Debates of Oct. 1st, 1998

Government Response To Petitions

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to two petitions.

Personal Information Protection And Electronic Documents Act

[John Manley, Liberal, Minister of Industry]

moved for leave to introduce Bill C-54, an act to support and promote electronic commerce by protecting personal information that is collected, used or disclosed in certain circumstances, by providing for the use of electronic means to communicate or record information or transactions and by amending the Canada Evidence Act, the Statutory Instruments Act and the Statute Revision Act.

(Motions deemed adopted, bill read the first time and printed)

Petitions

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I am pleased to present a petition signed by constituents who are asking that Bill C-68 be repealed and that the hundreds of millions of tax dollars that are currently wasted on the licensing of firearms be redirected to more cost effective efforts of reducing violent crime and improving public safety, such as more police on the streets, more crime prevention programs, more women's crisis centres and so on.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, I have a number of petitions to present concerning the multilateral agreement on investment.

This agreement was being negotiated at the OECD and was stalled in the spring of this year. Many of us hope that it will be stalled for good.

People continue to express their opposition to it, particularly in light of the decision this summer whereby the government had to back down from its ability to legislate in the environmental interests of Canadians because of a suit brought against it by Ethyl pursuant to chapter 11 of the NAFTA, which would be extended under the MAI.

Canadians continue to be very concerned about the possibility of an MAI, particularly one that contains an investor state provision, so I table these petitions.

Questions On The Order Paper

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I would ask that all questions be allowed to stand.

[The Acting Speaker (Mr. McClelland)]

Is that agreed?

[Some hon. members]

Agreed.

Canada Customs And Revenue Agency Act

[Herb Dhaliwal, Liberal, Minister of National Revenue]

moved that Bill C-43, an act to establish the Canada Customs and Revenue Agency and to amend and repeal other acts as a consequence, be read the second time and referred to a committee.

Mr. Speaker, I am pleased to rise in the House today to lead off debate on second reading of Bill C-43, an act to establish the Canada Customs and Revenue Agency.

This bill represents a major milestone in the evolution of tax administration, customs service and trade administration in Canada. It is an integral part of our government's drive for better service for all Canadians.

The genesis of this bill is quite simple. It is built on five simple facts about tax collection. I would like to discuss those facts quite briefly. Flowing from those facts are five clear principles. Those principles, those values, I would like to describe in some detail for they are the principles, the values, which are the foundation of the legislation before us.

Fact number one is easy. Nobody particularly likes to pay taxes. The truth is that since the Prime Minister named me Minister of National Revenue I have not had a Canadian come up to me and say “Herb, my taxes are too low. Can you find a way to raise my tax bill?”

Fact number two is equally easy. We live in a country where millions upon millions of citizens voluntarily pay taxes. Something which we can all be really proud of is that in our country citizens voluntarily fill out their tax forms and remit the money they owe. In our society small businesses fill out their GST forms and send in the money owing. In our nation, millions upon millions of citizens make their declaration of customs openly and honestly.

This leads to fact number three. The reason Canadians pay their taxes is because we understand the imperatives of our democracy. We understand that we are rated number one in the world by the United Nations because of our health care, our support for young people, our support for senior citizens, our commitment to safety and security for families and our determination to bring out the best in our nation.

Canadians understand that meeting those objectives and rising to those ideals costs money.

Fact number four is the logical corollary of the other facts. Canadians want to ensure that the system is fair. We want to ensure that the system is as logical and straightforward as possible. Since we are so amazingly and willingly ready to pay taxes voluntarily, we rightly expect the system to be as modern, as intelligent, as streamlined and as service oriented as possible.

Fact number five is that there are two ways to improve the tax system. The first way is through changes to the tax law, which is something we address annually when the finance minister brings down his budget. The second way is to improve the structure of the tax system, to improve the process, to modernize the method of service, to modernize the method of management, to simplify the means of compliance and to eliminate overlap and duplication among the different levels of government.

Those are the facts and the realities on which our tax system is built. Those are also the facts which lead to the five principles, the five values of this bill. The principles and values are very simple. Canadians want service and fairness. They want to work in partnership. They want accountability and modern management of resources.

This bill before the House of Commons will deliver what Canadians want: more efficient customs service; less federal-provincial overlap; lower compliance costs for businesses; more flexibility to meet a changing world; a more simplified system for taxpayers; less cost for Canadians.

We are talking about service for over 22 million taxpayers. We are talking about administering over $600 billion in trade. We are talking about serving over 100 million travellers annually. We are talking about service for over 75,000 charities, service for nine million Canadians who receive GST credits, service for over three million parents who receive the child tax benefit.

Combining a new form of management structure with strong ministerial accountability and strong traditional Canadian values, the new agency will ensure better service for all those Canadians and for our country.

The introduction of this new agency structure will maintain parliamentary accountability to clients and to the public. The agency will be accountable to parliament and to all Canadians. The new agency will benefit from management practices that are characteristic of successful organizations outside of government. Yet the Canada customs and revenue agency will be part of the public service of Canada. It will be a vital component of our democratic parliamentary system.

We were told by Canadians that it is important that there continue to be ministerial accountability for how tax, tariff and trade systems operate. We have listened attentively and responded fully.

The Minister of National Revenue will be fully responsible for the agency to parliament. The Minister of National Revenue will still be responsible for the powers, duties and functions vested by the Income Tax Act, the Customs Act and all other program legislation. The Minister of National Revenue will still be able to direct how taxes are assessed, to seize and release goods, and to determine how import and accounting data should be processed. I will still be answerable to all members of parliament and through them to the citizens we are all elected to serve.

In Canada we have always made sure that individual taxpayers retain their privacy and are not subject to political influences. We have a longstanding practice in this country that the Minister of National Revenue does not become involved in interpreting the law in individual cases. The minister may however inquire into specific cases in order to guarantee fairness for all taxpayers. Questions are often asked in the House of the minister. The power of the minister to inquire into these matters and respond to the House will be maintained under the new agency.

Canadians will continue to have a Minister of National Revenue whose primary concern will rightly be to ensure that citizens are given the full benefit of the law. In short, Canadians' right both to impartial decision making and to redress through the minister will be retained.

Accountability and fairness are cornerstones of our Canadian system of revenue collection. These vital principles must and will remain paramount. Fairness forms the basis for the millions of tax, customs and excise transactions. It is at the heart of every communication Canadians have with tax officials on the telephone, or with our employees at the counter, or with customs officers while crossing the border. It underpins all our programs and services.

Notwithstanding an excellent record, we can and must do more. Last March I launched the fairness initiative to consult with individual Canadians and businesses on how fairly we administer our programs and to identify ways to enhance fairness. We have consulted widely and we will shortly have a report produced by an independent organization, the Conference Board of Canada.

I intend to issue a fairness action plan that will continue to ensure that Canadians continue to receive the fairest customs and revenue administration possible. Fairness is a fundamental priority for Revenue Canada and fairness will be a fundamental priority for the new agency.

Another fundamental priority for the new agency will be a true spirit of practical partnership with other levels of government and all Canadians. By working even more closely with the provinces and the territories, the new agency will be able to expand the programs and services that we provide.

I should point out that provincial participation will be completely voluntary. This is not a power grab by the federal government. In fact the agency's structure gives for the first time ever a real say to the provinces and territories in managing how we collect taxes.

Right now we administer social benefit programs for British Columbia, Alberta, New Brunswick, Saskatchewan, the Northwest Territories and Nova Scotia. We collect personal income taxes for nine of the provinces and we collect corporate income taxes for seven.

With the agency we want to create real opportunities for greater partnership with the provinces. We want to reduce overlap and duplication. We want to save money for the provinces. We want to save money for Canadians. What we are trying to build today is an organization that will create more win-win situations for tomorrow.

We are currently engaged in joint studies with several provinces on the feasibility of the new agency administering more of their programs. There is only one level of taxpayer and that taxpayer should only have to deal with one level of tax administration.

I should tell the House that my provincial counterparts generally like the concept of an agency. They see it as an important step toward pragmatic forward thinking reform on behalf of and for Canadians.

To guarantee that the provinces and territories truly have a central role to play in the new agency, they will nominate 11 of the 15 members of the new agency's board of management. This will provide for sensitivity to provincial and regional concerns. The members will be appointed by the governor in council. This board of management will bring a client oriented approach to the provision of services, and a more progressive and businesslike approach to management.

Operational accountability will not be as diffused under the agency as it is now under Revenue Canada. That is because the authorities for management and administration which are now shared among Treasury Board, the Public Service Commission and other government departments and agencies will be united under the new agency. The agency will be more directly accountable for the results it achieves. It will be accountable to parliament and to Canadians.

The move to new models in improving the efficiency, effectiveness and accountability of government services is a worldwide phenomenon. Countries like the United Kingdom, Australia and New Zealand with parliamentary systems similar to ours are all pursuing new administrative arrangements to improve service delivery to citizens.

Although the new agency will remain part of the public service, we propose to make important changes that will shift certain management responsibilities directly to the agency. Specifically, a modern tax and customs administration needs the flexibility to tailor its human resource systems, such as staffing, classification, training and recourse, to meet the needs of Canadians and to meet the needs of employees.

Presently the staffing process at Revenue Canada can take between six to twelve months. That is simply too long. Agency status will allow us to develop a staffing system that is faster, more flexible and more progressive in providing opportunities for employees and rising to the challenges and opportunities of the modern technological era.

The proposed Canada customs and revenue agency will provide us with the flexibility we need to meet the needs of the future head on.

More and more transactions are taking place through electronic commerce. Why not have a single, virtual office window for federal and provincial tax as well as customs administration? Why not employ a single business number approach to increase efficiency even further and yes, to enhance compliance as well?

My roots are in the business community. Because of this, I know firsthand just how important customs, trade and revenue administration can be to the well-being of a business. I believe that streamlining and simplifying procedures is a critical issue for the growth of Canada's business enterprises, and consequently for the growth of the Canadian economy.

Revenue Canada is already a leader in areas such as electronic tax filing. We would like to take those initiatives further by putting a framework in place that will allow us to expand the reach of our service to and for Canadians.

I want to emphasize that this is not an exercise in changing departmental organization charts. This is an exercise in changing our approach in how we do business, in how we deal with the people we serve.

We want to work together with all our partners for the benefit of Canadians. Even now, Revenue Canada is highly involved with formal and informal consultations that include business people, customs brokers and tax professionals among others. Their input was important in the preparation of the legislation that I am placing before this House.

Canadians want their system to be user friendly and transparent. They want it to be fair, where fairness means equal and efficient treatment. Canadians want us to minimize the costs of compliance with the tax system.

In January 1998 the Public Policy Forum released an important study on the costs of compliance with Canada's tax systems. The forum estimates that with a single administration, there are potential annual savings to Canadian business of between $116 million and $193 million. In addition, the forum estimates between $37 million and $62 million in potential savings in administration costs for governments.

The transition to agency status is a means to an end. It marks a realization of our commitment to fairness and excellent service for all Canadians, our commitment to work with the private sector and our commitment to maintain Canada's reputation as a world leader in revenue, customs and trade administration.

It is something else too: a new model for governance, where success builds on the blending of governmental accountability and private sector flexibility. The best of both worlds: one unified better way of doing business, one unified better way of serving Canadians.

The Government of Canada is working with all Canadians to address our shared needs and our individual aspirations, and to help ensure all of Canada's citizens can reap the benefits of building our country for the next millennium. What we have before this House is an important stepping stone in that process. It is an opportunity to strengthen bridges among governments and on behalf of the Canadians we all seek to serve.

I believe that the creation of the Canada customs and revenue agency is a positive, a practical and a philosophically sound step forward.

What we want to create is an organization with a state of mind that is the state of the art.

The new agency promises to usher in a new era in revenue administration and customs administration as we enter into a new millennium; a new era of service, fairness, partnership, accountability and wise management of our resources; a new era that clings fast to values on which our country is built but meets the needs of our times and the times to come.

[Gilles-A. Perron, Bloc, Saint-Eustache—Sainte-Thérèse, QC]

Mr. Speaker, I am pleased to rise this morning to address Bill C-43. At the end of my speech, we will introduce an amendment to this legislation.

The Bloc Quebecois and myself are totally opposed to this bill. As you may remember, the government first announced the creation of the Canada Customs and Revenue Agency in the Speech from the Throne delivered in 1996.

At the time, the government had defined a number of objectives for the agency. First, to provide programs and services in a more efficient and cost-effective manner, through greater autonomy and flexibility. Second, to improve services and reduce administration and enforcement costs by working with the provinces to eliminate duplication and overlap. Third, to strengthen the effectiveness of the Canadian federation and to contribute to national unity by making the agency responsible for providing federal, provincial and even municipal services to Canadians.

Before explaining why we are totally opposed to this bill, let us take a look at each of these objectives.

Let me begin with the third one. That objective mysteriously disappeared when the second progress report was tabled, and it is obvious that the agency as proposed will not contribute to the effectiveness of the Canadian federation and to Canadian unity.

The second objective is doomed from the start, since none of the provinces has agreed to enter into any agreement with the federal government so far. The provinces are very unenthusiastic about the establishment of such an agency. Quebec, for one, is formally opposed. While not being totally against the idea of the single level of taxation referred to by my hon. colleague, the minister, Quebec feels that tax administration should be a provincial responsibility.

Ontario's opposition is even stronger than that of Quebec. In fact, the Minister of Revenue of Ontario recently stated he was considering the possibility of taking over personal income tax services. As we know, in Ontario, personal income taxes are currently collected by the federal government. The minister now wants to look after it at the provincial level.

The maritimes are very unenthusiastic because the program to harmonize the sales tax is not producing the expected results, in spite of the fact that this new approach to tax collection has cost Canadian taxpayers over $2 billion.

Also opposed are all western provinces, except Manitoba, whose premier suggested it might be worth looking into. The premier of Manitoba may be looking for a job opportunity after he leaves politics. After all, the position of agency commissioner is an attractive one with an attractive salary. The commissioner would be appointed for a term of five years, which is renewable, so that he could hold office for several years, making very good money.

In the face of this opposition, Revenue Canada's spokesperson, Michel Cléroux, explained that the provinces had not said no. That is not a very good explanation.

Returning to the first objective, which was to provide more efficient programs and services at a lesser cost. First, I do not believe the agency will produce the promised savings. Right from the start, those promoting it accepted that the greatest savings would come from harmonizing taxation. I would remind you, however, that, as we all know, extension of the harmonized sales tax flew like a lead balloon.

Another thing, the proposed agency will not require the provinces to pay for collection and processing of their taxes if the provincial programme is fully harmonized with a federal taxation program. This so-called free service represents an increase in agency costs, not a decrease.

The agency's status will also enable its executives to pay themselves salaries comparable to those of business leaders in the private sector. Will the agency commissioner, who will have responsibility for hundreds of thousands of people, and billions of dollars, demand to earn the same amount as the President of the Royal Bank? Will his annual salary be up in the millions? Those are questions that need to be asked.

Regardless of the position one adopts on this, one cannot avoid acknowledging that this is a new expenditure coming at a time when the morale of public servants who are not in executive positions is suffering seriously after a six-year freeze. It must not be lost sight of that, since April 1, the present government has awarded its executives raises of up to 19%.

The agency has already cost the taxpayer a fair bit. Thousands of departmental employees have been involved in design teams and other internal exercises aimed at turning the dream of senior management into reality. A good part of the focus of Revenue Canada has been turned away from more important and more pressing matters which the minister ought to have been looking at.

I will give you an example. You will recall a CBC program, which reported that, according to Department of National Revenue documents, over 500 of the 1,500 auditor positions in the Toronto region were vacant. This situation would mean a shortfall for the federal treasury in this region of over $500 million in 1997.

If we apply this to the rest of Canada, we estimate the loss would be over $2 billion, due to the lack of Revenue Canada auditors.

There is another point I wish to make: the agency would be less effective as a solution than the status quo. The myth surrounding the agency is that it could provide tax services more cheaply and more effectively. However, the structure proposed for the new agency adds another level of bureaucracy in the form of an appointed board of management, which would have nothing more than a supervisory role. Nevertheless, time, money and staff must be provided for the board and its staff. This would mean another level of bureaucracy.

At the same time, the Canada Customs and Revenue Agency would report to Treasury Board on administrative matters, such as its activity and human resources plans.

Another point I wish to address is that this agency would seriously weaken the Department of National Revenue. By removing the agency from the direct supervision of the minister's office, the bill would seriously weaken the Department of National Revenue's bureaucracy. The minister would receive a corporate business plan from the agency in which he would have a very small hand, or none at all, making it practically a fait accompli. The minister would be told what to do.

Fourth, the agency would upset the balance between tax policy and tax collection. There is, at the present time, a healthy balance between the structure and tax policy, which should be left up to the department and the Minister of Finance, and enforcement of this policy, which is the responsibility of the Minister of Revenue and his department, the Department of National Revenue.

The agency's status would upset this balance. The agency's bureaucrats would inevitably launch into a turf war with their Department of Finance counterparts. This would be a costly and unproductive exercise that would serve the interests of no one but the mandarins.

Fifth, the agency would open the door to bureaucratic patronage and the abuse of power. In practice, the agency would have carte blanche with respect to contracts, and with respect to the management of property, materiel and information, as well as technology. With limited outside oversight, the risk of favouritism and abuse of power by bureaucrats is very, very high.

Sixth, the agency would pose a threat to taxpayers' privacy. My colleague, the hon. member for Sherbrooke, mentioned this yesterday in a question having to do with the report tabled by the auditor general. If the agency were actually to achieve its objectives, personal information would be concentrated in a large organization not overseen directly by Parliament.

Moreover, internal departmental documents indicate that creation of a “big brother” raises reservations among some of those involved with privacy issues. We share those concerns.

What do the experts and the business sector think of this agency? Nothing good. In his report of December 1997, the auditor general voiced concerns about the responsibility of the proposed agency by asking “What assurance will the people of Canada and parliamentarians have that the public interest is protected?”. I share Mr. Desautels' concerns.

As well, a Public Policy Forum, or PPF, study commissioned by Revenue Canada reported that Canadian business had serious reservations about the creation of this agency.

The PPF report referred to the agency's objective of rationalizing and simplifying tax collection. However, 40% of the businesses the foundation surveyed saw no advantage to a new national collection agency and over 68% felt that such an agency would add to their compliance costs, or have no effect whatsoever.

As we have seen, then, the promise of a single tax collection agency did nothing to bring about the harmonization of taxes in all provinces. If this harmonization did take place in the three Atlantic provinces, that is because they were paid $2 billion while Revenue Canada was a department, and not an agency.

A serious question arises: how many billions will the provinces have to be paid to gain their participation in this project?

Continuing with outside commentaries, I quote a Canadian Press article by Bruce Cheadle, which appeared in the Halifax Chronicle-Herald on February 9, 1998, stating that some observers see the agency as a pretext for getting rid of employees or increasing executives' salaries, or both.

Professor Vern Krishna, head of the CGA Tax Research Centre at the University of Ottawa, is quoted as having said: “—what are the advantages? Mainly, a little less direct control by government, and in particular a little more leeway with employee salaries—This is not as fabulous a concept as they would have the public believe”.

An associate with the Montreal firm of Raymond, Chabot, Martin, Paré & Associates—or RCMP, as it is known in Quebec—said that the “creation of the customs and revenue agency would, in every respect, amount to an abdication of political power”. That comment was made in the March 1998 issue of CA Magazine. It was not made three years ago, but in March of this year.

One has to wonder. Why has the government developed this bad and even compulsive habit of creating agencies? This is, as the spokesperson for RCMP pointed out, an abdication of political power. We have a number of examples of that pattern. The new Canadian wheat agency just started its operations and people are already bickering. Nothing works.

And let us not forget Nav Canada, which cost millions of dollars. Remember what happened. Nav Canada said that all its employees would keep their jobs for at least two years. Now, 30% of the employees who were guaranteed a job for two years will actually lose their job after just 18 months. Will these job cuts jeopardize the safety of airline personnel? That is one concern we have regarding Nav Canada. Is this yet another meaningless commitment made by the government?

Another example that really fires me up is ADM, the Agence des aéroports de Montréal. Remember the mess in which the agency found itself in February 1997, when it decided to transfer international flights from Mirabel to Dorval. That decision was made unilaterally by dictators, without any regard for what people thought. A year and a half later, it is still a mess and nothing works.

Bloc Quebecois members put questions to the Minister of Transport regarding ADM, but he told us he could not do anything, that the agency had total control.

Since when do these agencies have the authority to spend taxpayers' money without having to answer to anyone? It is highly improper.

In conclusion, I think that the government finds the present human resources system to be in need of improvement. Rather than make changes to Revenue Canada's present system, it prefers to create a completely new external body.

In the face of this admission, we can also conclude that the government feels that federal employees are being paid at rates well below those of the private sector. Rather than raising the pay scale for all present positions, the government prefers to create a structure within which it will be easy to pay salaries that will attract and keep excellent employees.

The following question then arises: Can two people performing the same duties, or doing the same type of job, one employed by the agency and the other employed by a department, be paid at different rates? That is what I am asking.

In closing, I would like to move an amendment to the motion for seconding reading of the bill.

That the motion be amended by deleting all the words after the word ”That” and substituting the following:

”Bill C-43, An Act to establish the Canada Customs and Revenue Agency and to amend and repeal other Acts as a consequence be not now read a second time but that the Order be discharged, the Bill withdrawn and the subject-matter thereof referred to the Standing Committee on Finance.”

[The Acting Speaker (Mr. McClelland)]

Debate is on the amendment and I recognize the hon. member for Calgary Southeast.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I am pleased to rise in debate on Bill C-43. I wish to congratulate the minister. It has only taken him 15 months to get his major legislative proposal before us. After saying that it would come here last fall and then last spring, it is finally here. If the minister is lucky it will be passed by the end of the century.

Clearly the minister has enormous pull with the government House leader as well as with bureaucrats in the finance department who we know have been fighting over the loss of control they may face as a result of the bill. I do wish to congratulate the minister on finally managing to bring it before us.

The concept was unveiled in the throne speech of February 1996. It has taken the government two and a half years to flesh it out. It was one of its big ideas, one of the grand schemes, one of the great Liberal projects to create this super tax agency, this IRS style agency which would be removed from direct oversight and accountability to the people's representatives in parliament.

However, when the government took the original versions of the bill around for review and input it saw that Canadians actually believed in something called parliamentary accountability and ministerial responsibility. We are pleased to see that consequently the government made some modifications to its earlier legislative proposals and has mentioned the minister in the act at least a few times.

The grand scheme, which the Liberals proposed two and a half years ago in the throne speech and which the Minister of National Revenue has been out on the road flogging for the past year, has turned out to be not such a grand scheme at all. In fact it is a whole series of administrative changes which simply does two things: creates more bureaucracy and less parliamentary accountability.

The stated purpose of Bill C-43 and the creation of the Canada customs and revenue agency is to create greater efficiency in the tax collection process, to create greater administrative flexibility, and to strengthen the federation through the creation of a single national agency. These are all marvellous motherhood objectives but we have to look closely at whether the bill actually achieves them.

First, with respect to efficiency the minister quoted in his speech a study conducted by a public policy forum in his department which reviewed the efficiency costs and studied cutting the cost of tax collection down to size. It suggested that there might be cost savings in compliance of about $170 million and further potential savings in administrative costs of about $100 million. This was quoted by the minister in his speech.

What the minister did not quote was that the entire study and these cost saving estimates were predicated upon a national revenue agency which collects all provincial taxes for all provincial governments. Clearly that will not be the case. The study demonstrates that if there are to be any cost savings they will come from the participation of the provinces. When we listen to the provinces what do we hear? Silence.

The Minister of National Revenue has been criss-crossing the country over the past year. I actually bumped into him in the hallways of one legislature going in to see the finance minister of Alberta. I am sure he has been working very diligently, along with his officials, to persuade provincial finance ministers to believe that letting federal bureaucrats collect their taxes is a good idea.

However, sorely the minister's efforts have produced no proof. Not a single province at this point has indicated that it is prepared to participate in the CCRA, the proposed Canada customs revenue agency, and several provinces have stated their outright opposition, most notably the province of Quebec.

The Quebec minister of finance, Mr. Landry, said in a letter to my office that “Quebec opposes the federal government's intention to centralize all of the tax revenue collection activities in one cross-Canada agency. We already have our own department of revenue, which collects all taxes in Quebec. In 1982, we took over the administration of the federal goods and services tax, the GST, and we have proven our efficiency by providing a top quality service to Quebec taxpayers”.

We have received similar responses from the finance ministers of British Columbia, Ontario and Alberta, all of whom indicate that they have not seen anything compelling in the government's proposal for the CCRA which would persuade them to participate. The provincial treasurer of Alberta wrote in a letter to me that he was “concerned that such a large agency might become bureaucratic, unwieldy and aggressive in its dealings with taxpayers, and Alberta will want to know how the federal government plans to address these issues”.

Of course the biggest province, Ontario, which produces about 40% of the tax revenues in this country has taken the position that is almost completely contrary to where the federal government is going.

It says it is actually prepared because of federal interference to pull out of the federal-provincial income tax collection agreement so it can begin to tax directly on income as opposed to taxing on federal tax. It wants greater flexibility, greater autonomy and greater accountability to its own provincial taxpayers rather than greater centralization in Ottawa.

In fact, the minister of finance of the province of Ontario said to me in a letter from last year:

Ontario is unable—due to a lack of information—to assess whether the CCRA will provide improved services, at lower costs, to Ontarians.

In the 1997 Ontario budget, I indicated that we have significant concerns with the current arrangements for setting and collecting Ontario's income tax. Ontario has suggested that the discussion about the creation of a new agency should include a review of the framework under which the provinces can make policy changes in harmonize tax arrangements. The province must have the capacity to adjust its tax policies to appropriately reflect the provincial needs, regardless of the method of collection and administration.

And so we see that this grand scheme of the minister and government to have all the provinces participate in one mega tax collection agency has fallen on cold ears and has not been received positively. Any punitive efficiency costs, administrative savings would not be realized without the participation particularly of the larger provinces.

Not only is it provincial governments who elect not to participate that will create inefficiencies but 40% of businesses surveyed in the public policy forum study saw no advantage to a single tax collection agency and 68% thought that a single tax collection agency would increase, not decrease, compliance costs or have no impact at all. The minister has not been able to persuade businesses and the business community in Canada that this proposal would create efficiencies in terms of compliance.

We can look further at the other provinces. Not only are Alberta, Ontario and some of the western provinces talking about pulling away from their involvement with the federal tax policy but so are some of the Atlantic provinces. The province of Nova Scotia is considering removing itself from the HST, the harmonized sales tax, or as it is known on the east coast the BST, by going back to the original retail sales tax.

The Government of Prince Edward Island, which never committed to the HST, which was seen as a step on the way to a single tax collection agency, has committed itself in its election policy not to adopt the HST.

It is not hard to understand why the provinces would be so sceptical about participation in this grand federal scheme given the paternalistic attitude of this government with respect to the sovereignty and the democratic responsibilities of the provinces. Just look at how this federal government has responded to the good faith constructive initiatives taken by the provincial governments this summer at their Saskatoon assembly with respect to the social union proposals.

Instead of responding positively and affirmatively, engaging in a constructive dialogue, the federal government just brushes the provinces aside, reminding the provinces and reminding taxpayers that this is precisely the same government which pontificates about the importance of national policy in matters like health care but which proceeded in the last term of government unilaterally to cut $7 billion without consultation or forewarning social transfers for health care and education.

The federal government slaps the provincial governments by taking $7 billion away from critical social programs and slaps them again by lecturing them about the importance of those very programs which it has slashed and then the provinces come up and suggest a renovation of social policy between the federal and provincial governments through the social union recommendations. The federal government slaps them again by saying we don't care what recommendations you come up with, we are going to proceed unilaterally.

Is it any wonder that the provincial ministers of finance and premiers would be so unenthusiastic in their response to the revenue agency proposal?

Finally, with respect to efficiency one could argue that this act without the participation of the provinces would in fact result in greater inefficiency because what we have here in Bill C-43 is an act which creates a new bureaucracy. It creates a new board of governors with no clearly defined role in the governing structure of the proposed agency.

This bill creates a new commissioner, a new patronage position to be appointed by the government. It creates an entire new apparatus for the governance of Revenue Canada without any assurance that the provinces will be participating and that governance structure is even necessary. We would like to know exactly what the costs involved are in the creation of these new bureaucratic processes in this bill.

The second punitive objective of this bill is to create greater administrative flexibility. The minister rightfully points out that under the very strict, burdensome and bureaucratic employment and management guidelines of Treasury Board, Revenue Canada is finding it increasingly difficult to hire and maintain high quality, well trained people in an extremely competitive labour market.

The minister points out, as we have heard from recent media reports, that this is a particularly critical problem with respect to tax auditors in certain regions of the country such as southern Ontario. We have an unacceptably high level of turnover with respect to skilled auditors who can find considerably greater levels of compensation in the private sector than they can working under the unreasonably bureaucratic regulations of Treasury Board.

This is a serious problem because Revenue Canada is an enormous department. It is an enormous bureaucracy with approximately 40,000 employees who constitute approximately 20% of the public service of Canada which raises about $1 billion a day with operational expenses approved by parliament of about $2.3 billion per year.

We agree that in such an enormous federal bureaucracy we ought to aspire to greater flexibility in the administration of human resources and the management of personnel and their compensation.

We agree that government ought to operate more like business and less like bureaucracy. We believe that there ought to be incentives for efficiency in the public sector and that good people should be paid more. There should be a greater consideration of merit as opposed to bureaucratic schedules in the compensation of employees at Revenue Canada and in all other government departments.

I am very intrigued by the progress made in this respect by the governments of the United Kingdom, New Zealand and others, as mentioned by the minister in his speech, that have been able to achieve greater administrative flexibility and operate in a more business like fashion through the adoption of more flexible policies.

But it is not necessary for the government to adopt the agency or to pass this legislation or to diminish parliamentary accountability in order to achieve those savings, efficiencies and incentives. All the government needs to do is pass legislation amending the Public Service Employment Act and other statutes exempting Revenue Canada from Treasury Board guidelines.

We requested and received an opinion from the Library of Parliament research branch on this very question. We said is it possible for this parliament to give the minister of revenue the flexibility to pay his best people more, to operate in a more business like fashion with greater incentives and less bureaucracy without adopting an agency superstructure and diminishing accountability. The answer from the Library of Parliament was indeed it is possible. From its report of May 29 of this year: “The Public Service Commission could seek an amendment to the Public Service Employment Act to exempt the department from the staffing requirements under the act. Alternatively, the department could be given authority for its own staffing under another act of parliament”.

At the current time the Treasury Board and the Public Service Commission have responsibilities for different aspects of the human resources regime in federal government departments, including Revenue Canada.

In sum, it simply is a ruse for this minister to argue that he needs to create another bureaucracy through the CCRA board and commissioner, that he needs to jeopardize parliamentary accountability and ministerial oversight in order to achieve New Zealand and United Kingdom style efficiency gains. Those gains can and should be made through normal legislative changes without jeopardizing accountability and the minister, I think, knows this.

There is no reason why the Department of National Revenue should be isolated in this effort to find greater efficiencies and more business like incentives. If the minister of revenue really has a problem with the way the Treasury Board guideline restricts his ability to hire people and manage human resources, he ought to go before the cabinet and suggest that all these statutes governing Treasury Board guidelines for personnel be changed and amended as we would strongly support.

That takes us to the question of accountability. This really is our central concern. Originally in the early drafts of this legislation the government had really proposed the adoption of an IRS style management structure where the revenue agency would become a quasi crown corporation responsible in name only to the minister and through him to parliament. But for all intents and purposes executive authority in this enormous tax collection bureaucracy would be centralized in the hands of a commissioner and a board of directors.

We and many other Canadians, businesses, provincial governments, stakeholders made it clear that we would simply not accept such a radical diminishment of parliamentary oversight and democratic authority in Revenue Canada or its successor agency. We are pleased again to see that the government responded to some of those concerns by bringing the minister back into the scope of the act. But our concern is still that there will be a transfer of executive responsibility, of policy making authority to the commissioner of the proposed agency and his or her board.

This is something which the auditor general has flagged as an absolutely critical issue for this parliament to consider. In his report in December of last year the auditor general said that the new Canada customs and revenue agency is “an extremely and critically important one” to watch because of the nature of taxation and revenue collection within a democracy.

He said also that he is concerned with “substantial amounts of money that are being put into the hands of arm's length organizations and that new ways of spending may also diminish parliamentary control over government activities”. He pointed to the $800 million innovation fund administered by an arm's length organization and the millennium fund which could be as much as $240 million. The auditor general is worried about the effectiveness of parliament's accountability regimes which contribute to the overall health of our democratic institutions. He said that as the structure of government and the ways it functions are modified, it is important to preserve the accountability and oversight for elected representatives.

That is about as clear a signal as we can get from the man we charge to ensure the government spends and operates in an accountable manner. He is saying we ought to be concerned about the potential for diminished accountability here.

This really is an important principle because the whole history of parliament is a history of the common people rising up against the abuse of executive or in the past royal authority principally in the collection of taxes. Historically parliament's central raison d'étre was the oversight of the tax collection power of government, of the executive branch, because the power to tax is the power to destroy. It is an awesome power. The powers we invest in the Minister of National Revenue are almost police powers. We grant to him and he grants to his officials the power, the government's monopoly, the state's monopoly on coercive power.

All too often this coercive power is abused. Even though the minister theoretically controls the department and is responsible to parliament, every member of this place knows of outrageous and scandalous instances where officials of the Department of National Revenue have exceeded appropriate bounds in the tax collection process.

I have raised a number of these cases in the House over the past year. Let me review some of them to remind us why accountability is so important.

Let me remind the minister of the case of Ms. Janice Collingridge of Calgary. Ms. Collingridge is a severely handicapped quadriplegic who is unable to speak. She is in a low income situation, such that the government of Alberta provides her with a subsidy to contract homecare workers to assist her in her daily duties.

It turns out that a couple of years ago Ms. Collingridge managed to use some modern technology to type out on a computer a schedule for her homecare workers to come by at certain times of the day and to give them certain chores and responsibilities. The tax dogs at Revenue Canada found out about this terrible act on the part of Ms. Collingridge, this work schedule that she had produced, and they said “Ms. Collingridge, we are afraid that, based on the fact you created this schedule, these homecare workers we regard as employees of yours who are now obliged to pay payroll taxes and you are now liable for back payroll taxes of about $5,000”.

A non-verbal, low income quadriplegic gets dragged into the Tax Court of Alberta at Calgary by this minister's officials to try to force her to give this government $5,000 for supposedly withholding payroll taxes for people who were there helping her live on a daily basis, supplied by the provincial government. I say shame on this minister and his department and this government for allowing that kind of rabid abuse of power to occur. This is what happens when the enormous power of tax collection is abused.

There are dozens of cases like this that I have reviewed in the past year alone. Let me review the case of, for instance, the Ethier family of Alberta who was assessed about $2,000 because a disability credit was terminated by the minister's tax police. Mrs. Ethier was disabled and unable to dress her upper body without assistance. Her doctor wrote in a medical report that she was unable to perceive, think or remember to the extent that she was limited in the ability to do personal care or manage personal affairs. In other words, she was seriously disabled. Medical reports clearly indicated this condition, but despite this evidence Revenue Canada officials ignored her medical reports and persisted with their re-assessment to deny her disability credit. Revenue Canada ruled that she could work when the doctors said she could not.

This is a curious position because her own doctor said “She constantly needs supervision”. This is the kind of hard-hearted, cruel tactics sometimes employed by the minister's tax cops.

Let us talk about the case of Régent Millette of Laval, Quebec. His is a good example of the extraordinary tax collection powers of the government. Mr. Millette wrote my office to tell me about the many difficulties he had experienced in recent years, when his property was seized and his family and friends, including his 91-year-old mother, were harassed. He had a very difficult time coming up with enough money to meet the needs of his family. The problems he was facing pushed him to the brink of suicide.

When his case came up in court, the judge, Mr. Justice Jean-Louis Beaudoin, said “The law is the law, and we must apply it. This is the only reason I support the opinion of my colleague, but I deplore the cavalier and clearly abusive fashion—”

The judge himself said that Revenue Canada officials had used illegal means to collect the money.

Finally, I raise the case of Suzanne and John Thiessen of Manitoba. They had confidential income tax information leaked to the Manitoba Public Insurance Corporation without their consent. We raised this case in the House and the Minister of Revenue said “We have provisions to ensure the confidentiality of information at Revenue Canada”.

If that is the case, then why have I received several similar reports of leaked tax returns going to a crown corporation in Manitoba without the authorization of these taxpayers?

These are all reasons we need not to diminish accountability in the tax collection process, as the minister proposes to do in the bill, but rather to enhance accountability to ensure that cases like the Collingridge case, the Millette case and the Thiessen case cannot happen, and that if they do happen, somebody, namely the minister, is going to be on the hot set and accountable to the democratically elected representatives of taxpayers.

We propose to do precisely that through the adoption of a taxpayer bill of rights. Let me be clear. We would be prepared to consider supporting the bill because of the potential gains in terms of efficiency and flexibility in administration if the government were to adopt a taxpayer bill of rights with teeth to put the rights of taxpayers ahead of the tactics used by the tax collectors in the process.

Today we have released and tabled our draft taxpayer bill of rights which would enshrine the rights to due process in the tax collection process and the presumption of honesty on the part of taxpayers. Now we have something called the declaration of taxpayer rights which is really just a gimmicky slogan that people find in brochures which the government distributes. It has no statutory authority. We are calling upon the government to pass a law which would enumerate the rights of taxpayers in the audit, assessment and collection processes of the revenue department or future agency.

The rights that we would enumerate in the taxpayer bill of rights would include the right to understand tax laws. Lay people should have access to the tax laws in plain language, not in the kind of incomprehensible gobbledegook which is found in the 1,300 page Income Tax Act.

We would include a right for taxpayers to be treated in a professional and courteous manner, for taxpayers to be able to complain about poor treatment or service, to receive a written response from officials at the agency or department and also the ability to appeal such a response.

We would grant taxpayers the right to pay the amount of tax required by law and not a penny more. Government officials would be obligated to inform taxpayers in cases of overpayment.

We would provide taxpayers with the legislated right to know the purpose for which information is being requested and information on exactly what penalties are applicable if that information is not provided.

We would include the right for taxpayers to represent themselves or appoint someone to act in their place in any dealings with Revenue Canada or the CCRA, as well as the right to record any and all meetings with revenue officials without being required to give notice of doing so.

We would continue to give taxpayers the right to appeal revenue rulings, first administratively through the appeals branch and later through the courts. We would have Revenue Canada waive penalties and interest wherever it can be shown that a taxpayer acted in good faith and without the intention to evade, or relied upon incorrect advice provided by revenue officials.

I could mention numerous cases where revenue officials have given inaccurate information, taxpayers in good faith have taken it and ended up finding themselves being penalized for having done so.

In cases where penalties and interest can cause severe financial hardship or in cases where reassessments can be proven to cause severe financial hardship, alternative arrangements should be made available through abatement or negotiated repayment schedules.

Finally, where fraud or evasion are suspected, Revenue Canada officials would be permitted to seize or freeze assets after first demonstrating a compelling reason for which such action must be taken. Taxpayers would have the right to complain to the office for taxpayer protection, which we would create in this taxpayer bill of rights, in cases where the seizing of assets can be expected to create serious financial hardship for others, such as employees or family members.

This is just a brief summary of some of the rights that we think could be incorporated in such a statute, but we would invite input from all members, parties and Canadians on how to strengthen a statutory protection like this.

The bill that we propose in terms of a taxpayer bill of rights would, as I have mentioned, be enforced by the office for taxpayer protection. He or she would be an officer of parliament, similar to the auditor general, who would report to parliament and would be asked to provide us with a summary of at least 25 of the most serious problems encountered by Revenue Canada or the revenue agency in a given year.

The taxpayer ombudsman would be empowered to issue taxpayer protection borders where necessary to protect taxpayers from arbitrary treatment that could lead to undue financial hardship. He or she could act as an advocate of last resort for taxpayers who feel they are being treated unfairly or in an unjust or arbitrary manner by revenue officials.

He or she could assist taxpayers in resolving disputes with the revenue department or agency, could identify areas where taxpayers have been consistently having problems with the agency and could offer some recommendations on how these problems could be resolved.

Finally, the taxpayer protection officer could make recommendations to parliament about proposed changes to the administrative practices of the revenue agency in order to minimize problems incurred by taxpayers.

This is not a completely novel idea. Recently many Canadians heard about the scandalous revelations before the United States Senate finance committee on the operations of the Internal Revenue Service. As a result of the horror stories that were told by many taxpayers, the Government of the United States, the Congress and the presidency have adopted a new taxpayer bill of rights, which includes many excellent ideas which, again, give the presumption of innocence to honest taxpayers in the collection process.

We want to remind the government that it does not matter how much it tinkers with the tax collection process, that unless and until we see fundamental reform of tax policy in this country, giving the provinces greater flexibility to administer their own tax laws and getting this destructive 1,300 page Byzantine tax code that nobody understands, under control, and until we provide Canadians with real tax relief, people will not have faith in the tax collection process.

Jean-Baptiste Colbert, the finance minister to Louis XIV, said that tax collection consists of plucking a goose so as to produce the most amount of feathers with the least amount of hissing.

It seems that that is the objective of this government. It is goose plucking and trying to do so in the most efficient way possible. However, the reality is that Canadians are overtaxed. They are overburdened by an enormous tax code, by a department of over 40,000 people, sucking up enormous resources that could otherwise be directed to productive private sector employment and economic activity. Instead, billions and billions of dollars in this economy are wasted by businesses and taxpayers in complying with the enormous and out of control Income Tax Act.

The official opposition will oppose Bill C-43 unless the government responds to our call for the adoption of a taxpayer bill of rights with teeth and the creation of an office for taxpayer protection to enforce that act.

Furthermore, we really are not that interested in this government's plans for continuing to pluck $160 billion out of the pockets of Canadian taxpayers. We want to see tax relief and fundamental tax reform. I call upon the government and this minister to start moving in that direction.

Committees Of The House

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order. I think you will find that there is unanimous consent for the following motion.

That the 36th report of the Standing Committee on Procedure and House Affairs regarding the membership and associate membership of the standing committees of the House be deemed tabled and concurred in.

[The Acting Speaker (Mr. McClelland)]

Does the parliamentary secretary have the unanimous consent of the House to move the motion?

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. McClelland)]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I think you will find that there is also unanimous consent for the following motion:

That the following standing committees be permitted to meet later this day for the purposes of Standing Order 106:

Finance at 1.00 p.m.

Public Accounts at 3.30 p.m.

[The Acting Speaker (Mr. McClelland)]

Does the hon. parliamentary secretary have the unanimous consent of the House to move the motion?

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. McClelland)]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, similarly I think you will find unanimous consent for the following motion:

That the 37th report of the Standing Committee on Procedure and House Affairs regarding the selection of votable items in accordance with Standing Order 92 be deemed tabled and concurred in.

[The Acting Speaker (Mr. McClelland)]

Does the hon. parliamentary secretary have the unanimous consent of the House to move the motion?

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. McClelland)]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?