Hello everyone, and thank you for the opportunity to appear before the Standing Committee on Finance to discuss the main estimates.
I would also like to thank the agency’s four assistant commissioners who are with me today: Ms. Kami Ramcharan, Mr. Ted Gallivan, Mr. Frank Vermaeten, and Mr. Geoff Trueman.
At the Canada Revenue Agency, putting tools and services into the hands of Canadians, so that they can easily file their taxes and receive the benefits to which they are entitled, is what drives the work we do.
As Minister of National Revenue, I made a commitment to the on behalf of all Canadians to adopt an approach focused on our clients, the Canadian people.
The needs of Canadians and the environment in which the agency operates are constantly changing. That’s why the agency must adapt and improve its services on an ongoing basis. This is true both for people who file electronically and for those who file on paper. Regardless of how Canadians choose to interact with the agency, we have made improvements.
Allow me to list some of the ones that are already benefiting millions of Canadians.
More and more Canadians are filing their taxes online. This year, more than 90% of the approximately 24 million returns Canadians filed were completed online. My Account, the agency’s digital portal, now has more than 7.9 million users.
Enhanced digital services, such as Auto-fill my return and Re-FILE, allow Canadians to file or edit their tax returns online.
You may also have noticed that you can now access your notice of assessment instantly. In fact, the Express Notice of Assessment is now available in certified tax software.
The agency is also simplifying its communications. Indeed, providing Canadians helpful information depends on the use of clear, simple, easy-to-understand language. In 2017, the agency simplified the language it uses in most of its correspondence to Canadians. The Clerk of the Privy Council, in his 25th report on service excellence, commended the agency for this effort.
Responding to the questions of Canadians is also a key service that the agency must absolutely provide by phone. That is why we have an action plan to improve the quality of the services that our call centre agents provide. During the recent tax-filing period, the agency hired additional agents, and more than 3,000 of them were able to answer questions from Canadians.
In addition, we have increased the number of self-serve options to help callers get the information they need more quickly and easily. These improvements and other new measures, such as better training for agents and the implementation of a new telephone platform, will allow more callers to have access to telephone queues, which means fewer lines will be busy.
As I mentioned earlier, it’s also important to continue meeting the needs of Canadians who use traditional methods to file their taxes. This year, we’ve made it easier for those who choose to file on paper to do their taxes by mailing approximately two million forms and guides directly to them.
In addition, people can now make tax payments in person at any of the 6,000 Canada Post outlets. This new in-person payment service makes life easier for taxpayers who live in remote areas and who may not be close to a bank or have easy access to Internet service.
Another new telephone service that was launched this year is File my Return. This service helps Canadians with low or fixed incomes, whose situations remain unchanged from year to year, to file their income tax returns by answering a few questions through an automated phone service. This year, we sent out more than 950,000 invitations to Canadians who may be eligible for this new service.
Lastly, I’d also like to highlight the important work done by volunteers from the Community Volunteer Income Tax Program, the CVITP. This program has been around for a long time, helping eligible people who have modest incomes and simple tax situations file their returns. The funding announced in Budget 2018 will allow the program to open more year-round tax preparation clinics, which will help more Canadians access the benefits to which they are entitled.
To conclude, I’d also like to briefly touch on the agency’s recent accomplishments in fighting tax evasion and aggressive tax avoidance. The agency has taken concrete and effective steps to crack down on tax cheats. It has broadened the scope of its tools for improving its risk assessment systems. It can now assess the risks associated with all multinationals every year.
These improvements, as well as those made to other systems, provide the agency with more relevant information to better identify large businesses and individuals who may be participating in aggressive tax avoidance schemes or avoiding tax laws.
Moreover, with the implementation of country-by-country reporting, as of this year, the agency will automatically have access to information from other jurisdictions. As of March 31, 2018, audits of more than 1,112 taxpayers were underway with respect to offshore non-compliance, and the agency was conducting criminal investigations into over 42 tax evasion cases. In 2016–2017, the agency’s efforts resulted in 37 convictions, over 50 years in jail terms, and $10 million in fines imposed by the courts.
And I’m pleased to inform the committee that the fiscal service improvements offered to Canadians will not stop there, because this is an ongoing process. The agency must absolutely ensure that Canadians receive the benefits to which they are entitled. That is my priority. Budget 2018 announced the implementation of a measure to automatically register individuals for the Canada Child Benefit. Accordingly, I am pleased that approximately 300,000 additional low-income workers will receive the benefit.
Let me end by saying that improving service delivery to Canadians will continue to drive our efforts. This will ensure that Canada’s tax system is fair, helpful, and easy to use.
I will now yield the floor to Ms. Ramcharan, who will speak about the main estimates.
Thank you for your attention.
Good afternoon, and thank you for the opportunity to appear before the committee to present Canada Revenue Agency's main estimates for 2018-19 and to answer any questions that you may have on the associated funding.
As you're aware, the CRA is responsible for the administration of federal and certain provincial and territorial tax programs, as well as for the delivery of a number of benefit payment programs. Each year, the agency collects hundreds of billions of dollars of tax revenue for the Government of Canada and distributes timely and accurate benefit payments to millions of Canadians.
As the minister mentioned earlier, in order to fulfill its mandate in 2018-19, the CRA is seeking a total of $4.2 billion through these main estimates. Of this amount, $3.3 billion requires approval by Parliament, whereas the remaining $0.9 billion represents statutory forecasts that are already approved under separate legislation.
The statutory items include children's special allowance payments, employee benefit plan costs, and, pursuant to section 60 of the Canada Revenue Agency Act, the spending of revenues received for activities administered on behalf of the provinces and other government departments.
These 2018-19 main estimates represent a net increase of $41.8 million, or 1%, when compared with the 2017-18 main estimates authorities.
The largest component of this change is an increase of $89.8 million to implement and administer various measures to crack down on tax evasion and combat tax avoidance. This represents the incremental 2018-19 funding for measures announced in budget 2016 and budget 2017. The majority of these resources will fund new GST/HST measures aimed at preventing tax evasion and improving tax compliance, the expansion of existing compliance and verification measures, and the expansion of business intelligence activities and improved strategies that promote enhanced compliance.
The CRA is currently on track to meet the incremental revenue-generating commitments associated with these measures.
Other increases to the agency's budget include $11.8 million to support the introduction of a new tax regime related to the legalization of cannabis, including adjustments to our systems. The funding will also be used to start processing early licence applications, so that cultivators and manufacturers are authorized to provide legal cannabis on the implementation date.
These increases are partially offset by a $21.5-million reduction in statutory contributions to employee benefit plans, and in the forecast of cost recovery revenues, pursuant to section 60 of the CRA Act, for initiatives administered on behalf of provinces and other government departments; a $17.1-million adjustment associated with changes in the funding profile for the various measures announced in previous federal budgets; a $16.2-million adjustment related to accommodation and real property services provided by Public Services and Procurement Canada; and finally, a $5-million reduction in forecasted payments under the Children’s Special Allowances Act.
It should be noted that CRA's 2018-19 main estimates do no reflect incremental resources for the announcements made by the in the February 2018 budget. The funding required for the implementation and administration of these measures is currently being evaluated and will be presented to Treasury Board ministers through formal submissions in the coming months.
In closing, the resources being requested through these estimates will allow the CRA to continue to deliver on its mandate to Canadians by making it easier for the vast majority of taxpayers who want to pay their taxes and more difficult for the small minority who do not, and by ensuring that Canadians have ready access to the information they need about taxes and benefits.
Mr. Chair, at this time we'd be pleased to respond to any questions you may have.
Before I address passage of Bill , I would like to thank the members of the Standing Committee on Finance for their hard work and diligence.
I’m pleased to be here today to talk about our government’s most recent budget and to answer any questions committee members may have.
When I introduced budget 2018 in the House of Commons back at the end of February, it reflected a record of achievement for Canadians. Since November 2015, more than 600,000 new jobs have been created for Canadians, most of them full time. The unemployment rate is at the lowest level we've seen in more than 40 years in this country.
If you compare Canada with its economic peers, the other G7 nations, we're leading the pack when it comes to economic growth since 2016. With budget 2018, we're building on a plan that respects the choice that Canadians made a little over two years ago—a confident and ambitious approach to growing our economy.
Right now, the strength of our economy’s fundamentals allows us to invest in what will help keep our economy strong and growing now and in the long term. I’m talking about areas like infrastructure, science and research, as well as skills and training.
However, we have an obligation to take a serious look at the deeper problems that continue to slow down our people and our economy.
That's where this year's budget comes in.
The measures in budget 2018 reflect our government's continuing commitment to strengthening and growing the middle class, and doing so in a fiscally responsible way. There are important measures from budget 2018 contained in the BIA, and I'd like to take a few minutes to describe a few of them.
The first is the new Canada workers benefit. We know that the future success of Canadians and, indeed, the future success of our economy as a whole rests on giving more people more opportunities to work and to earn a good living from that work. As a strengthened, more accessible, and more generous replacement for the working income tax benefit, the Canada workers benefit will allow low-income workers to take home more money while they work, encouraging more people to join and stay in the workforce, and offering real help to more than two million Canadians who are working hard to join the middle class.
I'll give you a sense of what this will mean for Canadians. A low-income worker earning $15,000 could receive nearly $500 more from the Canada workers benefit in 2019 than he or she would have under the previous working income tax benefit.
Our government will also make it easier for workers to get the allowance to which they are entitled. We are proposing amendments to allow the Canada Revenue Agency to automatically determine whether these tax filers are eligible for the new allowance.
By making this benefit more generous and automatically paying it to all eligible individuals, we will be helping about 70,000 Canadians lift themselves out of poverty by 2020.
In total, our government will be investing almost $1 billion in new annual funding, starting in 2019, to help low-income workers get ahead and stay ahead.
Also included in the budget implementation act are changes to better support Canada's seniors because we believe, as we know Canadians do, that every Canadian deserves a secure and dignified retirement. In June 2016, the government reached an historic agreement with provinces to enhance the Canada pension plan, the CPP enhancement. It will begin to be phased in next January, and it will mean more money for Canadians when they retire so that they can worry less about their financial situation and focus more on enjoying their retirement.
With the action taken by Quebec to enhance the Quebec pension plan in a similar fashion, all Canadian workers can now look forward to a safer and more secure retirement.
The budget implementation act includes the additional CPP benefit increases that were agreed to with the provinces last December. A unanimous consensus was reached to further strengthen the CPP in order to provide greater benefits to parents whose income drops after the birth or adoption of their child, to persons with disabilities, to spouses who are widowed at a young age, and to the estates of low-income contributors. These changes we have put in place without raising CPP contribution rates.
This year's budget, and consequently the current BIA, is also heavily focused on helping Canadian women and Canadian families succeed.
As you may know, women's participation in the workforce in Canada is the highest among G7 countries, but it's still nearly 10 percentage points below the rate for Canadian men, even though Canadian women are among the best educated in the world. The gender wage gap is also an issue in Canada, as it is in many other places. In 2017, for every dollar per hour a male worker in Canada earned, a female worker earned 88¢.
Canadians are under-represented in leadership positions and in science, technology, engineering and mathematics. We also know that unpaid work requirements, such as child care or caring for sick or elderly family members, are disproportionately handled by women, making it difficult for them to take advantage of other opportunities, including work opportunities.
Therefore, in Budget 2018, we announced a new shared EI parental benefit, use it or lose it, to encourage both partners in a two-parent family to share child-related work equally.
The employment insurance parental sharing benefit isn't part of the budget implementation bill, but I'd be happy to answer any questions about it that you may have.
We're also taking steps to further help Canadian families through a strengthened Canada child benefit. Compared to the old system of child benefits, the CCB gives low- and middle-income parents more money each month, tax free, to help with the high cost of raising their children. It's simpler, more generous, and better targeted to help more families who need it most. Thanks to the CCB, nine out of 10 Canadian families now have extra help each and every month to pay for things like healthy food, music lessons, kids' activities, or whatever their family wants. In dollar terms, families that receive the CCB will get on average about $6,800 this year. Across the country I've heard, and I'm sure many other people in this room have heard, this income is making a real difference for families. It's making a real difference for children, too.
Since its introduction in 2016, the CCB has helped to lift 300,000 Canadian children out of poverty. The budget implementation bill strengthens the Canada child benefit by indexing its benefits to the cost of living, starting this July. I should note this is fully two years ahead of the previous schedule. It's because our economy is strong and growing, and because of our government's stronger fiscal position that we're able to offer this extra help to families now.
Finally, Mr. Chair, I’d like to say a few words about our government’s commitment to providing greater support to small businesses that create the jobs Canadians depend on.
Small businesses create good jobs and help support communities and families across this country. Small businesses account for about seven out of 10 jobs in the private sector. We know that low and competitive tax rates allow Canada's entrepreneurs to invest in their businesses and create even more good, well-paying jobs. That's why we cut the small business tax rate to 10%, effective this past January, with a plan to lower it again to 9%, effective January 1, 2019. By this time next year the combined federal-provincial-territorial average income tax rate for small business will be 12.2%, the lowest in the G7 countries and the third-lowest among members of the OECD. For the average small business this will mean an extra $1,600 per year to reinvest in new equipment, new products, new jobs.
There is one last thing I'd like to mention because I know it's of great interest to this committee, and that's the terminology used by credit unions. The budget implementation bill would provide prudentially regulated, deposit-taking institutions, such as credit unions, with the ability to use generic bank terms under the Bank Act, subject to disclosure requirements.
Mr. Chair, the measures contained in the budget implementation bill represent the next step in the government's plan to put people first, to deliver the help they need now, while investing in the things that will deliver growth for the long term.
Thank you again for having me here with all of you today. I'll be happy to answer questions from members of the committee either on budget 2018 or on other measures, as you wish.
Thank you, Mr. Chair, and thank you, Minister, for joining us once again.
My staff shared a document with me this morning that made me quite happy. It's the GDP report from Stats Canada, and it showed that there was an increase in every province and territory for the year 2017. That's the best since 2011, which is really exciting to see. It was really good to see that Alberta had increased by 4.9%. The information that was better, though, was that the Northwest Territories increased by 5.2% and Nunavut by 13%, so things are moving in the right direction for us. We're doing a lot of things that are helping us move forward.
I didn't expect that. I raised it with you several times. I expected that we needed to see the land claims and self-government issues resolved before we would see the economy grow. We also needed to see more transportation infrastructure in the north in order to attract industry there, where it's very expensive to do business.
Since our government has come into power, we have 10 sets of negotiations—10 sets of discussions with indigenous governments going on at this point. We didn't have any going on three years ago, which is really positive.
On the infrastructure side, we're playing catch-up. We have a huge deficit. Whether it's municipal or transportation or any part of infrastructure, we need investment. We have a number of things that are causing us some concern. The main one is the cost-sharing component of our investment from the federal government, and the requirement for the municipality or the territorial government, in our case the Government of the Northwest Territories, to put in a share. This is fine, except we are starting to hit our borrowing limit.
I'm not sure if that's the case with the provinces. Is there a difference between the provinces and the territories when it comes to borrowing limits?
Minister, I mentioned this to the Minister of National Revenue, who came before us just a little while ago, as a way of saying congratulations. Yesterday afternoon, A.T. Kearney came out with their 2018 direct investment confidence index. Canada moved up three spots. I'll read the quote without getting to the full report, which I had a chance to look at earlier. It says, “Canada moves up three spots...[to its] highest ranking in the history of the Index.”
An update to the Investment Canada Act, a newly established Invest in Canada agency, and new trade agreements could be boosting investor optimism. We now rank number two in the world, slightly behind the United States but in front of many of our trading partners such as Germany, the U.K., China, Italy, and Switzerland. We were only one of three countries to move up three spots, the other two being Switzerland and Italy, all in the top 10. I wish to say congratulations. I think you need to do a victory lap once in a while and say that we are going the right way in terms of attracting investment here in Canada, and it's showing in a number of the announcements we've been doing recently.
However, our work remains unfinished and it continues. In the BIA legislation, we have a number of things that address labour participation rates. I wanted to hear your comments on the Canada workers benefit in terms of getting people into the labour force and keeping people in the labour force—say, if you're ready for retirement and you may want to work, you get a little boost there—and then attracting under-represented groups and increasing that labour force participation rate for women.