July 26, 1955

LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

It depends entirely upon the size of the building and the requirements of the point involved. For instance, we would not think of constructing a building that would cost, let us say, $100,000 or perhaps a million dollars. But when it comes to a smaller place where only a few thousand dollars would be involved, we would go ahead. And we have found over the years that we have done this with perhaps greater expedition than it could be done by any other department. It is for that reason we have adopted that policy.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

I am not going to press it further; but I still think my definition is the best one that has been given thus far.

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Item agreed to. Taxation division- 290. General administration, $2,524,429.


LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

I wish to make a brief statement.

To assist hon. members in their consideration of the taxation division's estimates, I should like to comment briefly on the more significant features of the operations and the estimates of the division.

As set out on page 49 of the estimates, the amount of $27,539,017 will be required to operate the taxation division for the 1955-56 fiscal period. This figure represents an increase of $1,372,024 over the amount provided for the last fiscal year. To function during

Supply-National Revenue the next fiscal period, the income tax appeal board will need $80,790, which is $5,870 more than last year.

Although the division was able to effect reductions totalling $107,350 in certain allotments, an increase of $1,386,624 in salaries and wages is mainly responsible for the higher estimates this year. The total payroll provided for in these estimates is $24,142,967. As at April 1, 1955, the total regular staff of the division was 6,301 as compared with 6,134 at the same date last year. In addition, 1,207 seasonal employees were on strength at April 1 this year, compared with 1,164 last year.

The increase in the amount requested is due principally to the mounting volume of work being processed in the district offices, necessitating more full time and seasonal staff in the coming year. There is still need of additional permanent staff with the qualifications required to perform the work of the division. The division is continuing its efforts to seek out and hire technical personnel who will bring the staff up to the strength necessary to do the work required of it, and extensive recruiting is expected to fill some 400 vacant positions through 1955-56. During the year 1954-55, the total revenue collected by this division amounted to $2,458 million. If you add that to the figure that I gave for the customs and excise division, which was $1,499 million, you have a total collection in the Department of National Revenue of over $4 billion, and I submit that that is a big job and it is one that requires constant supervision, efficient and hard-working staff, and that it extends from Newfoundland to Vancouver and Victoria and up to the Yukon. All told, we have 27 divisions. When we consider that the total tax withheld at the source from income payments was $875 million, it follows that $1,583 million, the balance of the total revenue collected, was due to the work of our assessing and collecting staffs. In the light of these figures, hon. members will appreciate the importance of bringing the strength of the staff to a level permitting the prompt and efficient operation of the division.

The policy of hiring temporary employees to handle returns during the heavy filing period has proven most successful. The peak work-load coinciding with the bulk filing period from February to May is promptly handled, as evidenced by the 1,350,000 refunds mailed out by April 30, 1955. This indicates that one-half of the 2f million refund cheques issued annually are issued prior to the final date for filing the returns. The remainder are issued during May or later, according to when the taxpayer files his return.

The number of seasonal employees which we plan to use this fiscal year is 1,257, an increase of 82 over last year's estimate; but as the period of employment has been shortened, the cost of hiring these seasonal employees therefore remains about the same as last year.

To give some indication of the work performed in the division, there were 4,794,363 individual returns received and processed during the year ending March 31, 1954. This represents an increase of approximately

280,000 returns received during this period over the number received during the previous 12-month period.

The number of corporation returns received during the year ending March 31, 1955, was 68,522 as compared with 64,805 during the preceding 12-month period.

Besides salaries and wages, only two other allotments show increases of any significance over last year's estimates. Provision has been made for an additional $28,000 in travelling expenses in the general administration vote. This item provides for the expenditures incurred by headquarters staff in visiting the district offices for the purpose of direction and inspection. The additional amount will be required because it is planned to step up the coverage of district offices. Similarly, the allotment for postage in district offices has been increased by $35,000 over last year's estimates, as increased expenditures are anticipated.

It has been possible to effect a reduction of $42,000 in the provision for office machine equipment. The equipment modernization program currently in progress is intended to simplify accounting procedures and to make the method of handling crown funds as efficient as possible. The provision for office stationery and supplies has also been reduced by $20,000.

Hon. members will be interested to hear that the plans to open a new district office in Rouyn are going ahead. This office should be in full operation before the close of the fiscal period.

On February 14, in reply to a question by the hon. member for Okanagan Boundary, I stated that a district taxation office would be opened in the interior of British Columbia but that its exact location had not yet been decided. My officials have now completed a study of the factors involved, such as the area to be administered, population growth and road, rail and airline facilities, and recommend that the new office be situated in the city of Penticton to administer the counties of Kootenay and Yale. Penticton has been selected as the most suitable location from

which to provide the best possible service and convenience to taxpayers in this important area which has a population of some 204,000 people and embraces 54,000 square miles.

It is not anticipated that the new district office can begin operations until the end of 1956. Suitable premises must be secured, the office must be staffed, and the necessary transfer of files and records must be made from the Vancouver district office which now administers the area.

With respect to the income tax appeal board, there is an increase of $5,870 in the appropriation required. This is mainly due to the fact that the board, consisting of four members, has been divided into two-member sittings. This procedure has accelerated the number of hearings and consequently the cost of travel and the use of court reporters will increase. There were 404 appeals filed in the calendar year 1954, and 381 were disposed of by the board during the same period. As of April 1, 1955, there was a total of 212 appeals outstanding, including 43 which are on the reserve list awaiting judgments on similar cases, or for previous years, in the exchequer court or in the supreme court.

In this brief statement I have endeavoured to bring out the more significant points related to the taxation division's estimates. If hon. members wish, I shall make answers to any questions.

There is one point I want to add, which is not included in this statement, which I think is very significant. Our whole appropriation here is to the extent of approximately $65 million. Last year, by reason of reassessment, we collected $72-3 million additional.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

Mr. Chairman, however painful our personal association may be with the income tax division, we do recognize that it does a big job and with a very considerable amount of efficiency. I was struck with two or three of the figures, particularly the number of refunds running into the millions. I suppose the answer to that is that the department, in its regulations when it is dealing with deductions at the source, has to play safe. I presume that is the reason, and perhaps the minister will say the inescapable reason, why you must have these literally millions of refunds.

I was interested in what the minister had to say about the recruiting of personnel. I wish he would say a word or two more about that and tell us just the kind of people they are looking for and the method that they are taking. He might also say a word as to the number of refund cheques which are outstanding and not claimed. I think it amounted to 75,000 some years ago. I am

Supply-National Revenue wondering what the story has been since then and whether it has been found possible to get on the track of those entitled and cut down the number.

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

The hon. gentleman expressed it well when he said that we are supposed to play safe. That is one of the reasons. There are other reasons which enter into the matter of refunds. For instance, the marital status of a lot of people changes; their exemptions change; their deductions for church and other purposes change; their medical expenses change; and it is these changes that make the great number of refunds that have to be paid back. What I wish to say is that they are paid back very promptly, and what I wish to reiterate is this. The peak-load coincided with the bulk filing period from February to May and is promptly handled, as evidenced by the fact that 1,350,000 refunds were mailed out by April 30. That is the due date; but many people, in order to get their refunds, make their returns in January, February and March and either get their refunds in cash or have them applied to their 1955 return in this instance. In the calendar year 1954 there were 2,722,000 refund cheques mailed to taxpayers with a round dollar value of $18 million. Of those only 15,580 cheques were in the first instance returned undelivered, but of this number 11,300 were subsequently delivered to the current addresses, leaving about 4,300 cheques still on hand having a dollar value of $120,000.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

Is that for the year or is that cumulative?

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

That is for the year. During 1954, 99-8 per cent of the cheques were delivered, representing 99-9 per cent of the money. Despite the difficulty imposed by the time lag there remain only 65,512 undelivered refundable portion cheques for a gross value of $3 million. That has reference to the compulsory savings principle which was in effect in 1944.

With regard to staff, we always look for competent staff to do the work. We like assessors who have a C.A. or public accountant's degree. We make it our business to attempt to employ temporarily during the summer months young men who are taking this particular course with a view to having them become employees of the department when they have completed the course. We canvass the universities with a view to having them direct to the Department of National Revenue people who are training themselves in this type of work. They make excellent assessors and as they prove their worth they can increase their grades through competitive

Supply-National Revenue examinations from grade 1 to chief assessors or they can take administrative posts in the department.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

Does the department get any substantial number of recruits from other government departments?

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

No, I cannot say that very many come from other departments. When competitive examinations are held they are held within the department and if a man from another department takes part and his standing is equal I would say that the man from within the department would be more likely the one chosen for the position.

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PC

Jay Waldo Monteith

Progressive Conservative

Mr. Monteith:

The minister mentioned 1,257 seasonal employees.

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

A total of 1,200 seasonal employees were on strength at April 1 compared with 1,164 last year.

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PC

Jay Waldo Monteith

Progressive Conservative

Mr. Monteith:

I thought the minister mentioned 1,257 as being the estimated number for this year. Would that include the summer employees or are those employees taken on during the busy season from the end of April?

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

Those are clerical employees who are employed during the rush when people are filing their applications. There is an increase to 1,207 from 1,164.

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PC

Jay Waldo Monteith

Progressive Conservative

Mr. Monteith:

Would that include the students and so on employed during the summer months?

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

The number we take on during the summer months is in the neighbourhood of 100.

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PC

Jay Waldo Monteith

Progressive Conservative

Mr. Monteith:

The minister mentioned that some $875 million came from taxes deducted at the source, and then he said that the collection and assessing department was responsible for the balance of $1,583 million.

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LIB
PC

Jay Waldo Monteith

Progressive Conservative

Mr. Monteith:

I can understand the taxes deducted at the source, but I cannot understand the collection and assessing department being responsible for the balance. Would not a lot of that be automatically filed with the tax returns? The minister mentioned a figure of some $70 million obtained by reassessments, which I think would represent the amount that the department had collected by actually going out after it and the rest would be paid automatically by the taxpayers, both corporation and individual.

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

No, I cannot quite agree with that. The $875 million plus the $1,583 million gives the total collection of $2,458 million. It follows that the $1,583 million was collected

through the work of the assessing and collecting staff. Not everyone sending in a return sends in all the money with it and you have a problem of collecting it. While a person may make a return he does not pay all the taxes at that time and a lot of our work is in getting them to pay the balance.

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July 26, 1955