we received indicated that they felt the rules were unfair and recommended that there should be some change. Then, of course, the interpretation bulletin from August 23, 2016 made that change. Then these campgrounds started to be assessed and reassessed with a different interpretation of the rules about active versus passive income. Frankly, the idea that a business is too small to be a small business is quite ridiculous, but that was the interpretation.

I gave you a list of a few businesses that have been affected because of this change in the interpretation. There are others, and some of them are being put out of business. Also, I know there are a lot of businesses out there that are in fear right now, because they wonder if they'll be the next business model to be approached and attacked under these changes, which really seem to be quite arbitrary.

As my colleague Mr. Aboultaif read to you earlier in this own committee's pre-budget report for the 2017 budget, the recommendation was:

That the Government of Canada recognize the income earned by campgrounds and storage facilities as “active business income” for the purpose of determining eligibility for the small business deduction.

Minister, it seems to me that the only thing your Liberal government isn't ignoring is another attempt to be able to punish small businesses. I want to give you another chance, Minister. Will you take another look at this? Will you actually try to make sure this war on small businesses stops, or are you just going to keep repeating these talking points about people paying their fair share?

[The Chair, Liberal, Wayne Easter]

Madam Minister and Mr. Gallivan.

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

I thank my colleague for his question.

I will repeat myself and tell him that we have not changed the rules.

[Blake Richards, Conservative, Banff—Airdrie, AB]

How much evidence do you need, Minister?

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

At the Canada Revenue Agency, we apply the legislation that is the responsibility of…. If the act is to be amended, we would have to consult the Department of Finance. At the Canada Revenue Agency, no changes have been made to tax rules. They continue to apply, as they applied when your government held public consultations when you were in power. You did not change the rules at that time and, in turn, we continue to apply exactly those same rules.

[Blake Richards, Conservative, Banff—Airdrie, AB]

I really don't know whether to laugh or cry. That is actually embarrassing on your part.

[The Chair, Liberal, Wayne Easter]

Mr. Richards, we'll be turning to Mr. Grewal.

Minister, I think it's fair to say that on campgrounds and RV parks we are all getting calls. Probably every member on this committee has been lobbied on this issue. It is a serious issue, and we are hearing from the tourism sector, so I would ask you to look closely at the issue with your officials and make sure that people are not being targeted.

I went through the memo that Mr. Richards tabled. All members have a copy. As a committee, we looked at this before and we just want to make sure that campgrounds and RV parks are not being targeted and are being treated fairly. That's all I'll say on the matter.

Mr. Grewal.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thank you, Mr. Chair. I'm glad to see a member of the Liberals recognizing such a fact.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Minister, I want to thank you and your officials for coming today. We really appreciate it.

Minister, one of the things we can all agree on at the table, irrespective of party, is that we're all here to help solve problems for our constituents. It's sometimes really difficult to solve a constituent's tax problem with the CRA, for various reasons. We have to fax the consent form in. They don't give us very much information over the phone. Sometimes constituents' accounts are being garnished and it really becomes an issue of how to have enough money to put food on the table, as I saw in a recent case in my constituency.

Our government has made significant investments in the CRA. Can you let me know how the investments made in our appeals process will help at the local level?

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

I met with the Auditor General over the winter on the objection process. We discussed his report. It was submitted and I have considered it.

We accepted all the recommendations on objections in the Auditor General's report. An action plan with the goal of reducing delays in processing objections is already being developed and will be submitted soon. We will make it public so that people know how to proceed when they have an objection.

We know that there is a backlog of objections and we really intend to reduce it. We want objections to be processed as quickly as possible. Service to Canadians is a priority for us.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Minister.

This is my last question, and maybe your officials can weigh in on this as well. I sometimes wonder about the training we give our officers at the CRA. It just seems that they are so rigid in their interpretation of the rules and that there is no flexibility or a common-sense alternative. If you owe $10,000 and you're a single mother with two children and you live paycheque to paycheque and you've paid $5,000 or $6,000 and there's $4,000 left, why not call it even at $2,000 and close this file and go on?

There are a lot of frustrations at a local constituency level in some of these cases. Canadians hear these stories of tax evasion. Congratulations to you, Minister, that we're doing a great job to make sure the wealthiest Canadians in our corporations are paying their fair share. On the other side of that pendulum, however, we have a problem. For me, this problem is very important because we want to be able to solve people's minor CRA issues and close these files so they can keep on working hard to put food on the table and send their children to post-secondary education.

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

Thank you for your question.

As I mentioned before, what's important to us is that everyone pays their fair share and receives what they are entitled to. My goals are to have effective and efficient services that are geared to Canadians. That's actually at the heart of my mandate letter.

There are still services within the agency. Our goal is not to put people in difficult situations and shut down businesses, but to reach agreements with people to find the tax base that will enable the government to invest in public services, education and health, to help the poorest of the poor and to invest in infrastructure. That is what the Canada Revenue Agency is all about. There's always a way to reach a deal with the Canada Revenue Agency. Each case is treated separately. Our employees are there to help and support people, as well as to enter into agreements with them.

Perhaps Mr. Huppé could elaborate on that.

[The Chair, Liberal, Wayne Easter]

With respect to that, Mr. Huppé.

[Roch Huppé]

I think the minister said it well. You'll have noticed in the last year that we actually had a new advertisement on the collection front, reminding Canadians that we're there to work with them, considering the realities on a case-by-case basis to make different payment arrangements. We have the flexibility and the capacity to do that, obviously.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Mr. Dusseault, you have three minutes, and then the last questioner will be Mr. Ouellette.

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

Thank you, Mr. Chair.

I would like to come back to your responses to the committee's report.

Mr. Gallivan, the question is for you. It is about recommendation 14 and your answer about post-employment and conflicts of interest.

You have made a commitment to set up a high-level interdisciplinary committee to look at the post-employment and conflict of interest rules. You said that you wanted to implement measures on a tight schedule. Can you give us some news about that? What has upset Canadians the most is that agency officials have attended secret cocktail parties at the Rideau Club, or that people have moved directly from the Canada Revenue Agency to accounting firms.

Can you tell us whether the post-employment and conflict of interest rules will be tighter, and when that will be done?

[Ted Gallivan]

The review has two parts. The first step was to immediately look at the tools we had before us. There have been some changes. For example, when an employee leaves the agency, we now require the right to contact his or her employer afterwards if the employee tries to exert some influence.

In terms of the high-level committee, there have been three or four meetings, including one last week that lasted two days. Directors from the regional tax offices participated, and so did people from headquarters. The goal of all that was to bring about real change, not changes that are good in theory but that do not really work on the ground. The fact that the agency convened about 20 senior officials and directors of the regional tax offices shows the exercise was taken seriously. We spent two days on it. We expect specific changes later in the year following this process.

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

We are watching with great interest.

In terms of recommendation 9, you have committed to reviewing the memorandum of understanding between the Canada Revenue Agency and the Public Prosecution Service of Canada (PPSC). The goal of that exercise is to speed up the process when investigations are conducted under the criminal investigations program and cases are transferred to the PPSC. So you made a commitment to do that. Will you update it?

You said that it would be updated if appropriate. Is it appropriate to update the memorandum between the PPSC and the CRA?

[Ted Gallivan]

Yes.

I have an official meeting with my counterpart every quarter. We have an improved draft memorandum. We consult our legal services. We are in the process of finalizing the details, but most of the changes have already been made. The approval process could take several weeks or months, but everything should be finalized by the fall.

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

Thank you, Mr. Gallivan.