Debates of Oct. 27th, 1998

Canada Customs And Revenue Agency Act

[Alfonso Gagliano, Liberal, Minister of Public Works and Government Services]

moved:

That in relation to Bill C-43, an Act to establish the Canada Customs and Revenue Agency and to amend and repeal other Acts as a consequence, not more than one further sitting day shall be allotted to the consideration of the second reading stage of the said bill and,fifteen minutes before the expiry of the time provided for government business on the day allotted to the consideration of the second reading stage of the said bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and in turn every question necessary for the disposal of the stage of the bill then under consideration shall be put forthwith and successively without further debate or amendment.

[Some hon. members]

Shame, shame.

[The Acting Speaker (Mr. McClelland)]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Mr. McClelland)]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Mr. McClelland)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Mr. McClelland)]

In my opinion the yeas have it.

And more than five members having risen:

[The Acting Speaker (Mr. McClelland)]

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 247

[The Acting Speaker (Mr. McClelland)]

I declare the motion carried.

The House resumed from October 21 consideration of the motion 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; and of the amendment.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, I rise on a point of order, even though I do not really believe it is a point of order. I was just preparing to take part in the debate, but if my colleague from the Liberal Party is before me, however, I will defer to him. You are the boss, Mr. Speaker.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, I rise on a point of order. I could have missed this but I thought we passed the motion and we were now going to the introduction of petitions.

[The Acting Speaker (Mr. McClelland)]

The superseding motion was to proceed to Government Orders. We will not be doing petitions until tomorrow.

[Peter Goldring, Reform, Edmonton East, AB]

Mr. Speaker, I rise on a point of order. You might find unanimous consent to revert to the presenting of petitions in order that I may table one petition.

[The Acting Speaker (Mr. McClelland)]

Is there unanimous consent?

[Some hon. members]

No.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to take part in the debate on Bill C-43.

As with any new government undertaking, the cost aspect must always be considered. In the case of the proposed Canada customs and revenue agency, start up costs are minimal. Only the direct costs associated with the board of management and its secretariat will be new. In both cases, they will be minimal.

Other costs will arise in the normal course of events for the management of human resources and other administrative skills, in order to maximize the new agency's operating flexibility.

All these costs will be offset over time by the savings resulting from streamlined and more efficient internal procedure.

The agency will benefit from the greatly reduced time and energy spent on complex and unwieldy administrative procedures. For instance, under the present system, it can take up to one year to hire the large number of auditors required every year.

The reduction in hiring time and the elimination of numerous vacant positions will substantially lower staffing costs, as well as considerably improve service and the integrity of the overall tax system.

Besides these operating savings from productivity improvements, there are other potential savings from the new agency. The Public Policy Forum, an independent organization with extensive experience in public sector management, undertook a study to examine the cost of compliance with and administration of Canada's tax systems and the savings from a single administration.

The study concluded that there could be significant savings to Canadian businesses, particularly small businesses, from a single revenue administration. Savings were expected from such activities as single registration for taxpayers, common federal-provincial databases, the combination of certain forms, greater consistency in tax rulings and greater simplification of procedures.

It was estimated that the level of compliance savings to business each year would be between $116 million and $193 million dollars at a minimum. The study also examined the administrative costs to governments of tax collection and potential savings. It found that there was a high potential for savings in the areas of personal income tax, corporate income tax and payroll tax because of the similarities at the federal and provincial levels as well as in a common collection system.

Medium levels of savings were expected in the areas of audit and enforcement, client service possibly through a single point of contact, excise taxes and the assessment of returns. Other potential savings were seen to be possible through general reductions in administrative and technical support, such as a reduced requirement for management.

In total it was estimated that administrative costs to governments could be reduced by between $37 million and $62 million annually at a minimum. The critical point is that potential savings to individual Canadians, businesses and governments far outweigh the start up and new operating costs of the proposed agency.

Having 11 directors on the board of management nominated from the private sector by the provinces and territories will ensure that the agency continues to operate in a cost effective and responsive manner as would the other accountability mechanisms built into the legislation before this House.

When we have Canadian businesses focusing on marketing, developing products and developing business rather than filling in forms and dealing with administrative matters not only once but twice, then we have efficiencies in the economy. We have businesses out there doing what we want them to do, creating jobs for Canadians.

The Canada customs and revenue agency represents a very significant opportunity for the generation of benefits to the provinces and territories and to Canadian businesses and warrants speedy passage before this House.

I urge all members of this House to support this bill when it comes to a vote.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, as members will recall, on June 4, 1998, one week before the summer recess, the Minister of Revenue tabled Bill C-43 to establish the Canada Customs and Revenue Agency.

This bill stems from the Speech from the Throne delivered in February 1996, when the government announced its intention to set up a national revenue recovery agency. Initially, this agency will essentially be the existing Department of Revenue turned into an agency operating almost at arm's length from the government, whose mandate will be to negotiate with the interested provinces and municipalities an arrangement for the collection of all taxes in Canada.

Do the members of this House realize that the bill before us basically provides for two things? First, concentrating under one single organization the collection of all federal, provincial or municipal taxes. While there is no mention of it in here, it is very clear that school taxes, gasoline taxes and liquor taxes may also be administered by this agency.

So, the first point to consider is the centralization of all tax collection operations in the hands of a single organization. The second different but equally important point we must bear in mind is the creation of an agency.

This means that the Minister of Revenue, who has been responsible so far for what was going on in his department, will now devolve to a quasi-independent agency the responsibility to collect all taxes.

In this House, when we question a minister about the actions of a government agency, the minister will often hide behind the fact that the agency is independent, competent, self-regulated, and thus enjoys his or her full confidence. In the end, we do not get an answer.

The fact is that this House, which is made up of democratically and individually elected members, can no longer get a minister to account for an agency from which he is removing himself. This is precisely the situation that is proposed in the bill, with the creation of an agency.

It is one thing to centralize the collection of taxes in the hands of a single organization, so as to avoid duplication and reduce costs. Incidentally, Quebec's Department of Revenue—Quebec being the only Canadian province to have its own revenue department—is already collecting the GST for the federal government. This, of course, reduces costs, since the GST is collected at the same time as the Quebec sales tax.

However, while we may achieve economies of scale by concentrating tax collection in the hands of a single organization, to give that responsibility to an agency is a very different matter and one that should be considered much more carefully.

With an agency, the minister is not involved in the ongoing operations of the organization. Take, for example, the CRTC and various other federal agencies. Whenever something happens with these organizations, the minister tells the House “This agency, this entity, can self-regulate. It has investigative tools. In short, it will ensure transparency”. But that transparency is never there.

I will mention two cases where there were problems. One is the Somalia inquiry. A commission was set up and was going to take care of everything. Yet, as we know, in the end the commissioners themselves said they had not been able to find the whole truth, as we wanted them to do.

Then there was the tainted blood issue and the Krever commission. I clearly remember asking a question in this House to the then Minister of Health, who replied gently and kindly “The issue is in the hands of the commission. The commission will get to the bottom of this”. As we now know, the commission was never able to get to the bottom of the issue.

Here, the government wants to create an agency that will once again operate at arm's length from the minister, with the result that, when asked about it, the minister will simply say “The agency is looking after all this”. In my opinion, we must oppose the establishment of such an agency.

Let us now go back to the issue of concentrating the collection of all our taxes in the hands of a single organization.

It is true that, on the face of it, this should result in savings. If this is the case, why not give the Quebec Minister of Revenue the responsibility for collecting all taxes in Quebec? The Quebec Minister of Revenue would then, as he already does with the GST, give the money to the federal revenue minister. Already, this would result in significant savings.

Where I start not being able to follow is when a body is created which would collect taxes not only at the federal level, not only at the level of Quebec or the provinces, but also at the municipal level, even the school board level, taxes on alcohol, on cigarettes, on gasoline. In short, it would be a monster with tentacles reaching everywhere, up to and including the taxpayer's pockets, and worse still, able to keep track of what taxpayers are doing.

Here we no longer have just a body for collecting taxes, but one that also collects information, a lot of information, collective and individual, from sea to sea.

There is a danger here. I appeal to this House to consider the fact that, even if it were economically advantageous to give one single body the right to collect everything considered taxes, both direct and indirect, and any other kind as well, would it be socially acceptable to allow a single body like this one to have all this information concentrated in one place?

I say no. When one body has powers this wide, economic considerations can no longer apply. The consideration that must take precedence is respect of the individual, and of privacy.

Second, the very fact that the minister hands over to an agency powers that are allocated to him by the law is, to my mind, an unacceptable contradiction. An agency cannot be allowed into the pockets of taxpayers to collect taxes which have been determined by this House. This is the minister's responsibility, and one he cannot easily slough off.

In the minute remaining to me, I would like to point out that 20% of federal public servants work for Revenue Canada at the present time. It is my impression that the secret intention, the hidden agenda behind all this is to put 20% of federal employees into an agency where they will no longer be covered by the Public Service Employment Act. This is totally unacceptable. If that is the hidden desire of the government, it is totally evil.

I understand that my time is up, and I thank you for your attention. I hope the House will dump this bill.

[The Acting Speaker (Mr. McClelland)]

For the ease of figuring out who is next, we will go now to the member for Port Moody—Coquitlam—Port Coquitlam, then to the member for Regina—Qu'Appelle, then the member for Saint-Bruno—Saint-Hubert and then the member for Durham.

[Randy White, Reform, Langley—Abbotsford, BC]

Mr. Speaker, I did not hear a member for the Reform Party on your list. It may be that we will take our turn as the time comes around, so we may stand.

[The Acting Speaker (Mr. McClelland)]

We will take that under advisement.

[Lou Sekora, Liberal, Port Moody—Coquitlam, BC]

Mr. Speaker, one issue that arose repeatedly in consultations with the provinces and territories, the clients and the public was accountability.

Essentially there is a desire that the proposed new agency be accountable both to what it does and how it operates. Bill C-43 establishes a number of accountability mechanisms that will ensure that the agency despite its new structure and potential increase in services on behalf of the provinces and territories will remain accountable to parliament and its clients and to the public for its action.

Full ministerial accountability for the program, legislation and overall control of the agency by the government will be maintained.

The Minister of National Revenue will remain responsible for the administration and enforcement of the program and legislation such as the Income Tax Act, the Excise Act and the Customs Act. The minister will be able to direct officials to exercise authority under the legislation.

The minister is currently named in 1,470 various pieces of program legislation as the person with the authority to exercise specific actions such as assessing tax returns. The minister will continue to be the person named to exercise those authorities. This means that the minister will retain personal accountability for the way the programs are run. This direct accountability ensures that the minister has the authority to inquire into any matters of program administration. This is important because the minister can ensure that the clients of the agency have been treated fairly and equitably.

The minister will continue to respond to questions in the House and from the public on program and policy matters. The minister will continue to be able to respond to members of parliament when their constituents seek their help in dealing with tax or customs matters.

The minister will retain the primary role in establishing the strategic direction of the agency. The minister will approve major corporate documents, recommend approval of the agency's business plan to Treasury Board and table an annual report to parliament on the operation of the agency.

While the minister is accountable for how the programs are carried out, the agency has a considerable amount of autonomy in the matter of internal management.

The agency will be directed by a board of management which will be accountable to parliament through the minister for management policies of the agency, such as human resource activities in staffing and compensation; mandates for negotiating with its bargaining agents and collective bargaining agreements; service and performance standards; and the appropriate allocation of internal resources.

Some people have expressed concern that the board of management, consisting of private sector individuals, might ignore the public interest and act in a way that is motivated only by revenue generation.

There are sufficient checks and balances in this bill to ensure that the agency will remain within the overall government policy framework. These checks and balances include Treasury Board's mandate to approve the corporate business plan and the need for the agency to report annually to parliament. Ultimately, if problems do arise, the minister will have the authority to give direction to the agency on matters within the board's jurisdiction if they affect public policy or materially affect public finances. It is doubted that this direction authority will ever have to be used, but it is there as an insurance policy.

The commissioner, who is a full member of the board of management, would act as a full time chief executive officer of the agency and be responsible for the day to day operations of the organization. The commissioner will be accountable to the minister for the administration and enforcement of the program legislation.

With regard to accountability for the administration of provincial programs, the commissioner will offer to meet with provincial and territorial finance ministers and to report on such matters as service and revenue levels and to receive feedback from them.

As indicated, the agency's corporate business plan will require Treasury Board approval and its appropriations will be made through the regular government estimate procedures.

In addition, certain human resources aspects will form part of the corporate business plan. The public service commission will have authority to review and report on certain aspects of the agency's staffing program.

The Minister of Finance will continue to be responsible for the development of tax and trade policy and legislation. The Minister of National Revenue, through the agency, will be responsible for implementation. The important and necessary relationship now in place between the Departments of Finance and National Revenue will continue between the Department of Finance and the agency.

The Auditor General of Canada will be the auditor for the agency and will play the same role as with Revenue Canada.

Bill C-43 also provides a full scale review of the legislation by a committee of this House five years after coming into force. This does not exist, of course, to prevent parliament from exercising its normal authority over the agency in the interim.

Parliament will have all of the normal opportunities to ensure that the agency is being properly managed, such as review of its corporate business plan, its annual reports and its annual appropriations. It can require a further in-depth review at any time.

In summary, ministerial accountability, overall control by government and parliamentary oversight will be maintained for the new agency.

Those being served by the agency, especially the provinces and the territories, will have new means at their disposal to ensure that the agency is accountable to them for its performance.

Accountability for fairness is the cornerstone of our government's legislation, policies, regulations and processes.

Fairness is an essential foundation to the entire revenue administration. It is a system based on voluntary compliance and if the clients do not believe they are being treated fairly, one cannot expect them to comply voluntarily.

The issue of fairness is a priority for Revenue Canada and it will remain a priority for the Canada customs and revenue agency.

Revenue Canada's record on fairness is excellent. The fact that 95% of filers comply voluntarily is a testament to that record. That compliance rate can be even higher.

However, one can only maintain this level of compliance if taxpayers believe that the tax system is fair to them, fair to their neighbours and fair to everyone.

One also knows that complacency is no way to deal with fairness. Canada's business, economic and social environment is dramatically changing and that is one of the reasons that the agency is being created: to respond to those changes and to provide better service to clients.

Last spring an initiative was launched to look closely at fairness: what measures were in place; how well the department was doing at providing fairness; what improvements could be made to provide a greater level of fairness to the department's clients.

This has been a broad and comprehensive consultation effort. It has looked to the department's many independent advisory committees, to stakeholder groups, to the general public and to our own managers and front-line staff for their ideas and advice.

In addition, an assessment was performed of the best practices of other customs and revenue administrations around the world.

To ensure that this has been an open, credible and transparent exercise, the Confederation Board of Canada was retained to help design the consultation, gather and analyse the feedback and produce a report.

Fair treatment means being open, clear, courteous, responsive, timely and accessible.

For Revenue Canada, applying legislation fairly means applying it impartially, justly and consistently.

The commitments that Revenue Canada makes to fairness will be commitments for the Canada customs and revenue agency. The agency is all about providing better, more effective and more efficient service to Canadians.

Fairness is part and parcel of service and an efficient organization that is not fair to its clients is not an effective one.

As the Canada customs and revenue agency is created, there have been suggestions that an ombudsman forum be created to ensure that the rights of taxpayers are protected.

It would be premature to consider the establishment of an ombudsman or any such office until this process of public consultation is complete. In fact, early feedback from the fairness initiative is reinforcing the longstanding practice of building commitment to fairness throughout the organization as opposed to isolating it in a separate office.