Evidence of meeting #21 for Finance in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was quebec.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Debi Daviau  President, The Professional Institute of the Public Service of Canada
Jean-François Sylvestre  Vice-President, National Executive, Syndicat de la fonction publique et parapublique du Québec
Marc Brière  National President, Union of Taxation Employees
Jean Couillard  Québec Representative, AFS Group, Professional Institute of the Public Service of Canada
Pierre-Alexandre Caron  Research Advisor, Syndicat de la fonction publique et parapublique du Québec
Julien Gaudreau  Political Consultant, Syndicat de la fonction publique et parapublique du Québec

4:25 p.m.

National President, Union of Taxation Employees

Marc Brière

Thank you, Mr. Chair.

Mr. Berthold, this is something people have been talking about for a long time, but they have yet to find a solution. Why? Because it's complicated. That's the problem.

You said you would like to have a single form. It's worth noting that 95% of individuals who currently receive a T4 from the federal government and an RL-1 from the provincial government file their returns with the help of an accountant or tax software. They enter the information in the program, which populates the appropriate fields for the two tax systems. That's all they have to do; it's not hard. The process is already simplified when people file electronically.

The important thing to remember is that there are two tax laws: Quebec's and the federal government's. The rest of Canada has just one, the federal law. The difference between the two is huge. Some things could be harmonized, but others would be very difficult to harmonize. As I pointed out, the two systems define income differently. That's a big deal. Quebec could lose at least $500 million annually if it harmonized its law with the federal government's. Otherwise, you, the federal lawmakers, would have to amend the Income Tax Act to introduce a tax in the rest of Canada on a benefit that is currently tax-exempt. That would cost Canadian taxpayers $3.8 billion.

It's one heck of a big problem, as I see it.

4:30 p.m.

Conservative

Luc Berthold Conservative Mégantic—L'Érable, QC

Ms. Daviau, would you care to comment?

4:30 p.m.

President, The Professional Institute of the Public Service of Canada

Debi Daviau

If we really want less paperwork and tax filing burden on individuals, and to help ensure that people get the benefits they're entitled to, what really should be supported is the move to the automated tax filing form, which we advocate for and which the government says it's going to be looking to implement. There are ways to simplify Quebec taxes, as I mentioned in my presentation, without completely overhauling both the Quebec and the federal tax regimes.

In answer to your question, yes, there are easier ways to simplify the burden for Quebec taxpayers. But in our view, this isn't the efficient way, and it's certainly going to be extremely costly. Whatever savings might be realized down the road, maybe, would be more than offset by the cost of resetting up all these systems—treaties, informatics systems, processes—and hiring all the people to do this work.

4:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

We'll move on to Ms. Koutrakis.

4:30 p.m.

Liberal

Annie Koutrakis Liberal Vimy, QC

Thank you, Mr. Chair.

Thank you to the witnesses for their participation this afternoon.

My first question is for you, Ms. Daviau.

Last week, CRA officials told us that having the provincial government administer income tax would cost approximately $800 million. That would cover fixed costs associated with setting up new IT systems, and making the necessary changes to workflow, human resources and staffing.

Ms. Daviau, could you comment on CRA's cost estimate and share your thoughts on the possible cost of such a transfer?

4:30 p.m.

President, The Professional Institute of the Public Service of Canada

Debi Daviau

I really don't know the numbers. We're not in a position to be able to do that calculation. But certainly the justification provided by the CRA for that number sounds reasonable.

It's likely to be even more expensive than that, given that projects don't always go as anticipated. Additional costs arise during the project. If we're introducing new complicated IT systems, that hasn't always gone smoothly at either the provincial or federal government levels. A lot of risk is associated with changing something that actually works.

Let's face it. Our tax system works. It's just more complicated for those living in Quebec. As I said, that could easily be solved by centralizing the administration with the CRA, which already has all the systems and processes in place, and all the expert knowledge and auditors able to do that, as they do for other provinces.

4:30 p.m.

Liberal

Annie Koutrakis Liberal Vimy, QC

Ms. Daviau, have you identified the cost savings and efficiencies that would be achieved if the CRA were to administer income tax for the province of Quebec? If so, could you provide them to us? How would the CRA be more effective and efficient at administering the regime? I know you've addressed the issue before, but could you provide more details, please?

4:30 p.m.

President, The Professional Institute of the Public Service of Canada

Debi Daviau

I'm not at all sure they would do the job better or worse than the people who are doing it in the province.

I'm suggesting if you want to simplify it under one umbrella, it makes more sense to simplify it under the Canada Revenue Agency, where the systems are already in place, than it does to centralize under Revenu Québec, where all these systems would need to be built. All the processes would need to be put in place. All the staffing would need to be done. It's quite a transformation you're looking at to solve a pretty small problem in the scheme of things.

I think there are much better ways to go about simplifying taxes for the residents of Quebec that will be a lot less costly both to individuals and to the government, and will not run the risk of losing thousands of jobs at a time when these jobs are so very important.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Brière wants in as well.

4:35 p.m.

National President, Union of Taxation Employees

Marc Brière

Thank you, Mr. Chair.

Good afternoon, Ms. Koutrakis.

I can speak to the potential cost savings for Quebec. Even the Robillard commission, which the Quebec government established under former premier Couillard, estimated that Quebec would save $398 million annually if the federal government, in other words, the CRA, were to administer the tax regime.

It's pretty straightforward. The federal system is in place across the country. The other nine provinces opted to turn over tax administration to the CRA for one reason, and it wasn't that the CRA asked nicely; the arrangement was very much in their favour. The federal government does not bill the provinces for doing the work on their behalf. The CRA already administers taxes for the federal government, so it administers taxes for the provinces as well. The CRA sends the money to the provinces. You may not know this, but even for uncollectible accounts, the CRA pays the province and absorbs the loss. That's something people don't realize. Being a CRA tax recovery officer at heart, I can tell you that.

Therefore, Quebec could save a lot of money by having the federal government administer the tax regime. What's more, when the federal or provincial portion of taxes is recovered, the province's portion is collected before the federal government's.

All that to say there are many good reasons why Quebec would hand over tax administration to the federal government. Politically speaking, it's a different story, so I won't go there. Fiscally, however, it's a no-brainer.

4:35 p.m.

Liberal

Annie Koutrakis Liberal Vimy, QC

Do I still have time left, Mr. Chair?

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Sylvestre wants in, Annie, and then we'll come back to you.

Mr. Sylvestre.

4:35 p.m.

Vice-President, National Executive, Syndicat de la fonction publique et parapublique du Québec

Jean-François Sylvestre

Thank you, Mr. Chair.

The commission Mr. Brière mentioned was dismantled by Revenu Québec three years ago. As everyone else did, we advanced a cost savings estimate that would be achieved if tax administration were transferred to Quebec: $425 million annually. That would offset the previously cited $800 million it would cost for the CRA to restructure its work.

I'm going to digress momentarily. I believe Mr. Berthold brought up the possibility of combining the two forms into one. As mentioned earlier, doing that would be complicated. Someone pointed out that technology reduced the burden of having two forms. Entrusting the responsibility to Revenu Québec is also a matter of technology.

Ms. Koutrakis brought up efficiencies and IT systems, but Revenu Québec has the capacity to take on the work because the agency is already doing it for a number of programs.

I would also draw your attention to the fact that, when the CRA entrusted management of the GST to Quebec, in the early 2000s, no one lost their job and the IT system was adapted just fine.

4:35 p.m.

Liberal

Annie Koutrakis Liberal Vimy, QC

Mr. Chair, do I have time for another question?

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Ask a very short one, and then I'll let Mr. Couillard in as well.

4:35 p.m.

Liberal

Annie Koutrakis Liberal Vimy, QC

Mr. Brière, on top of some 5,500 job losses, your union suggested that a single tax system administered by Revenu Québec would result in about $300 million in lost wages.

Describe, if you would, how that lost income would affect local economies in the regions where CRA workers live and work?

4:35 p.m.

National President, Union of Taxation Employees

Marc Brière

I can certainly do that.

The impact would be devastating, especially for the Saguenay—Lac-Saint-Jean and Mauricie regions. The CRA is the biggest employer in the Mauricie region and one of the biggest in the Saguenay—Lac-Saint-Jean region, along with the mining sector. That's 1,200 and 1,500 jobs respectively, and I would even say those numbers are probably higher now. Those people contribute to the economy. They have good working conditions and they make a decent living. They earn more than their provincial counterparts.

I would not want to live in the Mauricie region if the CRA were to close its office there. The impact would be devastating, leaving a massive hole in the public purse.

4:40 p.m.

Liberal

Annie Koutrakis Liberal Vimy, QC

Thank you.

4:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Couillard has a point he wants to raise.

4:40 p.m.

Québec Representative, AFS Group, Professional Institute of the Public Service of Canada

Jean Couillard

I wanted to add something about the importance of leaving the responsibility in federal hands.

Canada has tax information exchange agreements and tax treaties with other countries. The federal government has good international coverage. We have people in our office who work on international taxation. Would a province be able to do all that work at no additional cost? It would have to start from scratch. On top of that, would those other countries be willing to sign agreements with a province, as opposed to a country? Those are questions we have.

4:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, all.

Mr. Ste-Marie is next.

Gabriel, we're giving everybody an eight-minute first round, it seems, today. You're on.

4:40 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Thank you, Mr. Chair.

I want to start by thanking all of the witnesses for their participation today and their opening statements. They were very informative. It is clear that not everyone supports this idea; it could even be called contentious.

I want to follow up on what Mr. Couillard just said. With all due respect, the bill seeks Ottawa's agreement to give Revenu Québec the necessary authority to administer the regime and thus access the tax information exchanged with other countries. It's not that complicated. It would merely involve sending the countries a letter to inform them of the change. The federal government could notify Barbados, for example, that Quebec's revenue agency was now authorized to receive the information.

When it comes to cracking down on tax havens, whether legal or illegal, Canada unfortunately scores quite low for its efforts. We are bringing forward this bill precisely so the Quebec government can do a better job of fighting against tax evasion. The blame does not lie with any CRA employee; it lies with the federal government and its political decisions. We believe this bill would help significantly in the fight against tax evasion and avoidance.

I would like to set the record straight for Mr. Berthold. He talked a lot about harmonization. This is my bill, and in no way, does it seek the federal government's permission to harmonize or change tax rates or anything of that sort. It's about making life easier for people by having them file a single tax return with Revenu Québec, which would then send the information to the CRA. This has nothing to do with eliminating all the jobs of CRA workers in Quebec. The idea is to establish a single window to make life easier for people. If people had questions, they would call Revenue Québec.

Under the bill, the federal government is being asked to undertake discussions with the Quebec government, within 90 days of the bill's passage, so the two governments can enter into an agreement within a year.

I was accused of bringing forward this bill because I belonged to a sovereignist party. While it is true that I am a sovereignist and that I believe Quebec would certainly be better off if Quebec, not its neighbour, managed Quebec's affairs, that's not at all what this bill is about. I support this bill because it has the unanimous support of Quebec's National Assembly, which unanimously adopted a motion calling for a single tax return, in fact. That means every member from the Liberal Party, the Coalition Avenir Québec, the Parti Québécois and Québec solidaire is in favour of a single tax return. Last week, I quoted the Québec solidaire critic on economic and fiscal matters, who expressed support for the initiative. Quebec's own premier, Mr. Legault, formally made the request to Mr. Trudeau. Can we not make life easier for people by allowing them to fill out a single tax return, as is the case everywhere else in Canada and in other countries?

Unless I'm mistaken, the House of Commons recognized Quebec as a nation. Can the Canadian nation, through the House of Commons, accommodate Quebec and agree to this request since it has the unanimous support of Quebec's National Assembly? Clearly, the whole issue is very political.

I also want to say that I am very sensitive when it comes to jobs. The idea behind the bill is, of course, to combine the jobs of two employees doing the same work, one at the provincial level and the other at the federal level, to save money. Those savings could be put towards hiring people in understaffed areas of the federal public service.

Mr. Sylvestre, in your opening statement, you mentioned examples in the past where jobs in other parts of the federal public service had been incorporated into Quebec's public service. Can you tell us about those examples? Take all the time you'd like.

February 23rd, 2021 / 4:45 p.m.

Vice-President, National Executive, Syndicat de la fonction publique et parapublique du Québec

Jean-François Sylvestre

Thank you for your question.

In the early 2000s, the GST and the—

4:45 p.m.

Liberal

The Chair Liberal Wayne Easter

We'll start with Ms. Daviau and then go on to Mr. Brière.

4:45 p.m.

President, The Professional Institute of the Public Service of Canada

Debi Daviau

I just want to address the issue of tax evasion. It is not a simple matter; that's for sure.

As representative of a union that represents most of the auditors Canada Revenue Agency engaged in this work of going after tax avoiders and tax cheats and getting offshore money, I can tell you that very complex systems are needed and very complex interactions between jurisdictions are required. I don't think you can water that down by having provincial versus federal. It's already very difficult to get complete sets of information from countries—even countries we have treaties with.

If you really want to address the problem of tax evasion, then what the money should be spent on is not rebuilding a whole new system in Quebec but rather investing in the areas required federally, like technology and training for people who are up against some of the most complicated technology and some of the most expert tax avoiders in the world.

There is a lot of work that can be done to improve Canada's tax system, but if you want to get back to the issue of simplifying things for Quebeckers, there is a way to do that. It doesn't require a complete overhaul of both the Quebec provincial system and the federal system to do that. That's just likely to create turmoil and a whole bunch of risk about outcomes for our ability to continue to collect taxes.