Evidence of meeting #7 for Public Accounts in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
Based on the ability of the taxpayer to pay the debt.
There are two types of clients: those who can pay and have the ability to pay, and those who can't pay because they do not have the ability to pay. That is the basic challenge we have. Those who have the ability to pay we are doing very well on because we have the tools at our disposal to manage those. The challenge comes from those who do not have the ability to pay.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
I would also say there are two kinds of clients, those who do pay and those who don't pay, and you're dealing with the ones who don't pay.
I'm taking a look here at paragraph 8.26, dealing with instalment remitters. It states: “...38 percent of total taxes owed by individuals. However, the Agency does not have more detailed information about these remitters that would allow it to understand the extent of the non-compliance and the reasons for it...”.
Why don't you understand 38% of your clientele?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
We are building systems to actually help us manage this challenge of ours. These people don't pay for various reasons.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
I know they don't pay for various reasons. My point is that you haven't even gone out to find the reasons and understand the reasons. You talk about Equifax. I bet you they know who will pay and who doesn't pay, and where the bang for the buck comes from. But you don't.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
We have set up more proactive campaigns recently to actually call people who don't pay their quarterly instalments. We're having a lot of success with that, because we're being more proactive as to why the money is not coming in.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
But the Auditor General tells me you haven't automated your collection records, so that if somebody phones somebody three times in a week, you don't have that information computerized so that somebody else in a different office can pick it up and continue. This is 2006. Computerization is a fact of life, even for management of tax debt. Why aren't you computerized in this?
Deputy Commissioner and Chief Operating Officer, Canada Revenue Agency
Mr. Chair, the points are taken from the member, but I think we have to keep the whole thing in mind as well, in fairness: 95% of the tax debts are paid. And that doesn't happen by accident; it happens—
Conservative
John Williams Conservative Edmonton—St. Albert, AB
But we're dealing here with the uncollectibles, with the difficult collections.
Deputy Commissioner and Chief Operating Officer, Canada Revenue Agency
I understand that, but the singular focus on what is not collected does unfair service to the work that is done to collect what is collected. We can't lose sight of the entire amount of accounts receivable and how they are managed.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
No, no, I'm not going to allow you to use up my five minutes, Mr. Baker, with a recognition of the hard work. I complimented the Revenue Agency when I was in the chair, because I know the difficult job you do. But at the same time, you as an agency, I think, are failing, because the Auditor General reported on this before and you didn't implement her recommendations.
Why wouldn't you implement the recommendations of the Auditor General? Why wouldn't you understand your clientele? It says here “there is no automated summary” of the actions taken by the collection agencies. Why don't you have these things automated? Why don't you have information on the different modes of collection? Why do you have “no information on the frequency of danger-of-loss reviews and jeopardy applications”? As a corporation, why don't you have the answer to these questions?
Deputy Commissioner and Chief Operating Officer, Canada Revenue Agency
I'll just repeat what has been stated before. Where we have deficiencies—and we acknowledge those deficiencies—we are developing plans to fill the gaps. We do not have all the gaps filled yet.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
So can we have the answer to every one of these questions in Mr. Christopherson's motion—why there is no information on danger-of-loss reviews, why there is a lack of information on insolvency files? Your vision will address these issues—will it?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
Yes. The information that is not being captured in our legacy systems is most of the cause of these observations. We have a plan to capture all of this information, we have acquired data tools, and we are rebuilding the systems—exactly to address most of these deficiencies that have been observed.
The other issue I think the OAG pointed to is this. We did have a lot of progress; the issue here is unsatisfactory progress. I think the challenge here is basically to go and get what is the challenging part of what we have to fix. I think the OAG recognizes itself that we have changed a lot of our processes, procedures, and systems within the means we had to improve the situation. We recognize we need to make it better.
Liberal
The Chair Liberal Shawn Murphy
Thank you, Mr. Williams. Thank you, Mr. Proulx.
I have a couple of public policy questions for you, Mr. Baker—or perhaps Mr. Proulx also.
In your opinion, do you have the legislative and regulatory architecture to do the proper job? Are there any deficiencies?
Deputy Commissioner and Chief Operating Officer, Canada Revenue Agency
I think generally we do, Mr. Chair.
Every year, through our experience, and for instance, as we develop the vision and do the work on the information systems and so on, we may identify additional needs. It's standard practice that we would raise those with the Department of Finance for consideration as part of an omnibus bill for amendments to the Income Tax Act, or whatever. My personal sense is that generally the agency has the tools at its disposal. There is always a need for continuous refinement of them.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much.
My second issue deals with what I consider to be the tremendous difference in certain tax liabilities, and it really hasn't been talked about here. That is, we have an income tax liability, which of course is a debt, but then you have a GST or a source deduction remittance, which isn't really a debt. Those moneys were collected by the taxpayer—on behalf of the Canadian government on behalf of the Canadian taxpayer—in trust, the trust being that they be remitted to the government. In the case where they are not remitted, that really is not a person who's insolvent, who's gone; it's stealing.
I don't see any distinction between that and an 18-year-old who robs a service station. There isn't that much distinction. When a person sells $100,000 worth of goods, collects $7,000 of GST on behalf of the taxpayer, and puts it in his back pocket and doesn't remit, basically in my view he steals it. I know you have a civil priority under the Income Tax Act, your priority and everything else, but it's not treated as what I consider to be a criminal matter. I think if you dealt with it as a criminal matter, there might be a different attitude out there.
Is there any legislative policy or procedure that you think...? Do you have any thoughts on that, Mr. Proulx, Mr. Baker, or maybe the auditor too?
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
The tools vary by the type of debt. Quite obviously, the severity of our use of those tools will vary, depending on the significance of the issue.
With respect to trust funds, we also have certain issues like the super-priority in the bankruptcy. We have the ability to go after the directors personally and so on. We believe that our performance is very good there, because we do prioritize those accounts and because of our level of oversight on those accounts, before they get to receivables. The frequency of remitting and so on.... We apply a lot of time and effort to making sure those people perform their fiduciary duties in a very efficient manner.
When they do come into collections, those are priority accounts for us. We think our performance is very good.
Could we use more tools? Or if the rules were different, would we be more efficient? I think that's a separate issue altogether.
Liberal
The Chair Liberal Shawn Murphy
Does anybody have anything else?
If not, on behalf of the committee, I want to thank you, Mrs. Fraser and officials, for coming.
I want to thank you, Mr. Baker and officials, for coming.
I want to add something too. In my experience—I've been here for five and a half years and I practised law for about 25 before that—Revenue Canada is a very well-run agency. You're tough, but you're fair. That's certainly been my experience, and I want to congratulate the agency for all the hard work it does.
I think the important point Mr. Baker made is that you, unlike other businesses, cannot pick your clients. You get the clients you get. A lot of them you wouldn't deal with if you had the choice, but you do not have that choice. I've dealt with some of them and know who they are. They're very difficult people to deal with, and I want to thank you.
Mr. Fitzpatrick.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
There's one question I wanted to ask and didn't have a chance. For information's sake, the underground economy.... Have you any estimate of how much revenue your department is losing on the underground economy?
Liberal
The Chair Liberal Shawn Murphy
Mr. Fitzpatrick, really that's not.... We're talking here about debt collection. That is a very important issue, but that requires a more extensive discussion.
Before we adjourn, colleagues, we did circulate the legal opinions. Everyone has them, so they are now part of the public domain. If we get any calls from the media, we'll....
Mr. Williams.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Thank you for the legal opinion, Mr. Chair. I see this from Danielle Bélisle or Mr. Morgan—I'm not sure which: “Here is the Pigeon opinion. There was no written request.”
Perhaps you can find this out for us. Why is the Department of Justice issuing legal opinions without anybody putting in writing, I would like an opinion on...whatever the score may be? Why are they doing this? What was the motivation behind it? Why did the Deputy Minister of Justice himself get so intimately involved in this, reading the opinion before it was made public, when it was just an informal request of some kind to—
Liberal
The Chair Liberal Shawn Murphy
We do have Mrs. Bloodworth coming on Thursday, and we can present that question.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Perhaps you can give her advance notice that the question needs to be answered.
Liberal
The Chair Liberal Shawn Murphy
We'll give her advance notice of the question, with any other written documentation. We'll put her on notice that the question will most likely be asked on Thursday.