Public Accounts Committee on Dec. 10th, 2018

[David Christopherson, NDP, Hamilton Centre, ON]

That's sufficient. Thank you. I respect that you attempted to answer that, but not satisfactorily, I have to tell you.

When I look at this report and at your obligations, I see those rights as being at the top and in the middle and at the bottom and going through everything. I don't get a sense that you see it that way.

What did the Auditor General say? It's that you throw around “consistent” and “inconsistent” easily. The Auditor General, in paragraph 7.22, states:

Our analysis supporting this finding

—that you didn't give taxpayers their rights—

presents what we examined and discusses the following topics:

Inconsistent time given to respond to requests for information

Inconsistent offering of proactive relief to taxpayers

Inconsistent waiving of penalties and interest

Different audit completion times across Canada

Untimely and incomplete processing of results of compliance activities

Fail, fail, fail. What I don't understand—and you're still not helping me—is where is the filter, the lens, for the highest responsibility you have, which is to protect Canadians' taxpayer rights?

Remember, your outfit scares the hell out of people. This really, really matters. Help me understand how we got to this point where you weren't applying those rights. Why was this not flagged by you or by that internal audit committee? Why did it take the Auditor General coming in and doing this report? My reading of this is that if the Auditor General hadn't come in, you would still be violating taxpayers' rights.

Why wasn't that part—a big part—of how you manage the Revenue Agency? Why? I'm not hearing a clear answer, sir, and you're not saying that you failed. You want to defend that, so this is not going well.

[Bob Hamilton]

Mr. Chair, let me say a couple of things.

First, obviously the Taxpayer Bill of Rights is something that's front and centre for us—

[David Christopherson, NDP, Hamilton Centre, ON]

Talk, talk, talk—

[Bob Hamilton]

I have a lot of obligations as the head of the agency in terms of generating revenue, being fair, and respecting the Taxpayer Bill of Rights. What you will see, in my opinion, in every response we have to what the AG has raised when they have pointed to something is that we've said we're going to address it and we're going to fix it.

I think I would even say, based on my experience here, is that when the Auditor General has said something and we've agreed with it, we've taken action. We've stuck to our plan.

[David Christopherson, NDP, Hamilton Centre, ON]

But why do you think the Auditor General—

[Bob Hamilton]

No, no; if I could just finish one thing—

[David Christopherson, NDP, Hamilton Centre, ON]

Yes, all right.

[Bob Hamilton]

That's a good thing. I don't want to let that go by without noting it.

The other thing I would really like to get to do more of is uncovering things on our own. We don't necessarily have to have the Auditor General come in. I think there is an example here on taxpayer relief, and I think it's even referenced in the Auditor General's report. We did our own work. We uncovered something that was perhaps inconsistent across the agency and needed to be addressed. We looked at it more horizontally.

That's the place where I want to be. If something gets raised with us, not only are we responsive and we correct it, but we also do a good job of uncovering those things ourselves in advance of somebody else coming in.

This is work in progress that we have to do. It's important for me and the agency to provide good service to Canadians, to respect taxpayers' rights and to fix issues when they come to our attention.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm listening to you—I actually am—but I'm still not hearing where the Taxpayer Bill of Rights was before this report.

I saw you hold up the paper. Is that all that happened inside the agency—you just held up the paper and then proceeded to ignore it?

Where was the bill of rights in the management decisions, in your decisions, in the internal audit reviews? Why wasn't the charter of rights for taxpayers front and centre long before the Auditor General rolled in?

I'm not hearing that.

[Bob Hamilton]

Well, I think I can give you some evidence that it is front and centre for us, and it was before.

One of the key initiatives that we're undertaking in the agency is to provide better service for Canadians. We have established a chief service officer to help us look horizontally at all of the things we provide to Canadians and to make sure that we are respecting the Taxpayer Bill of Rights and all of the other commitments we have to Canadians.

We have been on a mission to try to improve service, to improve consistency and to improve places where we need to make sure that we're fulfilling the obligations and meeting Canadians' expectations around this Taxpayer Bill of Rights. It is there. It's present in what we do. It has led to our making changes to provide a better service culture within the agency and institute a chief service officer.

I'm very hopeful—and confident, actually—that these changes are going to take us down a very good path to improve services to Canadians, which will put us in compliance with the Taxpayer Bill of Rights.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Hamilton.

Thank you, Mr. Christopherson. I'm not sure if it will make you feel a lot better, but with regard to the text for the speech today, we've just been told that it wasn't CRA's problem. It might have been with our offices.

We apologize for that. We want to make sure that we give them credit.

[David Christopherson, NDP, Hamilton Centre, ON]

I apologize to you for accusing you.

[The Chair, Conservative, Kevin Sorenson]

We'll go back to the government side.

Mr. Massé, you have the floor for seven minutes.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

I would like to thank the Auditor General and the representatives from the Canada Revenue Agency for taking part in this committee meeting.

Mr. Hamilton and Mr. Gallivan, I know the agency officials are working very hard to provide you with the information you need for any questions we might have. For my part, I am neither a tax expert nor an accountant, but I am a member of the Standing Committee on Public Accounts, and several things are obvious to me. My colleagues have told you this as well.

This is the case for the amount of debt write-offs carried out year after year by the agency. Basically, we are talking about $3.2 billion or $3.3 billion a year. There was a slight decrease in 2016-17.

In his report, the Auditor General states the following, at paragrah 7.59:

We found that the Canada Revenue Agency did not know the full results of its compliance activities. Its calculation of the additional revenues generated from compliance activities, beyond the initial taxes assessed, was incomplete.

I would like the Office of the Auditor General to tell me what led to this observation that the information provided by the agency is incomplete. I would like a little more detail on this observation.

[Martin Dompierre]

At paragraph 7.87, it states that the reports are incomplete, as you mentioned. With respect to the calculation of the agency's additional revenues, it is said that the amounts presented in its public reports do not take into consideration the amounts that have not been recovered. You mentioned write-offs. Reference is also made to objections where the decision is in the taxpayer's favour, in whole or in part. When calculations are made, these amounts are not exactly subtracted from the additional income. For example, the agency can report $100 million in additional revenue, but amounts corresponding to write-offs or objections earned by taxpayers are not deducted from additional revenue. That is the explanation I can give regarding the mention that the reports are incomplete.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you very much for that answer.

I will now ask the Canada Revenue Agency representatives how it is that we aren't able to obtain clarifications on such important issues as debt write-offs and assessment processes. This information is important to us, but also to Canadians.

How is it that this important information can't be collected?

[Bob Hamilton]

Perhaps I'll start, Mr. Chair, and then Ted can elaborate, because it is an important point.

I think the issue that's been raised is that when we put more resources into audit activity, for example, and we say that we will generate $100 from those audits, we give that figure to the Department of Finance and the Treasury Board. We're very transparent about that, but there is an important element there, which is that while that's how much we might identify through the audit, a bunch of things can happen after that.

It could be sent to our appeals division, which could overturn it or not. It could be fought out in court and we might lose the court battle, so we could lose some of that revenue there. Also, at the end of the day, in terms of how you started your question, there's the amount that gets written off. If somebody goes bankrupt or we can't collect that money for some reason, we don't get it. You might start with that $100 at the beginning and end up with something less.

I think we certainly have been truthful in that, but one of the things the Auditor General pointed to is actually something that we've been working on, which is constructing a better measure to explain what's going on to everyone. It's not always possible to trace from an individual audit what happened and calculate it at the end of the day, but we do have some figures that we can use to make generalizations about how much we might expect to lose in a court case.

We're doing those calculations now. I think the Auditor General was right to say that it's incomplete information. We're looking to make it complete. There will have to be assumptions made in that process, but I think we can provide a more complete picture of that whole spectrum from audit through to appeals, court cases and collections.

Ted is in the middle of all this. Maybe I'll ask if he wants to elaborate.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

The answers you've provided are acceptable to me.

You mentioned that the Canada Revenue Agency has 40,000 employees. It is the largest department in the federal government. The agency therefore has the necessary expertise to determine the possibilities of recovering funds. Year after year, it can determine the amount of money that can be collected, compared to the amount that must be written off.

I'll come back to debt write-offs. This is something I consider important because it represents $3.2 billion. Of course, you are the largest department. That said, the debt write-off for all departments, year after year, amounts to $4 billion.

The debts contracted represent a lot of money. What I want to know, basically, is whether the Canada Revenue Agency, based on the acts and regulations that govern it, is doing enough to recover the debts incurred and to recover as much as possible.

Mr. Chair, perhaps the agency's representatives can answer.

[The Chair, Conservative, Kevin Sorenson]

Mr. Massé, there are two questions there: one for Mr. Gallivan on the last round, and then this last one in regard to the—

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Mr. Chair, we're satisfied with the first answer that Mr. Hamilton gave me. I'm more preoccupied by my second question.

[The Chair, Conservative, Kevin Sorenson]

Okay. Let's do the second question first. We'll give Mr. Gallivan just a little time at the end.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you.

[Bob Hamilton]

Thank you, Chair.

On the second question, it is something we're concerned about as well in trying to maximize the amount of debt we can collect. We always want to be fair with people in terms of particular circumstances, but if you look at it globally—the $3 billion or $4 billion you calculated—we'd obviously like to take that number down and be able to collect more of the debt that is owed.

We face some challenges in terms of taxpayers who may not have access to their funds anymore or might be bankrupt. Generally, my sense is that time is not on our side in this matter, so where we can move more quickly to establish the debt and take action to collect it, I think we're going to do better. We're taking action on that front.

We're also involving some of the debt collections people in an earlier stage of the process with audit so that we can take that longer view, if you like—a more horizontal, comprehensive view of the audit-to-collection stage to see if we can increase our chances.

There will always be some amount of debt that gets written off, but we're putting a considerable amount of effort into trying to maximize the amount that we do collect.

[Ted Gallivan]

I have two points of clarification.

The first is that the debt writeoff number there is not just for our compliance work; it's for all debts that the agency has. When you put that in relation to the $460 billion to $480 billion the agency administers every year, it's actually a very small percentage, given that we don't pick our clients and we're not a preferred creditor.

The second point of clarification relates to the difference between management accounting and financial accounting in terms of your question about net versus gross. The Department of Finance, in its financial statements for the Government of Canada, does take into account things like litigation and adverse losses at Tax Court. From a financial accounting perspective, this concern with netting down adverse outcomes after audit is taken into account in the Department of Finance's financial statements. However, as the commissioner said, we need to do better from a performance management perspective.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Gallivan.

Mr. Kelly is next, please.