Finance Committee on Feb. 16th, 2021

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

This might not have been done, but has there been any type of assessment about what would be the cost to CRA to retool, to readjust, if what is proposed in Bill C-224...? Has there been some sort of a costing to CRA versus what would be the cost savings in Quebec? Has anybody done that? I don't know if that's Mr. Marsland or Ms. Laroche, but do you know if that type of costing has actually happened?

Everyone is frozen now.

[Mireille Laroche]

Do you hear me?

[Julie Dzerowicz, Liberal, Davenport, ON]

Now I do, yes. Thank you.

[Mireille Laroche]

Okay. Thank you for the question.

Naturally, we haven't done any type of study in terms of the potential savings on the Quebec side, but we have looked, I would say, at a very high level to see what would be the initial impact in terms of associated costs. We do have experience in that—not exactly in the same types of projects, but in the year 2000 we did take on the administration of the Ontario corporate tax, which is actually a much smaller project. They came to us, as opposed to our giving a piece to provinces. We do have experience in these large types of projects.

We estimate, at a very high level, that there would be significant fixed costs in terms of the investment that would be required, from a technology point of view, the increased coordination and everything. At a minimum, our estimate at this time is around $800 million.

This would need—

[Julie Dzerowicz, Liberal, Davenport, ON]

Did you say $800 million?

[Mireille Laroche]

Yes, but this would need to be refined based on the agreement that it would need to be taken from.

There are, as I mentioned before, significant considerations from an IT perspective, from a workflow perspective, from a staffing perspective, HR, real property. There are a lot of considerations. These are very complex agreements to be negotiated, and they do take time.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Okay, we'll have to end it. Thank you all on that round.

We'll go to two two-and-a-half-minute rounds, first with Mr. Ste-Marie and then with Mr. Julian.

Before we start, because I know some people are probably worried about the time, the app simulation and test now has been moved to 7:30 Ottawa time, so that gives us a little more time.

We'll end after Mr. Julian.

Mr. Ste-Marie, go ahead.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you for that update about the voting simulation, Mr. Chair.

I'm always flabbergasted when I hear that having one tax return rather than two would cost hundreds of millions of dollars more. That's amazing.

Mr. Marsland, in your remarks, you said that the federal government agreed to collect and administer provincial taxes almost free of charge. But, as we know, under the tax collection agreements with the provinces, the federal Treasury Board receives all the money collected by the Canada Revenue Agency when it conducts its audits, regardless of whether the amounts are for federal income tax or provincial income tax.

How much money has the federal Treasury Board received in the last five years from collecting provincial income tax outside Quebec?

If you do not have that information at hand, you could send it to the committee later.

[Miodrag Jovanovic]

I can answer the question, with your permission.

I would like to clarify the way in which tax collection agreements work. The Canada Revenue Agency estimates the provincial tax base in order to estimate the money due to each province. The money that goes to the provinces is based on an estimate of the taxes paid. If taxpayers do not pay those taxes, the federal government takes on that debt.

In return, the federal government keeps the money from penalties and interest on the unpaid debts. The reason is perfectly logical: because the provinces receive the full amount based on the initial estimate, the federal government keeps the interest and penalties to make up for the costs of its collection activities.

I don't know whether that answers your question, but I feel that it clarifies things.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

It was already clear to me, but thank you for your answer.

I would still like the Canada Revenue Agency or the Department of Finance to send the committee the amount received by the federal Treasury Board in the last five years from the provincial taxes that they collect outside Quebec.

I will stop here, Mr. Chair, because you gave me some more time earlier and we soon have to take part in a voting simulation. I will yield the floor to my colleague.

[The Chair, Liberal, Wayne Easter]

Okay. Thanks, Gabriel.

We have Mr. Julian for the last round, for two and a half minutes.

Go ahead.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you, Mr. Chair.

My next question goes to Mr. Jovanovic.

Mr. Jovanovic, thank you for joining us today.

You mentioned 120 tax agreements that have been signed between Canada and other countries. How many of them are signed with countries that previously had tax evasion strategies or are suspected of having them? In other words, which countries are considered to be tax havens?

[Miodrag Jovanovic]

I don't have the answer to that question at hand.

The underlying question is whether there is an international definition of a tax haven. There really is no such definition.

The countries of the European Union may have their own list of a limited number of countries, depending on the situation. We will probably have to get back to you about that. The question is to determine what, specifically, we understand by “tax haven.”

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Other countries have certainly agreed on the definition. If you can follow up and send us that list, we would be grateful to you, Mr. Jovanovic.

I am asking these questions, because some people feel that signing an agreement between Canada and Quebec to create a single tax return would have impacts on international taxation. It must be said that Canada really has not been in the vanguard of the fight against tax evasion, quite the contrary. Our country has been roundly criticized because we are losing a huge amount of money in tax havens and we have not done a lot to fight tax evasion.

Ms. Laroche, has the Canada Revenue Agency studied the steps that must be taken to limit tax evasion? Have you studied how an agreement between Canada and Quebec could improve the situation, or the impact it could have on strategies designed to fight tax evasion?

[Mireille Laroche]

Thank you very much for the question.

We have not studied the impact of a possible agreement on our activities to fight tax evasion.

In the past, we have published reports on our tax gap. One of those specifically dealt with the issue of international observation. We could send that report to the committee, if you wish.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Okay, we will have to end it there.

There were a couple of questions for information, so if you can provide that to the clerk...on tax evasion, and I believe there were a couple on expenses to Ms. Laroche as well.

I would certainly like to thank the witnesses for appearing today. We appreciate your coming before the committee and giving us your views.

Committee members, I would suggest that you have any amendments to this particular bill in to the clerk no later than Thursday, February 25 at 4 p.m.

With that, we have to go to the simulation vote. We'll adjourn the meeting and see everyone on Thursday.

The meeting is adjourned.