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Released: 24 July, 1998
Speech By The Honourable Herb DhaliwalMinister Of National Revenue
to the Second Biennial Canadian Tax
Education and Research Conference
Wilfrid Laurier University
Waterloo, Ontario
July 24, 1998
Check against delivery
Thank you and good afternoon.
It is an honor and a pleasure
for me to speak to you today. A pleasure because we have a common interest -
taxes, and an honor because of the work you do.
Most of Canada's future CAs,
CMAs and CGAs - the next generation of tax professionals - will be trained by
you, and your research plays an important role in advancing efficient and fair
tax administration in this country. Your work is important, and that's why I -
as Minister of National Revenue - wanted to take the time to speak to you about
two new and exciting developments now taking place at Revenue Canada.
These developments will
significantly improve the way we provide tax, customs, and trade administration
services to Canadians.
The two issues I would like
to address today are the creation of the Canada Customs and Revenue Agency,
and Revenue Canada's Fairness Initiative.
The Canada Customs and Revenue Agency
On June 4, I introduced in
the House of Commons a bill to create the Canada Customs and Revenue Agency.
The Agency represents a major
step forward in the evolution of government. It will provide a unique framework
to improve service to the public and to Canada's business community.
There are many reasons for
moving to Agency status, but none is more important than the need to provide
Canadians with better, more efficient, and more responsive tax, customs, and
trade administration services.
We have worked hard to
improve efficiency at Revenue Canada, and we have been very successful. However,
everything has a limit, and there is little room left for more efficiency gains
within the present structure.
The experience of other
countries-such as the United Kingdom, New Zealand, and Australia-shows that
organizations with greater managerial autonomy, combined with meaningful
accountability mechanisms, can improve service to the public.
Similarly, the Government of
Canada has initiated its Alternative Service Delivery Program to
encourage the modernization of service delivery. The creation of the Canada Food
Inspection Agency, and soon the Canada Parks Agency, are two examples of
alternate service delivery organizations established by my Government.
What will be the main
features of the Canada Customs and Revenue Agency?
Well, it will have
essentially the same mandate as Revenue Canada-to administer tax, trade, and
customs legislation and to deliver social benefit programs for the federal and
provincial governments. Also, the Minister of National Revenue will continue to
be responsible for all matters relating to the administration and enforcement of
tax, trade, and customs programs-full ministerial accountability to Parliament
for these programs will be maintained.
However, the Agency will have
a number of new features that represent a radical departure from the way
government has traditionally organized itself. These features will significantly
improve our efficiency and the quality of services we provide to Canadians:
- First,
a Board of Management will be established. It will bring an important new
dynamic to the operations of the Agency in that it will oversee the Agency's
organization and management, particularly of its human resources and
administrative activities.
- Second,
important new authorities are being given to the Agency to allow it to
manage its own human resources and administrative activities. These new
authorities will help ensure that the Agency can meet its unique
requirements. As a government department, we currently do not have this
flexibility. We have to submit to overall, federal government rules and
guidelines that don't always meet our very specific needs.
- Third,
the provinces and territories will play a greater role in tax
administration. They will nominate members to the Board of Management, and
the Agency will be accountable to them for the programs it administers on
their behalf.
Provincial involvement in the
Agency is one of its key features.
While federal and provincial
governments have co-operative arrangements for many areas of revenue
administration, considerable overlap and duplication still remain. This means
increased costs for Canadians who currently must deal with duplicate federal and
provincial revenue administrations, and who must comply with separate and
different tax rules and systems. This also increases the cost of Canadian goods
and services and makes Canada less competitive as a trading nation.
The Canada Customs and
Revenue Agency addresses these difficulties head-on, in particular by being able
to enter into agreements with the provinces and territories to administer
additional taxes - both harmonized and non-harmonized.
Prior to going into politics,
my background was business, and before starting a new venture, I always asked
myself: "is there a good business case for what I want to do?"
The same question applies to
the Agency - is there a good business case for it?
I believe there is - it is a
business case based on a sound analysis of where we are as a Department, what
challenges we will face in the future, and what the best approach is for dealing
with those challenges.
Revenue Canada is the largest
federal government department, with between 40,000 and 46,000 full-time and
seasonal employees. Its operations directly affect millions of Canadian
citizens, travelers, and businesses.
For instance, each year, the
Department provides services to approximately:
- 22
million individual taxpayers,
- 1.2
million corporations, and
- 2.7
million goods and services tax (GST) registrants.
Over the past several years,
Revenue Canada has experienced significant growth in business volume. This is a
direct result of a more buoyant domestic economy, freer trade, and a rapidly
expanding global marketplace in which Canadian companies are increasingly
active.
Just a few examples will
illustrate my point:
- In
1993, there were 20 million individual taxfilers in Canada; in 1997, there
were 21.2 million.
- Also
in '93, Revenue Canada processed about 970,000 corporate taxfilers; in '97,
that number jumped to about 1.1 million.
- Commercial
shipments to Canada processed by the Department numbered 7.1 million in
1993-94; in 1997-98, we processed 10.4 million shipments.
As we look to the future, it
is clear that business volumes will continue to increase, and the pressure to
achieve operating efficiencies will remain high.
As a former business person,
I know all too well that Revenue Canada must adapt to the changing environment
in which it operates. Intelligent and forward-looking change ensures that we
will continue to provide our clients with the best possible services.
The Canada Customs and
Revenue Agency represents that type of change. Revenue Canada has evolved to the
point where a new structure is required to meet changing service expectations
and requirements, and pursue new service opportunities. Moving to agency status
will provide the operational flexibility needed to deal with these challenges.
How? Here's how:
First, the Agency will allow
us to develop a more client-oriented approach.
- As
I mentioned earlier, the Agency will have a Board of Management, and its
members will be drawn from the private sector.
- By
bringing a new and rich perspective to the Agency, the Board will contribute
to the creation of a client-oriented approach that will result in improved
service.
Second, the Agency will allow
us to attract and retain key personnel:
- Currently,
it can take Revenue Canada between 6 and 12 months to complete a staffing
action - that's a long time!
- With
the Agency structure, it will be possible to develop new classification
systems and pay rates, as well as faster staffing processes that can compete
with the private sector.
Third, the Agency will allow
us to shift human resources to improve response times and service quality:
- Under
the present structure, staffing processes related to movement between
classification groups make shifting personnel to areas where demand for
service is growing, a cumbersome and time-consuming process.
- With
agency status, jobs would be more easily classified and staff would be more
easily reassigned to service areas where increasing demand requires
additional personnel, leading to quicker and more responsive service to the
public.
And fourth, the Agency will
provide single filing for similar taxes:
- Currently,
Revenue Canada can only collect provincial taxes that are harmonized with
their federal counterparts.
- With
agency status, it will be possible to collect taxes for provinces whether
the taxes are harmonized or not.
- In
addition, greater provincial participation in the management of the Agency
means that single-window tax collection for individuals and businesses will
be more attractive to provinces.
What are the benefits of the
Agency in terms of dollars and cents?
Well, in 1997, the Public
Policy Forum conducted a study for Revenue Canada to estimate the savings for
taxpayers and governments that would result from a single administration of
non-harmonized taxes. It estimated:
- a
reduction of administration costs for provincial governments, which could
save from $37.5 million to more than $62.5 million annually; and
- a
reduction of compliance costs for businesses, which could range from $116
million to over $193 million annually.
So as you can see, there is a
strong business case for the Canada Customs and Revenue Agency. That's why there
is strong and growing support for the initiative.
We've consulted widely with
our stakeholders in the private sector and the provinces, as well as our
employees, on the proposed model for the Agency - in particular, we've held
three major rounds of consultations with business groups across Canada:
- Private-sector
stakeholders have told us they like the potential for reduced compliance
costs that will result from eliminating overlap and duplication between
federal and provincial tax regimes.
- Most
provinces are in favor of the Agency concept because they also see the
potential for reducing overlap and duplication. Several provinces have
joined the federal government in working groups to explore options for
additional opportunities to co-ordinate program administration.
- Employees
also see the benefits of the Agency having its own human resources
framework. They clearly told us during consultations with them last summer
that the existing framework is not working well, and that they want it
fixed.
So the support is there, it
is growing, and it is one of the driving forces that is pushing us forward with
this initiative.
I believe in the Agency. It
will allow us to develop a more client-oriented organization, one which will
continue and expand on Revenue Canada's tradition of treating Canadians in a
professional, even-handed, and fair way.
Which brings me to my next
subject: the Fairness Initiative.
The Fairness Initiative
I launched this Initiative in
mid-March to look closely at how Revenue Canada is doing on fairness.
Fundamentally, I believe that
Canadians should know that they can expect the highest level of fairness when
they deal with my Department. Fairness is an essential foundation to our entire
revenue administration. Right now, 95% of our filers comply voluntarily, and we
would like to make that even higher. But I believe we can only sustain this
superb rate of compliance if Canadians believe that the system will treat them
fairly, and if they actually are treated fairly when problems arise.
How do we define
"fairness" at Revenue Canada?
We believe that fair
treatment depends on being open, clear, courteous, responsive, timely, and
accessible. At Revenue Canada, applying legislation fairly means applying it
impartially, justly, and consistently. I think Revenue Canada's record on
fairness is excellent.
However, Canada's business,
economic, and social environment is changing. With all these changes, we simply
cannot take a complacent attitude towards fairness. We have to continually
monitor and adjust so that our actions reflect our words.
What are those
"words"?
Revenue Canada's five
commitments to fairness are:
- to
keep Canadians well-informed about their rights and obligations.
- to
ensure that our administrative processes support a fair outcome.
- to
respond effectively to the concerns of Canadians.
- to
offer Canadians an impartial redress process, and
- to
provide Canadians with relief in extraordinary circumstances.
The question is - are we
meeting our commitments to Canadians? How well are we doing, and can we do more?
The only way we can find this
out is by talking to Canadians about what we do, and asking them how fair they
think we are in the way we do it. That is why this Fairness Initiative is based
on consultation.
To support these
consultations, back in March I issued a discussion paper called Ensuring
Fair Customs and Revenue Administration in Canada.
In the document, we :
- set
out the commitments that the Department has made to fairness,
- provided
practical examples of how these commitments are applied, and
- asked
a series of questions on how fairness can be improved in order to focus the
discussion.
Our consultation efforts are
following several tracks:
- Fairness
has been put on the agendas of the Department's various advisory committees.
- We
are meeting with various stakeholder organizations to get their views.
- We
have conducted focus group sessions with the general public.
- We
are holding focus groups internally with Revenue Canada managers and staff
to get their views on where improvements can be made.
- Finally,
we are researching the best practices of the customs and revenue
administrations of other countries.
With all this feedback, we
will be able to identify areas where new steps can be undertaken, or additional
refinements can be introduced. In the fall, when we have analyzed the results of
our consultations, I intend to announce a fairness action plan to set these
enhancements in motion.
Your views, as tax
professionals and as educators, will be most welcome in this process, and it is
not too late to voice them.
The Fairness
discussion paper is available on the Revenue Canada web site, and hard copies
can also be obtained from my Department. If you are interested, ask one of the
Revenue Canada officials here today for more information on the initiative.
Conclusion
So as you can see, we are
very active at Revenue Canada preparing for the future. The Agency and Fairness
Initiatives are at the forefront of renewal at my Department. They both are
about ensuring that we remain an organization with a state of mind that is
"state of the art."
I want to express my
appreciation once again for being invited to speak to you today about these new
and exciting developments, and I want to commend you for the significant
contribution you make to Canadian society.
Like us at Revenue Canada,
you too are helping lay the foundation for the future. Through research and
education, you are helping Canada prepare for the beginning of the next
millennium.
I believe the next few years
will be promising ones for our country. The economy is more vibrant than it has
been in years, Canadian entrepreneurship is thriving, and our products and
know-how are piercing new markets all over the world.
As we enter the 21st century,
I want my Department to be at the forefront of progress and innovation. The
initiatives I have described today will help us do just that - which is why I am
so excited about the future of Revenue Canada.
Thank you.
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