Evidence of meeting #52 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.

A recording is available from Parliament.

On the agenda

Members speaking

Before the committee

Bédos  Co-Founder, Alliance for Visitor's Tax Refund
Lee  President, Frontier Duty Free Association
Scoffield  Chief Executive Officer, The Canadian Tax Observatory
Lefebvre  Richmond—Arthabaska—des-Sources, CPC
Mueller  President and Chief Executive Officer, Aerospace Industries Association of Canada
Arcand  Chief Economist, Canadian Manufacturers and Exporters
Petelle  President and Chief Executive Officer, CropLife Canada

11:30 a.m.

Chief Executive Officer, The Canadian Tax Observatory

Heather Scoffield

There is, for example, the pre-filling of applications. This is going to go in three stages, and one of those is pre-filling applications. That would free up a whole bunch of time and paperwork, both for the navigators and for the accountants who are volunteering their time, by filling in the blanks with information that the government already has. It makes a lot of sense, and I think we have the technology to be able to do this.

It's not for everybody. It's not for people who don't have access to computers, who are not necessarily computer-literate or who don't trust the system. There's still a need for those volunteers and for those frontline organizations in civil society to be able to help them. It certainly could help speed things up and make their jobs easier.

Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC

Thank you very much.

My last question is for Mr. Bédos.

We mentioned the disruptions with the United States. Can you speak to the disruption to the travel habits of Canadians to the United States as well? Is that something you've noticed?

11:30 a.m.

Co-Founder, Alliance for Visitor's Tax Refund

Jean-Christophe Bédos

That's a good question. Thank you very much.

There's something we notice when we talk to people. I'll give you an example. People who live and work in Windsor know that their Canadian customers cross the border to shop. If a tax exemption for foreign visitors were introduced, the flow of shoppers would undoubtedly be reversed. This is anecdotal, but I think it's worth mentioning.

Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC

Thank you very much, Mr. Bédos.

Thank you, Chair.

The Chair Liberal Karina Gould

Thank you, Mr. Sawatzky.

We will now continue with Mr. Barsalou‑Duval.

Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC

Thank you, Madam Chair.

I would like to welcome the witnesses.

I'll start with Mr. Bédos from the Alliance for Visitor's Tax Refund.

Mr. Bédos, you're arguing that the government should refund taxes—if I understand correctly, these are sales taxes—that are paid by people who come here as tourists.

Do you have an estimate of how much it would cost the public purse to do that?

11:30 a.m.

Co-Founder, Alliance for Visitor's Tax Refund

Jean-Christophe Bédos

You raise a very important point.

The fact is, in every country that offers tax-free shopping to foreign visitors, the net result for tax authorities is positive. All the studies we've conducted show that, for every dollar refunded to a foreign tourist, Canada gains $1.70 in additional tax revenue, generating a net gain for the Canada Revenue Agency. Based on the calculations, that amounts to $170 million in net tax revenue for Canada each year.

This matters because it means that our alliance is not asking for a tax giveaway. It's actually a way to stimulate the tourism economy because people who come to Canada would, of course, spend money in retail stores, but also at hotels, tourist attractions and restaurants, which don't refund the taxes paid by consumers.

As I mentioned, this is the case in every country that offers tax-free shopping to foreign visitors.

Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC

Okay. I haven't seen those studies. I imagine you may have forwarded them to the committee. I would like to have the opportunity to review them.

I do have to admit I'm surprised. Had you told me that it increases spending and has an overall positive economic impact because of the knock-on effects, I would have believed you right away. However, as to your claim that it has a positive impact on public finances, I remain to be convinced.

I have a follow-up question for you: How would this be implemented?

If I understand correctly, every time a consumer goes up to the cash register, they have to indicate that they're a tourist. There would be an option at the point of sale to remove the tax. Is that the mechanism you're proposing?

11:35 a.m.

Co-Founder, Alliance for Visitor's Tax Refund

Jean-Christophe Bédos

Yes. This mechanism exists in most countries. Actually, 70 countries have this system. Technology has advanced considerably. This is how it works in Europe and in most Asian countries. A customer who makes a purchase—buys a pair of shoes, for instance—gets a tax refund voucher at the checkout. The voucher is digitized, provided the retailer selling the shoes is a member of the system. The government appoints a company to administer the tax refund process. That company invests in all the equipment needed to implement the tax refund system in retail stores. The customer has to prove that they are a foreign visitor, they have to show their passport, and the tax refund is activated when they cross the border. Actually, it's not until the traveller returns home. You may have used this system at airports or while travelling abroad.

Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC

If I understand correctly, people pay the tax, then get a refund when they get to the airport. That means they have to submit receipts, and then the taxes they paid are refunded.

11:35 a.m.

Co-Founder, Alliance for Visitor's Tax Refund

Jean-Christophe Bédos

Absolutely. The computerized system allows users to do it on their phone or at an airport kiosk.

The system used to be paper-based and manually administered. It was cumbersome, very costly, and vulnerable to fraud. These days, a computerized system that is widely available everywhere in the world—except in Canada, unfortunately—greatly facilitates transactions. Travellers validate their purchases when they cross the border, and they get the refund later, when they get home.

Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC

To be perfectly honest, this is the first time I've heard about this kind of thing, but if you tell me that 70 countries around the world use it, I'll take your word for it.

Could you give us an idea of which countries? Do any countries in the OECD, the G7 or the G20 do this?

11:35 a.m.

Co-Founder, Alliance for Visitor's Tax Refund

Jean-Christophe Bédos

Absolutely. Every country that levies a value-added tax has a system like this. Of those 70 countries, only three OECD member countries do not offer a visitor tax refund, and Canada is one of those three.

It's really a missed opportunity for Canada because one thing we know for sure is that, regardless of their destination, when people travel, they spend less if tax-free shopping isn't available in the country they're visiting.

The Chair Liberal Karina Gould

Thank you, Mr. Bédos.

That concludes your time.

Thank you, Mr. Barsalou‑Duval.

We will continue now with Ms. Jansen for five minutes, please.

11:35 a.m.

Conservative

Tamara Jansen Conservative Cloverdale—Langley City, BC

Ms. Scoffield, you've written about the automatic tax filing, and you've made a point that I think is very important. The government sometimes calls a tax situation “simple”, but the actual life may be anything but simple. They could be homeless. They may not have reliable access to computers. English or French may not be their first language. They've lost paperwork. Also, some don't trust CRA because of previous experiences.

Bill C-31 proposes now giving CRA considerably more responsibility for preparing returns for some of those people. Knowing of some of the error levels that we're seeing at CRA, I'm very concerned that this could very well be a boondoggle.

If CRA prepares the return and CRA gets it wrong, who carries the consequences? Is it CRA or the vulnerable person whose benefits may be affected?

11:35 a.m.

Chief Executive Officer, The Canadian Tax Observatory

Heather Scoffield

That's a very good question. I think it's incumbent on this committee to make sure that there is continuity of benefits and that it's not a burden that falls upon the person who has a right to those benefits. If you get to a situation where, if you're filing your own return and there's a mistake made, you as an individual carry that.... I take note of what the ombudsman said yesterday in his statement, that there's certainly a very good question there that has to be examined, with the priority put on continuity of benefits.

11:35 a.m.

Conservative

Tamara Jansen Conservative Cloverdale—Langley City, BC

Yesterday, we had the finance minister here. He seemed utterly bewildered at the idea of the CRA making an error of some sort, which I thought was quite shocking, especially because I just spoke with a senior in my riding last week and talked to her for at least half an hour. She has been fighting CRA for four years. This is someone who knows how the system works, because she used to work in provincial government. She has been fighting with CRA for four years, on a fixed income.

The concern we're asking about is, what happens if CRA makes a mistake and it takes weeks, months or years, as in her case, to clear it up?

11:40 a.m.

Chief Executive Officer, The Canadian Tax Observatory

Heather Scoffield

Yes, it can be very frustrating. I think we can see that in several different areas. Our tax system is very complicated and there are pitfalls all over the place. Regular people are snagged in a system where they are, as you said, “bewildered”.

Voices

Oh, oh!

11:40 a.m.

Chief Executive Officer, The Canadian Tax Observatory

Heather Scoffield

I think we can say that's the case for many taxpayers as well.

11:40 a.m.

Conservative

Tamara Jansen Conservative Cloverdale—Langley City, BC

Even in that, I was shocked. As we were talking with the finance minister yesterday, he wasn't even willing to confirm who they're going to be filing for. I didn't understand that. I asked him, “Are you going to be filing for seniors?” He just threw a question back at me. I asked him, “Are you going to be filing for those in the disability community?” He was unwilling to say. I asked, “Are you going to file for the homeless?” He was unwilling to say.

I do not understand why the finance minister would come here and act like that's not a question that should be easily answered. What is your take on it? Who's going to be filed for?

11:40 a.m.

Chief Executive Officer, The Canadian Tax Observatory

Heather Scoffield

We're talking about low-income people in simple tax situations, so they could overlap with any of those demographics that you just outlined there. Part of our issue here collectively is that we don't thoroughly understand which populations are going to be touched when we get into the finer demographics along those lines. Who's going to need some extra help with a human touch, and who will have a situation that's too complicated to go into the automatic filing right now? It really does touch all of those groups that you [Inaudible—Editor].

11:40 a.m.

Conservative

Tamara Jansen Conservative Cloverdale—Langley City, BC

Interestingly enough, this senior I spoke with has been fighting for four years. Hers is considered a simple issue, yet here she is four years later. It's outrageous. It was a mistake that CRA made. Are we solving the wrong problem here? Instead of continually finding new ways for government to help Canadians navigate an incredibly complex tax system, shouldn't we be asking why we made the system so complicated in the first place?

11:40 a.m.

Chief Executive Officer, The Canadian Tax Observatory

Heather Scoffield

I think we can do two things at once. Yes, there is a widespread understanding that our tax system is needlessly complicated in some spots, and yes, we should be asking how to simplify it. Automatic filing is part of that, though. We are in an era of very powerful information technology—

Tamara Jansen Conservative Cloverdale—Langley City, BC

I'm sorry, but I have only a few seconds left. My concern is for a senior like her, someone who cannot work a computer or who doesn't understand a QR code. We are going to be concentrating all of these functions in one organization, and we really have no independent oversight of CRA.