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Debi Daviau
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Debi Daviau
2021-05-06 15:50
Thanks for having us.
My name is Debi Daviau, and I'm the president of the Professional Institute of the Public Service of Canada, or PIPSC. It's the national union that represents some 12,000 auditors and other tax professionals at the CRA across the country. Our members are skilled professionals and knowledgeable tax experts who ensure that powerful corporations and wealthy individuals remain just as accountable as the rest of us.
With me today is Mr. Ryan Campbell, our union economist and my technical adviser today.
We'd like to thank you for the opportunity to present our views on this critical issue. Together we'd be happy to answer any and all questions you may have after our presentation.
We've researched this issue from the point of view of tax professionals at the Canada Revenue Agency and produced three reports on tax avoidance and evasion. You can find them on our website at PIPSC.ca. I'd be happy to forward copies to the committee members as a follow-up to this meeting.
Few Canadians enjoy paying taxes, but they understand that it's important to do it. Taxes fund the public services that make us healthier and safer, protect the environment and nurture a stable economy in which businesses can thrive and compete.
A healthy tax system is defined by fairness and integrity. The rules must apply to everyone. Unfortunately, many wealthy individuals and corporations use their superior resources to look for a shelter or haven where the tax rules don't apply. While these privileged few get a reduced tax bill, governments lose revenue for public services, resulting in either service cuts or tax hikes for everybody else.
In February 2018, we conducted a survey of professional staff at the CRA, including auditors, managers, forensic accountants, economists, statisticians and actuaries. Their responses were eye-opening.
Much of the criticism levelled at Canada's tax system is that while it is designed to be fair, it's easier for some to get around the rules than it is for others. In our survey, nine out of 10 tax professionals at the Canada Revenue Agency agreed that it's easier for corporations and wealthy individuals to evade and/or avoid tax responsibilities than it is for average Canadians. Environics Research put that same question to the general public and found that eight out of 10 respondents felt the same way.
You should find it troubling that CRA professionals with special knowledge of the inner workings of the tax system were more likely to agree than an average Canadian. Over eight out of 10 also agreed that tax credits, tax exemptions and tax loopholes disproportionately benefit corporations and wealthy Canadians compared to average Canadians.
When asked if multinational corporations shift profits to low-tax regions, even when there is little or no corresponding economic activity taking place in that jurisdiction, three out of four respondents agreed. When asked if the CRA has adequate audit coverage capacity to ensure tax laws are being applied fairly across the country, only 16% of respondents agreed. When asked if training and technology advancements within CRA have not kept pace with the complexity of tax avoidance schemes, 79% of the respondents agreed.
All of these survey results confirm one basic fact: Canadians deserve a rigorous examination of the tax system.
Our CRA professionals are among the best in the world at what they do, but they face great challenges. Their job is to go after individuals and entities that in effect have unlimited resources and can aggressively exploit legal and international grey areas for their own gain. The CRA employees, by comparison, often feel outdone by those trying hardest to avoid taxes.
In 2012, sweeping budget cuts were introduced to the agency. Even with the more recent government reinvestments, it still doesn't have all the tools and staff it needs to get this job done
Does this make any sense when the Parliamentary Budget Officer's own numbers show a $5 return for every dollar invested in combatting international tax evasion and aggressive tax avoidance? Does this make sense at a time when government spending has skyrocketed to deal with the social and economic impact of the pandemic?
We need to fix this now. More than ever, Canadians need the tens of billions of dollars in tax revenue, if not more, that are sitting in offshore tax havens.
We believe that a number of steps can be taken to correct the situation.
First, we need better enforcement of existing tax laws. One of the simplest ways to make the system fairer is to ensure that the same rules apply to everyone.
Second, we need to prevent political interference at the CRA. This was particularly visible during the previous decade when the CRA was accused of shifting its focus away from big tax cheats to individuals, charities and small businesses.
Third, because CRA officials are frequently put in precarious situations in which they are asked to hold powerful players to account in a high-stakes setting, whistle-blower protection is crucial to ensuring that professional integrity is paramount during the tax assessment process.
Fourth, while government investments in the CRA have increased in recent federal budgets, Canada's population continues to grow, and so do the amount of commerce and the complexity of tax evasion schemes. The CRA needs to hire more technical advisers and to invest in technology and training to deal with these factors.
Fifth, the CRA must enhance the capacity of its regional offices. The Auditor General has found that taxpayers receive different treatment from the CRA depending on where they live and who they are. Its regional offices need the appropriate resources to ensure that laws are applied fairly from coast to coast.
Finally, a number of policy reforms need to be undertaken. Budget 2021 announced initiatives that when implemented will take tangible steps in the direction of tax fairness. These include a digital service tax for companies like Netflix and Amazon and the creation of a publicly accessible beneficial ownership registry. These are both important initiatives long championed by PIPSC members and our allies in civil society.
While these changes are welcomed, we still have work to do. The Parliamentary Budget Officer has estimated that as much as $25 billion of corporate tax revenue is lost to tax havens every year. We must do more to end the transfer pricing and profit shifting that facilitate this destructive practice.
As of now, some incremental steps are being taken, but there are a variety of additional actions that could be put in place. The end result would be a new, simplified view of the global commercial landscape, one in which corporations can be prevented from pitting countries against each other and are taxed fairly everywhere.
In conclusion, CRA professionals must receive the training, tools and resources they need to do their jobs. The CRA must receive appropriate funding to ensure that tax laws are enforced equitably and that wealthy individuals and powerful corporations are just as accountable as any other Canadian.
Additionally, there needs to be international co-operation and updates to legislation so that those who try the hardest to avoid taxes end up paying their fair share anyway.
Thank you for your time. Mr. Campbell and I would be pleased to answer your questions.
View Brad Vis Profile
CPC (BC)
Thank you.
Going back to my concerns about telephone services and the frontline interaction that Canadians have with Service Canada on these matters, when can we expect reasonable improvements for Canadians in the live call agent response times?
Benoît Long
View Benoît Long Profile
Benoît Long
2021-02-18 16:12
That's a more complicated question. Obviously, more funding has added capacity, and it has helped us in being able to deal with some of the surge issues, but there's no question that these are historic levels of claims and recipients. I think we should expect it to be many months yet before we get to normal results, assuming, of course, that we don't go through multiple new waves of COVID.
View Peter Kent Profile
CPC (ON)
Certainly, to encourage repayment, it would help if the National Student Loans Service Centre phone line was more capable and had greater capacity.
You've seen the news stories. There have been anecdotal complaints of calls being made about unauthorized bank withdrawals, statements showing mispayments, no answers about repayment assistance, and very long wait times.
What is being done to increase the capacity of that phone assistance service?
Graham Flack
View Graham Flack Profile
Graham Flack
2020-12-01 11:58
Atiq can talk about the fact that he has managed to double the capacity. I think we have wait times down to 13 or 14 minutes.
For the honourable member, the key thing that hit us is that November is usually the time when we have more people coming in. You start paying your loan six months after graduation, so it's normally a peak time.
As you will recall, the added thing was that there were cyber-attacks on a number of government systems. They did not directly affect the Canada student loans program, but we were concerned that they could affect the system. As a result of our putting additional security measures in place, a considerable number of our clients had to call in to authenticate their accounts. That greatly increased the volume, but we thought it was the prudent thing to do, given the risk that their accounts, in principle, could have been hacked using similar tools.
Atiq, can you give an update on where we are on wait times and your efforts to reduce them?
Atiq Rahman
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Atiq Rahman
2020-12-01 11:59
Thank you.
The wait time varies a bit. Some days, we have had 15-minute wait times, and some days, up to 25, 30 or 35 minutes. Capacity has been increased significantly. More call centre agents have been added.
One of the challenges has been to get call centre agents during this pandemic, train them up and get their security clearances so they can deal with government data, but given all of that, the capacity has been significantly increased.
At the beginning, some of the students could not even join the queue. That is no longer happening, so things are improving. It will take another few days to get back to normal circumstances.
View Matthew Green Profile
NDP (ON)
You've heard me today passionately referring to COVID distribution. There may be some differences of opinion regarding whether it's germane to this report or not. I still strongly believe it is. I'll spend my time referencing specifically the issues brought up by the Auditor General's report with the frame and the understanding that I firmly believe it has a direct correlation to the military preparedness, and ability for COVID vaccination distribution.
In section 3.27, the Auditor General found that 50% of all materiel requested during the period covered by the audit was received after the required date of delivery. Among the late deliveries, 50% were at least 15 days late, and 25% were at least 40 days late.
In section 3.28, among the high-priority requests, it found that 60% arrived after the required delivery date. Of these, 50% were at least six days late, and 25% were at least 20 days late.
What is the Department of National Defence's service standard for deliveries?
Jody Thomas
View Jody Thomas Profile
Jody Thomas
2020-11-19 12:36
Our service standard for deliveries depends on both the priority assigned to the object, and the delivery methodology, whether we're doing it ourselves or contracting that delivery.
I'll ask Troy and General Cadieu to both respond, because this is a very joint process between the department and the Canadian Armed Forces.
Troy Crosby
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Troy Crosby
2020-11-19 12:36
In certain cases, where we can foresee, or need to position ourselves to react quickly, we actually put together packages of spare parts that are pre-positioned in order to allow us to respond quickly on need. Beyond that, as the deputy minister had mentioned, the requirement is on a case-by-case basis in most cases, where requesters specify when they need the equipment in order to support their ongoing activities.
View Matthew Green Profile
NDP (ON)
What are the reasons, then, for missing them so badly? Do the service standards need to be reconsidered?
Troy Crosby
View Troy Crosby Profile
Troy Crosby
2020-11-19 12:37
In certain cases, per the response to the Auditor General's report, where we need to introduce additional discipline into the establishment of those high-priority requests to ensure they are in fact reflective of an urgent need and that we're not diverting resources where they could be best served somewhere else, that's part of our response. That's part of what we'll be doing in the near term: ensuring that clarity exists.
View Matthew Green Profile
NDP (ON)
There's an old saying that an army marches on its stomach. According to the AG report, given the need to be well provisioned with food and with materiel and other supplies, I'm not sure that we're able to march very far, very fast.
I think about the Argyll and Sutherland Highlanders and the Royal Hamilton Light Infantry housed at the John Weir Foote Armoury in my riding of Hamilton Centre. We want to make sure that these men and women who are stationed there get the supplies and the equipment they need.
Section 3.47 says that for “129 high-priority materiel requests”, National Defence was asked “to provide the supply forms that were completed” and other documents, “such as emails and work orders”. The auditors found that “on the basis of the information [they] received, including explanations and supporting documentation, National Defence could not justify the high-priority status of 65% of the requests that were reviewed”.
Do you think high-priority requests are being made for things that may not be considered high priority so that they arrive only 20 days late, say, instead of 40 days late? Because this sounds like a way for our Canadian Forces members to try to find a workaround to this supply management system that doesn't work.
Jody Thomas
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Jody Thomas
2020-11-19 12:38
I'll refer to General Cadieu, but that is entirely possible, and that is why we are looking at the service standards and reviewing the documentation, the requirement and the justification for high-priority items.
If we divert attention from things that are truly high priority to those that are not, we take away resources from where they're most needed, so that entire governance and oversight has to be reviewed as a part of this audit and a part of our action plan for the audit.
View Raquel Dancho Profile
CPC (MB)
Thank you.
Further to that, the government has promised expedited service for Hong Kong nationals.
Do you think it's important that they commit to service standards, for example, publicly? Given that we've heard a lot on this committee alone today about the delays, do you think it's important that they commit to deadlines for the announcement they made?
Robert Falconer
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Robert Falconer
2020-11-16 17:38
I would say, yes, service standards are absolutely vital. Other research around other jurisdictions, various migration agencies and other allies and friends of Canada have shown that service standards do help improve timeliness, but the big thing as well is that there needs to be an upfront investment in staff training and sufficient staff capacity in order to process these claims.
One thing [Technical difficulty—Editor] made in my opening testimony here is that we have a very reactive refugee claim system that tends to play catch-up. That's not specific to any government; it's actually something that has been consistent over the past 20 years. There has been a spike in claims during this period and we've played catch-up for about two years. That [Technical difficulty—Editor] again has a fiscal impact as well on the [Technical difficulty—Editor].
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