Mr. Speaker, I am pleased to rise in the House today to debate this very important issue. I do so on behalf of the residents of Waterloo—Wellington.
I want to begin by pointing out an important element of the proposal for the Canada customs and revenue agency and that is that it is a framework for the participation of the provinces and the territories. By setting the right conditions for greater co-ordination of federal and provincial tax administration, the agency can and will serve both the national as well as the provincial interests.
The success of the Canada customs and revenue agency does not require the participation of every province and territory. In fact participation in the agency is fully voluntary. The agency is intended to provide a framework and a platform to work for the benefit of all the provinces, not to take over any provincial powers. The creation of a new agency will reduce overlap and duplication between federal and provincial revenue administration.
As you know, Mr. Speaker, there is only one taxpayer. Why not then a single administration to collect taxes? This approach will allow governments to reduce their administrative costs and at the same time provide savings in compliance costs to taxpayers. Only where provinces and territories agree that a sound business case can be made for a specific service to be supplied by the agencies will these arrangements in fact be made.
The province of Quebec has been consulted along with all other provinces since the beginning of this process. Quebec has told us that although it does not want the new agency to administer any of its programs, it is willing to stay informed about its progress.
The agency legislation in fact simply represents a framework for closer collaboration. There is no obligation on the part of Quebec or any other province to have the agency administer more programs on its behalf if it is a matter completely for each to decide on its own.
Even if Quebec chooses not to participate, Canadian businesses will still benefit by saving between $116 million and $193 million annually in compliance costs. In addition, governments would save between $37 million and $62 million in administrative costs. Any new programs that the agency will administer will be based on a business case analysis. This will apply to Quebec as it will to all other provinces.
At the present time Revenue Canada collects personal income taxes for nine provinces and corporate income taxes for seven. Revenue Canada administers provincial social benefit programs for British Columbia, Alberta, New Brunswick, Saskatchewan, the Northwest Territories and Nova Scotia. Revenue Canada also collects provincial sales tax, and alcohol and tobacco taxes at the border for a number of provinces. It also administers the national child benefit. There is ample precedent for this co-ordination and consolidation of services.
The proposed agency by its very structure should expand even further the level of co-operation and at the same time increase the provincial voice in tax administration.
Provinces and territories will be able to supply lists of nominees from the private sector for 11 of the 15 directors on the board of management which will direct the business planning of the agency. These directors will not, I repeat not, be on the board to represent the specific interests of their province, but rather to bring a provincial and regional sensitivity to the management of the board and the agency.
The powers of the agency will be broad enough to allow it to enter into service agreements with individual provinces, for example for the collection of a non-harmonized provincial tax. Until now Revenue Canada could only administer provincial taxes if they were harmonized with federal taxes, limiting the number of programs that could be administered by Revenue Canada. Under Bill C-43 the agency will be empowered to administer non-harmonized taxes such as the provincial sales tax which is not harmonized. There are still economies of scale under a single administration even if a tax is not harmonized.
The agency will enter into an agreement with a province to administer a tax, but all of these agreements will have to follow guidelines which will be established by federal and provincial finance ministers. These guidelines will ensure that any taxes collected by the agency on behalf of the provinces and the territories will first of all, be legally valid; second, not jeopardize the system of self-assessment; third, not involve double taxation; fourth, ensure fairness; and finally, be undertaken under mutually acceptable contractual arrangements.
The last criterion demonstrates an important aspect of these agreements. They are service contracts with the agency providing a service to a province or territory according to specific terms and conditions of a contract between the two parties. This means that the province or territory will retain full authority over the tax and will be accountable to the taxpayers for it.
The agency will have to strengthen its accountability to the provinces for the administration of programs on their behalf so that they in turn can be accountable to their own taxpayers. Once a year the commissioner of the agency will have to report to provincial and territorial ministers on the programs and services managed on their behalf and offer to meet with them also on an annual basis to obtain their feedback on the agency's performance on their programs and their services. This strengthening of the accountability and performance bonds between the agency and the provinces and the territories will ensure that programs and services remain innovative, responsive to clients and cost effective.
I also want to point out that a study of the Public Policy Forum estimates that Revenue Canada could administer current provincial taxes for about $97 million to $162 million less than is currently spent, an overall reduction of 6% of the current costs if all provinces participate. The agency is currently undertaking joint studies with some provinces to examine specific possibilities.
Savings to individuals, businesses and governments increase as more provinces and territories participate. So it is in the best interests of all Canadians to have as much provincial and territorial participation as possible.
Bill C-43 will make the Canada customs and revenue agency a reality. The agency will be structured and positioned to earn the support of the provinces and the territories.
I want to point out that all provinces and territories as well as the federal government have worked hard to put their financial houses in order. The Canada customs and revenue agency is an opportunity to reduce costly overlap and duplication between the orders of government even further. That is important to note and certainly something all Canadians want.
I urge this House to pass Bill C-43 as quickly as possible so that Canadians in all provinces can realize the tangible benefits of better and more cost effective tax, customs and trade administration services in Canada. I believe that is what Canadians want and I sincerely believe that is what Canadians deserve.