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.
