Thank you, Mr. Chair.
Thank you for inviting me to speak to private member’s Bill C-224. I am pleased to be here.
Bill C-224 proposes to authorize the Minister of Finance to enter into an agreement with the government of a province under which the government of the province would collect the federal personal and corporate income taxes on behalf of the Government of Canada.
It also requires that employment-related impacts be mitigated.
Within 90 days of the coming into force of the act, the Minister of Finance must undertake discussions with the Government of Quebec in order to enter into an agreement within one year.
Upon entering into an agreement with a provincial government, the Government of Canada must renegotiate its agreements with foreign tax authorities to give the province direct access to all international tax information.
Perhaps by way of context, I will say a few words about the administration of income taxes across Canada. As the committee will be aware, most provincial income taxes are collected on behalf of provinces by the Canada Revenue Agency, as established under the long-standing Tax Collection Agreements.
Under the tax collection agreements, the federal government agrees to collect and administer provincial taxes virtually free of charge in exchange for which the provinces agree to maintain a common tax base between the federal and provincial systems. This helps to ensure harmonization of the tax systems and reduces complexity, both in administration and in compliance. At the same time, provinces and territories have the flexibility to set tax rates and to introduce credits to reflect their particular policy choices.
Quebec, of course, does not have a tax collection agreement for personal income taxes or corporate taxes, and Quebec and Alberta don't have one for corporate income taxes. As such, these provinces administer their own provincial tax systems that are not required to adhere to a common tax base.
Over time, in the absence of adherence to a common tax base, different and reasonable policy choices have been made with respect to how various categories of income or expenditures are treated for income tax purposes. Consequently, it's important to consider how these differences in policy approaches contribute to the respective compliance burden faced by taxpayers in different provinces. In other words, the question of compliance burden goes beyond who is administering the law or the tax, but also, importantly, involves elements of the system itself.
Finally, as the committee is aware, while the focus of the bill is on tax administration, beyond the collection of taxes, the Canada Revenue Agency delivers benefits to Canadians, such as the Canada child benefit for individuals, and the scientific research and experimental development program for corporations. More immediately, over the past 12 months, the agency has played a critical role in the timely delivery of a range of emergency relief benefits to Canadians, individuals and businesses, leveraging the agency's role in tax administration across the country.
Along with our colleagues from the Canada Revenue Agency, we'd be very pleased to answer any questions that the committee may have.
Thank you.