Finance Committee on March 30th, 2023

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

I have a limited amount of time.

One grievance we've been hearing about from Muslim-led charities up until recently is that they feel like there are never-ending audit processes. The ombudsperson's report said, “some Muslim-led charities indicated that they felt they were treated more severely and differently at certain points in the audit process.” It also said, “Auditors would not let interviewees record interviews”, and that in some cases, it felt like they were trying to find something, no matter how small, to pin on a charity.

Minister, it seems that with your department, charities beyond the Muslim-led ones feel discriminated against because they may have a different ideology than the Liberal government does. This is a complaint we've heard from a lot of religious groups that may have a different ideology. I just want to highlight that because it is causing a lot of pain. There are a lot of youth-led initiatives and community-building initiatives being undertaken by these charities, but once their charitable status is revoked, maybe because their ideology doesn't meet up with the government's, all of that great work goes away.

With regard to the ombudsperson, whom you noted, even in his report, he says:

Even when we had received consent from a charity to access their taxpayer information, the CRA redacted information that detailed why this charity was screened for audit and how it planned to carry out the audit.

Without access to specific charity risk assessments, our Office was unable to see examples of how these considerations would have applied to a real file or examples of information that would have informed the selection of an audit in particular....

As a result, we have not been able to sufficiently address two of the areas.

There are all of what we call gatekeepers, and they're gatekeeping so that information cannot get out. I'm not saying this a directive you gave, but it would lead one to believe that they're being blocked and that this work cannot be done to reveal why there's discrimination against Muslim-led charities.

I'd also like to highlight that under your government, in 2021, a report by Pollara said there was rampant racism inside of IRCC that has not been addressed. It was against not only the applicants who were trying to come to this country, especially ones who were fleeing from harm—the refugees—but also employees. It was not being addressed.

I just want to know what steps you have taken since then to address this issue for Muslim-led charities.

[The Chair, Liberal, Peter Fonseca]

We're at the end of our time, so if you want to make a brief comment, that's fine, but we have to move on to the Liberals if we're going to get through this round.

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

I would like to tell my colleague that we very much welcome the review that the NSIRA has undertaken. We really believe this is the next logical step in response to the publication of the ombudsman's report. Yes, we have to continue fighting systemic racism at the Canada Revenue Agency and do better within the organization.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we'll go to the Liberals and MP Chatel for five minutes.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you for being here, Minister. Welcome to the Standing Committee on Finance. I am very happy to see you in such good company.

I don't know whether you know, but at the beginning of this millennium, I started my career at the Canada Revenue Agency. I worked on advance rulings.

Since we have the officials here with us, I would like to tell them that during the worst of the pandemic, in the first year of the pandemic, I was working at the Organization for Economic Cooperation and Development, the OECD. I was able to see everything that went on at the Forum on Tax Administration. All the resources needed for helping people in OECD countries that had enormous needs for immediate help when they had lost their jobs or could not go to work were being put together. I would like to say what a big leadership role the Canada Revenue Agency played in relation to those measures. All the practices that you put in place were adopted by other countries. I congratulate you on that great effort. When we go abroad, we see the extent to which the Canada Revenue Agency is a leader among tax authorities and to which it is recognized for its integrity. Bravo.

Minister, my first question relates to a comment you made in your opening statement. You mentioned two points that I consider to be very important. I am happy to see that there are additional resources, and I would like you to tell us more about them.

First, you said that budgets had been allocated to do more about tax evasion and tax avoidance. I would like your comments on that subject.

Second, you talked about supplementary budgets for international tax reform. These are big topics that are of considerable concern to me. I would like to know what additional initiatives are being taken on these two subjects.

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

Thank you for those questions.

It is important to the public, but also to the government, that we make sure that everyone pays their fair share. Almost $1 million has been invested since we came to power to implement measures to combat tax evasion and tax avoidance. We're talking about country-by-country reporting.

I will let the officials give more specific details about what is being done right now.

[Cathy Hawara]

Thank you for the question.

Yes, there are several initiatives that we are proposing to fund in the budget. I will give you a few examples.

On the international side, there is the initiative led by the OECD relating to the two-pillar solution. I can tell the committee that Canada is playing a key role, a leadership role among its peers, to support the adoption of this solution, which is very important and will really change the approach to international taxation. There is funding that will enable us to implement the two-pillar solution.

In addition, new rules will be adopted at the international level for the exchange of information relating to digital platforms. This is another very important source of data that the Canada Revenue Agency will have access to. The government has announced that it will be implementing these new rules. Those are some of the initiatives.

There are others, for example, regarding the expansion of our observation programs, including our criminal investigation program. We obtained funding in the 2022 budget to increase our capacity and the capacity of the Public Prosecution Service of Canada.

Those are a few examples of initiatives provided for in the budget.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chatel. You're right on time.

Members, I will have to hold strictly to the time so we can get through this round.

We're going to the Bloc now, with MP Ste-Marie for two and a half minutes, please.

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

Thank you, Mr. Chair.

I am going to continue on the same subject.

In April 2021, two years ago, Radio-Canada published an article on the Panama Papers, and I thought that the CRA really had unacceptable results. After the information was leaked, the United Kingdom recovered more than $300 million, Germany recovered almost $250 million, for Spain, France and Australia it was around $200 million, and Canada recovered $21 million, which is slightly less than the amount recovered by Revenu Québec.

I would like to get an update on this subject, whether from Ms. Hawara or from the Minister. How much money has been recovered from the Panama Papers since April 2021?

The article said that there had been criminal investigations, but no charges had yet been laid.

Have criminal charges been laid in connection with this matter?

[Cathy Hawara]

Thank you for your question.

Actually, we are currently working on numerous audits relating to various leaks from the Panama Papers, the Paradise Papers and the Pandora Papers.

On our website, we have statistics that we update regularly. The most recent statistics on the data leak relating to the Panama Papers are dated December 2022, and I can send them to the committee.

We have completed 280 audits. We have recovered assessments of $77 million in taxes and penalties, and 140 audits are underway.

With respect to criminal investigations, we have actually initiated five. Two are still underway and three have been closed. No charges have yet been laid.

I have figures for the Paradise Papers as well.

I would also like to clarify that in the Panama Papers data leak, 900 Canadian taxpayers, including individuals, businesses and trusts, were identified. However, it is important to note that the mere fact that a name appears on the list does not necessarily mean that the taxpayer breached their tax obligations. In the case of the Panama Papers, 60% of the taxpayers had complied with their obligations.

For the Paradise Papers, we have completed our review of all the taxpayers. We have closed 30 audits and recovered assessments of $1.8 million in taxes and penalties, and 25 audits are underway.

For the Pandora Papers, the most recent data leak, we have identified 400 Canadian taxpayers. We are in the process of doing our risk assessment. In that case, we have initiated four audits and the work is continuing.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Hawara and Mr. Ste‑Marie.

We'll go to MP Blaikie now for two and a half minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

In the spring of 2020, there were kids in Manitoba graduating out of foster care, and in a context where there were no jobs available because everything was shut down, they went to the provincial government to apply for social assistance. They were told by the provincial government that they had to apply for CERB before they could be eligible for social assistance. The Government of Manitoba knew that it was a no-fail process and that the kids would not be denied, so they ended up getting their income from CERB. They weren't eligible, but they applied, not only in good faith but at the behest of a government authority. These are some of the folks who owe CERB debt.

I'm concerned that the agency isn't looking at the profiles of the people who owe money and then prioritizing within that subset, and I'm concerned for two reasons. In the case of these kids who graduated out of foster care, I think there is a moral argument for why they should be spared that kind of recovery action. However, I'm also concerned from the point of view of efficiency of resources. If the government is spending about $350 million to recuperate $3 billion, we're already spending about 10% of the total debt to get it back.

Then the question is how much of it we think we'll get back. We won't get a lot back from low-income folks who are struggling in the context of inflation. Why hasn't the agency tried to prioritize debt cases by likelihood of recovering funds? What would it take to operationalize a principle such that if somebody is below the low-income cut-off, the department will pursue their debt last and go first after cases where there is identity theft, double claims or things that very obviously show somebody acting in bad faith? Then we can go after the category of people who may have applied in good faith and have the income to pay the debt back, and only lastly go after the people who applied in good faith and are clearly not going to be able to pay the debt back.

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

As I said at the outset, I would like to tell my colleague that a plan is in place for recovering the CERB. As we said, it is a case-by-case process, and we really encourage people to call the Canada Revenue Agency.

In the beginning, we wondered whether the CRA had learned lessons, and so it was important to do a thorough review, precisely to make sure that we adopted the best practices in a future pandemic.

I would like to remind you of what happened at the beginning of the pandemic. It was described as the most important event since the Second World War. Programs had to be put in place rapidly.

We also have to work with the provinces, and we have to do our job better, I agree. Are there people who abused the system? I'm sure there are. I am sure that people have also been victims of fraud, which is why it is important to do a thorough review so we can do things better in future.

[The Chair, Liberal, Peter Fonseca]

Thank you, Minister, and Mr. Blaikie.

Minister and members, just so that you are aware, there is a little flexibility on the time.

We're now going to go to the Conservatives and then to the Liberals to finish off the full round.

I have MP Morantz for five minutes, please.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Minister, the question to you is on the importance of the independence of officers of Parliament. For example, yesterday we learned that the Ethics Commissioner is actually the sister-in-law of Minister LeBlanc, who is the Minister of Intergovernmental Affairs. I have trouble believing I'm even saying that because it seems so absurd.

Last fall, when the Auditor General's report was tabled, I was in the House when you were asked a question. You said something to the effect of you felt the Auditor General's findings were skewed because she had been pressured by the Conservatives.

Given the importance of the independence of an office like the Auditor General, could you advise the committee if you still feel that way, or if you'd like to retract that statement?

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

First, I really want to take the time to thank the Auditor General and her entire team for their important work.

As I have already said, I have the greatest respect for the role of the Auditor General and the independence of her office.

I believe that having a different point of view does not amount to a lack of respect and ethics regarding the work done by the Auditor General. In fact, I met with her before her report was submitted and we discussed it. However, I do not retract what I said, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Minister, I want to make sure that we have a direct response from you on this.

You said in the House that you thought the Conservatives had pressured her on the findings she provided in the report. They were not flattering to your government at all. There was $4.5 billion in fraudulent payments and close to $30 billion in questionable payments.

Do you think the Conservatives pressured the Auditor General to skew the results of her report, yes or no?

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

I believe the work concerning audit requests was done too soon. We were starting to do audits. So it is important to respect the fact that the CRA still has audits to do for the next two years. However...

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Minister.

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

... what was said in the House of Commons still stands.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I have limited time, so I'll go on to my next question. It's unfortunate that we couldn't get a direct response on that one, but I'll try another area of discussion.

The Parliamentary Budget Officer reported that since 2015, the public service of Canada, over all departments, has increased by 49,000 people. Of those 49,000 people, 9,900 have been hired by CRA since 2015.

Given the increase in the number of departmental staff, are service levels considerably higher today than they were in 2015?

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

Mr. Chair, as I said at the beginning, and I would like to reiterate, the CRA put 13 programs in place during the pandemic. Did people have to be hired? Yes, we had to hire people, who did outstanding work.

They put programs in place, but they also protected Canadians and businesses, including by preserving the employment relationship between employees and employers.

The people at CRA did outstanding work. I can never say it often enough: they were our guardian angels during the pandemic.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Minister, I have limited time. I appreciate your view that the department is doing good work. I know there is good work being done in the department. However, the reason I'm asking you this question has to do with the recent ombudsman's report. It says the number of complaints their office receives about the CRA and your department doubled from 2021 to 2022, notwithstanding that you're asking for $15 billion more in funding and you've had at least 9,900 more staff.

Why are complaints doubling? Why are we spending more to get poorer service?