May 31, 1984

GOVERNMENT ORDERS

BUSINESS OF SUPPLY


The House resumed consideration of the motion of Mr. Beatty: That this House regrets the failure of the Government to satisfactorily protect the civil liberties of Canadian taxpayers in their dealings with the Department of National Revenue and calls upon the Government to implement without delay the recommendations of the Progressive Conservative Task Force on Revenue Canada and, in particular, to curtail the Department's powers of search and seizure under Section 231 of the Income Tax Act, to guarantee taxpayers the right to a fair hearing on disputed reassessments before having to make payments or post security, to create a Taxpayers' Bill of Rights, and to provide an adequate system of appeals of unfair decisions concerning collections. And of the amendment of Mr. Althouse to remove the period at the end of the motion and add the following words: -and further, to recognize the inequity of the appeal process by guaranteeing to taxpayers who are succesful in an appeal through the courts that their legal costs will be paid for by Revenue Canada.


NDP

Victor Fredrich (Vic) Althouse

New Democratic Party

Mr. Vic Althouse (Humboldt-Lake Centre):

Mr. Speaker, just before the luncheon adjournment I introduced an amendment to the motion before us today. I noticed when I received the "blues" over the lunch hour that when I introduced the amendment, some Hon. Members seemed to think that indeed there were now guarantees which recognized the problems of taxpayers appealing their cases before the courts. They shouted that the Government would now permit Revenue Canada to pay legal costs when taxpayers are proven to be in the right. I have a slightly different understanding of what is a guarantee.

I recognize that the Minister of National Revenue (Mr. Bussieres) has directed his Department to pay the cost of such appeals when the Department is clearly in the wrong. However, I do not think that is a guarantee which will be of any good to my constituents who run into difficulty next year, the year after or 10 years from now. Indeed, constituents have experienced problems with the Minister and with the Department interpreting somewhat differently that same law of Parliament. When I talk about guarantees, I mean guarantees in

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the form of a law or Bill passed in the House of Commons which makes it clearly understood where the responsibility lies. This is what we will be voting upon later this afternoon.

I should like to deal with some of the cases to which I referred just prior to the luncheon adjournment. For example, a small farmer who is in his late fifties or early sixties, has farmed all his life on a small acreage, raised his family and has run into a succession of crop failures due to hail and frost for four years in a row, has no choice but to go out and work. The very fact that he did this in his late fifties or early sixties got him into trouble under Section 31 of the Income Tax Act. An assessor in the Department decided that because crop failure forced him to go out and work, according to the rules he was suddenly a hobby farmer, even though he had lived and worked on that farm all his life.

On the Fifth year, as luck would have it-and it was purely luck-he showed a profit from his crop. He had that argument to make when the Department decided to press its case and take him to court. The poor man had no recourse but to obtain legal assistance from a lawyer and pay the legal costs. The case reached the point where the prosecuting attorney looked at it and decided that there was really no case to win in court. Therefore he telephoned my constituent's lawyer and said: "Why do we not get the Department to change the allocation and, instead of putting him under no losses, allow him to operate under the restricted farm loss section?" This meant he could have losses of up to $2,500 per year. Since the difference was somewhere between $3,000, the amount of the original assessment, and $600 to $700 under the new assessment, the lawyer convinced his client that it was the way to go. Instead of being assessed at something in the neighbourhood of $3,000, my constituent paid between $600 and $700 to the Department of National Revenue and a legal bill of something over $1,000. Had he and thousands of other small taxpayers been guaranteed in law that the Department would be responsible for paying the legal costs if the case were pursued, he would have pursued it, showed that he was indeed a farmer and liable to no taxation. The legal costs would have rested on the shoulders of the Department rather than his own. As it turned out, he paid out nearly as much in combined legal and tax fees as he would have paid had he paid the original assessment.

Thousands of small taxpayers are in this position. They have the choice of fighting the case and paying more in legal fees than what the assessment is, or simply caving in, paying the assessment and writing it off to experience. It is necessary to have guarantees written into the law of Canada, not into the operating procedures of the Department or leaving it to ministerial discretion. There should be guarantees from this House of Commons that taxpayers' rights are clear and guaranteed to them.

I have a number of other cases I want to point out to the House to show where I believe the responsibility of tax collectors and tax assessors has been overrun. I cite the case of a younger farmer who ran into some financial difficulties. His

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best choice was to sell the farm and leave farming. He sold the farm. Because of the requirement in our tax law that allows the principal residence to be free from capital gains tax, he worked out an agreement with the buyer of the property, which included the farmhouse, as to the valuation to be put on that house. They agreed that it should be done at about $30,000. Taxes were filed and paid accordingly.

The subsequent buyer of the property decided to move the farmhouse into town and put it on a lot and foundation, which cost him $5,000. He moved the house on to it and sold the property for $35,000, which is a clear indication that the house was worth $30,000. An assessor came to reassess his claim. The assessor only looked at the broken basement on the farm and never looked at the house. He never interviewed the buyer of the house or the subsequent seller after the original buyer resold it. He did no ground work. On the basis of the broken foundation, which naturally was broken because the movers broke down the sides to get the house off it, he decided that the house could not have been worth $30,000 and reassessed him. The case has been in the appeal process for two and a half years.

These types of things should not happen. On some occasions, 1 dare say, we have incompetent assessors, people who are perhaps trying to rush through too many cases. I do not know what the excuses are, but they do not do a complete and proper job. Because of that and because there is not adequate protection in the Act for individuals who are attempting to play the game fairly, live by the rules, be fair in their self-assessment, and are subsequently proven to have been fair-minded people in their assessment of what they owe in taxes, they have been harassed by the Department. There have been demonstrations of incompetence. It is only fair that the laws of the country be tightened up and changed in Parliament to guarantee that those taxpayers so harassed will have their costs paid when proven to be innocent of the charges laid by the Department.

It is extremely important to discuss and to have in this motion a guarantee from the House of Commons that taxpayers' interests will be looked after when they are taken to court by the Department of National Revenue. When the taxpayer is proven to be correct in his self-assessment, it is the Department and not the taxpayer who should pay the cost of that defence.

I see my time is up, Mr. Speaker.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-REVENUE CANADA
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LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

There follows a ten-minute period for questions and comments.

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Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-REVENUE CANADA
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PC

John William Bosley

Progressive Conservative

Mr. Bosley:

Mr. Speaker, I have just a simple question. Can the Hon. Member tell me whether his Party was aware of the change in policy earlier today when it moved the amendment?

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NDP

Victor Fredrich (Vic) Althouse

New Democratic Party

Mr. Althouse:

Yes, Mr. Speaker, we were.

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LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

Are there other questions or comments? If not, continuing debate, the Hon. Member for Cariboo-Chilcotin.

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PC

Lorne Everett Greenaway

Progressive Conservative

Mr. Lome Greenaway (Cariboo-Chilcotin):

Mr. Speaker, how interesting it is that the NDP has put forward this amendment to our motion. For the last two or three years we have been battling Revenue Canada. Where has the NDP been? We have heard very little from these people. Now they bring forth an amendment to a motion that is clearly past history. This situation was addressed in the Budget. On April 25, the Minister released a further amendment to his Budget, lifting the ceiling on the costs that are paid by taxpayers who have won their case. They are trying to play catch-up, and it is reprehensible.

When I was elected as a Member of Parliament, little did I know that I was destined to spend a good portion of my political life corresponding, questioning, arguing and fighting with a huge federal bureaucracy called Revenue Canada. If I had been forewarned, I would have surely returned to university and taken a double-barrelled degree in accounting and law. As a matter of fact, I would have enrolled in law school in Philadelphia, because I am convinced that only a Philadelphia lawyer could ever hope to do battle with Revenue Canada and come out on top.

What I have learned over the last few years has at time dismayed, discouraged and even disgusted me. I must quickly admit, however, that there have been occasions in dealing with the Department when I and my staff have received prompt, courteous and fair treatment on behalf of my constituents. There are many good and dedicated personnel in the 20,000 people who work for the Department. Unfortunately, there are the other type as well, and they should be, and will have to be, dealt with as they deserve.

Naturally, one must keep in mind that in many situations Revenue Canada employees are simply following the guidelines and interpretations of legislation passed by Parliament. Tax legislation endorsed by Parliament is obviously the root cause of most problems that we run into, all of which can be exacerbated by the attitudes of personnel whose job it is to collect taxes; not a pleasant task at the best of times, as has been recorded down through the ages.

I feel certain that there are very few Members of Parliament who, if they really understood the income tax legislation they were asked to pass, would ever vote for it. For years, Ministers of Finance have continued to table tax legislation written by bureaucratic drafters that is continually more complicated and incomprehensible. Much of it reads like fine print in an insurance policy. Those drafters probably never really intended to bring forth rules and regulations which, when interpreted to the letter, could literally bankrupt taxpayers and give powers expected only in a police state. However, that is what they have done and that is what we have done. The Act now is so large, complicated and convoluted that I do not think there is anyone in this country who really understands it. Members of Parliament henceforth should be certain, in fact they must ensure, that tax legislation is clearly understood, its ramifications clearly explained, before ever voting in favour of it. If only it were possible to scrap the entire Act and put in its place something clear and simple, it would be much better, because

May 31, 1984

that is what Canadians want. I do not think that any administration will ever have the fortitude to do what the majority of the people wish. One becomes rather cynical in this place. So often, people never receive the commonsense things that they want.

It was actually four years ago that I received my baptism respecting Revenue Canada. I recall that my office had been contacted by two ranchers in Williams Lake, British Columbia, a part of my constituency, who claimed to be having tax problems. I met with them on my next regular trip to my riding and was presented with two similar tales of woe, both of which I could not believe. Without going into great detail, let me say that both had been reassessed under Section 31 of the Income Tax Act, a particularly stupid, ambiguous, poorly drafted and odious rule, and both feared huge tax bills.

Both of these men, because of hard times, had taken jobs off the ranch to augment their farm incomes. Both had large families and were struggling to stay in business. Both were working along with their wives day and night to keep from going under. Both were good, honest Canadian folk who were trying to do what their forefathers had done and succeeding, until they were descended upon by the collectors of tax. While everyone agreed that the situation facing my constituents was most unfair, we lost both appeals, and as the men involved had no money to hire expensive professional help, they had to give up and they had to pay up. One survived and one did not.

About one year later, it suddenly became evident that there was an audit blitz going on in certain parts of my constituency and that the target was the small farmers and ranchers. Hundreds were audited and reassessed. People were left stunned and in a state of shock. We learned that this was going on in other provinces as well. Farmers were being targeted as had been fishermen a year or two before for what the Department refers to as a project "L" audit.

This concern was raised time and again in the House and we then progressed to the situation concerning quotas. Several of my colleagues did a superb job of drawing attention to this disgusting process. Finally, as Members know, after the Minister refused to appoint an all-Party task force to investigate the operations of his Department, our leader appointed a Tory task force on Revenue Canada. It was my good luck- although sometimes I wondered about that-to be appointed as a member of that task force.

Because I had received so many complaints from farmers respecting Section 31 of the Act, I took special interest in such cases as they came before us. I continued to watch for what I felt was a typical case and I selected one to present today. This particular case concerns the plight of a couple, both of whom are medical practitioners, who are raising horses in the Fraser Valley of British Columbia. In 1969, because of a lifetime interest in horses, this couple decided to develop a racing stable. In 1970, they organized this venture as a bona fide business. Books were set up by a chartered accountant. A trainer and grooms were hired and salaries, feed costs, bills for

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tack, vets, farriers and other bills were all paid. At the end of this first year, a reasonable profit was recorded, which in itself is praiseworthy, and the couple paid income tax.

At this point Revenue Canada entered the picture and informed these people that because they were both professionals, they were not allowed to have more than one source of income. Consequently, all capital costs incurred in setting up the business were disallowed, resulting in a large reassessment. This reassessment was paid. At that time, Revenue Canada indicated that under Section 31 of the Income Tax Act, Revenue Canada would in future only permit costs of up to $5,000 to be deducted annually. In spite of this initial setback, this couple went ahead. The enterprise expanded and enjoyed a fair measure of success.

In 1975-76, their business was re-audited and everything was found to be in order. In 1977, because of the success of this business, they decided to expand into horse breeding and consequently purchased a small farm for this purpose. The farm was run down and they spent a considerable amount of money in its upgrading. The wife took charge of raising the horses and the husband took out a licence as a trainer.

In the spring of 1983, Revenue Canada commenced a further audit. All records and receipts plus a 13-page letter of information covering the period from 1979 to 1982 were submitted to Revenue Canada. The auditor in charge was asked repeatedly to visit the farm but refused to do so. To this day, no Revenue Canada employee has done so. In the guidelines to auditors who are doing a Section 31 audit, it is recommended that the auditor visit the farm. At no time was this done in this particular case.

On May 31, 1983, a letter from Revenue Canada was received by these people stating that the provision for the deducting of $5,000 per year in expenses was rescinded for the years in question because the auditor claimed that there was no expectation of profit. A reassessment was made, which the couple immediately appealed. As soon as the notice of appeal was lodged, the taxpayers began to receive threatening phone calls from Revenue Canada collectors stating that if they did not pay the assessed amount, they were liable to be sent to jail. Ironically, after being disallowed costs because of no reasonable expectation of profit, a profit was actually made in 1982 and 1983.

These taxpayers have been fighting this case ever since. They have spent a small fortune on professional assistance and have had a good portion of their bank credit tied up in a letter of credit payable to Revenue Canada. I personally investigated this case as did my colleague in whose constituency these people reside. Their story is irrefutable and has been presented publicly in great detail. These people are good, hardworking, honest individuals who believe in Canada and are trying to survive in business in spite of the bungling and harassment of Revenue Canada. What is even worse is that, as I said at the outset, this is a typical case.

To say that the situation is ridiculous is a gross understatement. It is nothing short of disastrous and is a travesty of justice. Hundreds of farmers across the country are in similar

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circumstances all because of a section of the Income Tax Act that is clearly accomplishing nothing but is in reality destroying incentive and causing bitterness and ruin.

As I see it, the essential problem is that in many cases the taxpayers know that they are right. They understand the legislation and their current position with regard to that legislation. In addition, they know that if they appeal, a tax court will eventually rule on their case. However, that ruling comes after they have paid and after they have put up the hard earned money which they did not think they should have remitted in the first place. In addition, after shelling out for these unexpected taxes, many of them cannot afford to defend themselves against a Government that already has their money. This is clearly an injustice.

Because these citizens are at an overwhelming disadvantage, they are prepared, out of absolute fear, to accept payment plans and halfway deals from the Department. The taxpayer knows that he is right, but he is willing to pay the tax anyway because he risks losing his business, his house, his pay cheque and his savings before obtaining the right to an impartial review of the situation. All too often, it appears to be less expensive to pay than to fight. Is the Government protecting the civil liberties of Canadians in these cases? I simply do not see how it is doing so.

It is interesting to note that on a recent trip to British Columbia, Mr. John Turner, one of the Liberal leadership candidates, was asked about reforms to the tax law of Canada. In response, he said:

I will look very carefully into the Administration of that system. I will read the report that Mr. Beatty, the Conservative Member of Parliament, has put together-as a matter of fact I've read it. And, if I'm in a position of authority I'll see that the Administration of the Act is brought back into unquestioned equity and fairness.

That is a fine statement. It is interesting that the present Minister of National Revenue (Mr. Bussieres) is a supporter of Mr. Turner. I certainly do not think that Mr. Turner is a very strong supporter of the present Minister of National Revenue.

The power of the Department is so insurmountable that the taxpayer is completely at the mercy of the collector. The taxpayer will have the right to a hearing sometime in the future, but in the meantime his whole livelihood could be taken away. The situation is pitiful. Re-assessed taxpayers feel that they are taking on the whole world and no one can offer them the guarantee of a fair and impartial review before payment of disputed tax. Taxpayers receive conflicting advice and guidance from the Tax Department, tax accountants, lawyers and politicians. They are left alone to evaluate the conflicting advice with no indication of their personal rights. Tax officials offer them deals and remind them of the enormous powers of enforcement which the Department has. Tax accountants maintain that the returns they file on behalf of taxpayers, which are under dispute, are still correct. In Section 31 cases, lawyers-if they can be afforded-say that the law is in a state of flux. National Revenue has the advantage at the moment,

but important cases are currently before the courts, and that could be changed. Politicians argue that the law should be changed. Consultative groups and committees have been set up, but the process is slow and taxpayers cannot rely on them. If a taxpayers' bill of rights such as the one proposed by the task force existed, these people would at least be guaranteed the right to a review of their tax situation before having to pay disputed taxes.

It seems that Canada now subscribes to the Napoleonic form of jurisprudence, at least where Revenue Canada is concerned. Thus, the accused stands guilty as charged and the onus is on him to prove his innocence at great personal cost and inconvenience. This is diametrically opposed to the basic tenet of our common law whereby the accused is presumed innocent until the courts prove him guilty. It must be changed. In my mind every Canadian should be guaranteed these rights. In order to provide these rights, we should adopt a bill of rights as proposed by the PC task force on Revenue Canada.

In closing I would like to read a short portion from a submission which was made to the task force. It states very clearly the feelings of many taxpayers of the country. In part it reads:

In summary, then, we have presented in detail just one case, which we believe shows an overbearing bureaucracy at its worst. Countless other examples exist- you have heard many of them already during your deliberations.

Are all these people, as Revenue Canada would have us believe, all deliberate tax evaders? Are all these Canadians dishonest entrepreneurs, trying to beat the system? We don't think so. We are a generally peace-loving people, and tolerant probably to a fault. But we have reached the end of our tether, and we demand that something be done to right the inequities in this system, and restore to us the dignity and consideration which is our right.

If this Task Force accomplishes nothing else, it must seek to make Parliament curb these unwarranted and unjustified powers of the bureaucrat over his employers, namely the besieged taxpayers of Canada, and allow the taxpayer the right to redress through the courts.

That is the reason for the debate today. We have done enough talking. We have done enough consulting. We have scores of proposals for change to act upon. The only logical thing to do now is to act. We must move quickly and decisively to institute the important changes that have been proposed so that Canadians once again can rely on an efficient, fair and voluntary tax system.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-REVENUE CANADA
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LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

There follows a ten-minute period for questions and comments. Are there any questions? The Hon. Parliamentary Secretary to the Minister of National Revenue (Mr. Robinson).

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LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. Robinson (Etobicoke-Lakeshore):

Mr. Speaker, the Hon. Member has mentioned a number of what might be called horror stories with regard to the implementation of the Income Tax Act. I wonder if he could tell the House if all of the cases are very recent and if they are presently being acted upon efficiently and effectively by people in the Income Tax Department.

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PC

Lorne Everett Greenaway

Progressive Conservative

Mr. Greenaway:

Mr. Speaker, there were some 300 oral submissions and 100 written submissions brought before the task force in its hearings. Some of the cases go back 10 years

May 31, 1984

or 15 years. Many of the cases are current, but the Section 31 cases basically go back to 1978-79. Some of those cases are being acted upon, but I am not sure with what diligence or speed. It seems to me that many of them are hung up in the appeal process and the Department is waiting for court decisions. There is a tremendous amount of apprehension and unease among taxpayers. They do not know whether or not they owe money. In many cases, the taxpayers have had to sell out because they have had to pay before their appeals were heard. If they could not raise the money, they had to sell some of their equipment, stock and, in some cases, their real estate. The whole situation must be addressed and addressed very quickly.

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LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. Robinson (Etobicoke-Lakeshore):

Mr. Speaker, I agree that these matters must be addressed and that they must be addressed quickly. However, I would ask the Hon. Member if he knows of recent cases in which taxpayers are not receiving compassion and consideration in accordance with the dialogue which has been going on in the House for the past six months.

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PC

Lorne Everett Greenaway

Progressive Conservative

Mr. Greenaway:

Mr. Speaker, it is my experience, since we have started to raise this issue and since the task force began its work, that we are getting a much better service from the Department, at least in my constituency. There are hundreds of cases. Very few of them have come to an end. The majority of cases are still in progress.

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LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. Robinson (Etobicoke-Lakeshore):

Mr. Speaker, I agree with the Hon. Member because I have problems in my constituency with regard to income tax cases. I am sure every Member has. But I would like to ask one further question. He referred to a Napoleonic Code approach in the Income Tax Act. I would point out to him that, of course, it is a negative piece of legislation in that people are guilty and must prove themselves innocent as opposed to the normal trial situation in which a person is innocent until proven guilty. I appreciate that point. Maybe it is something which does have to be addressed. However, I wonder if the Hon. Member realizes that amendments to the Income Tax Act would have to be made through the Department of Finance and the Minister of Finance and not through the Department of National Revenue and the Minister of National Revenue.

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PC

Lorne Everett Greenaway

Progressive Conservative

Mr. Greenaway:

I certainly do realize that. It must be taken into account by the Minister of Finance. I know that he has made one move toward correcting the Section 31 situation and has appointed a group to look into it. However, it took the Minister three and a half months just to appoint the group. Lord knows how long it will take for that group to report and how long it will be before action is taken.

I would also remind the Hon. Member that in the United States the situation is the other way around. Taxpayers do not have to pay money until they are found guilty. If a taxpayer is deemed to have been using the system to try to delay his payment of taxes, he can be assessed and fined for a spurious attempt to delay the payment of his tax.

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LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

If there are no further questions or comments, for continuing debate, the Hon. Parliamentary Secretary to the Minister of National Revenue.

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LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. W. Kenneth Robinson (Parliamentary Secretary to Minister of National Revenue):

Mr. Speaker, at the outset I would like to point out that, in my view, the Hon. Member for Wellington-Dufferin-Simcoe (Mr. Beatty) has brought before the House a very interesting and timely motion. It follows the filing of income tax returns for the year 1983 and it also follows the concerns which have been expressed in the House for many, many months. I am sure every Member of the House of Commons share the same concerns as the Hon. Member. I share those concerns and I think that it is most timely that we are considering it further in the House today.

The Hon. Member, I am sure, is concerned about the fairness of the tax system, the rights of the individual, the Public Service versus the taxpayer relationship and, of course, service to the public. I would like to make a few comments on the latter point. It must be evident by now, Mr. Speaker, even to Members of the Opposition, that Revenue Canada, Taxation is currently engaged in a process which is substantially increasing service to taxpayers in Canada. Furthermore, proposed changes to the legislation are designed to support and enhance this upgrading in service. There is no question, Mr. Speaker, but that additional improvements will also result from the study being conducted by Woods-Gordon, the group commissioned by the Department to study the entire operations of Revenue Canada, Taxation. This study, which is headed by Mr. W. A. Farlinger, will identify areas for improvement for the longer term. In the meantime, there are a number of steps which have already been taken by the Minister. Operational changes to improve service include additional staff, increased tax advisory service by the Department, and greater access to the Department.

I would like to outline briefly some of the improvements which are already made, and then provide an indication of just how taxpayers will benefit from the proposed changes contained in the last Budget.

The Department has added more than 1,000 person years to provide the public with a faster and more complete tax information service. This is clearly a commitment on the part of the Department, and also an indication of the priority this Government places on service by Revenue Canada Taxation. The increase in almost 40 per cent of the total number of additional person years authorized by the federal Government for the current fiscal year. Revenue Canada has also established feedback procedures which will make the Department more accessible as well as provide a means to measure taxpayers' satisfaction in their dealings with the Tax Department. I am glad to see this happen because, in my view, this is indeed very important.

I think it is significant that the Minister has issued a number of directives which were subsequently supported by recommendations contained in briefs presented to the Woods-

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Gordon group. I assume this also includes the brief presented by the Hon. Member for Wellington-Dufferin-Simcoe. This is a clear indication that modifications to a government service are in line with the wishes of the public which is being served.

Included in these directives are instructions to put in place a means of monitoring and reporting on taxpayer satisfaction. These reports will be provided to the Minister on a quarterly basis beginning in September of this year. The Department will also be introducing surveys, questionnaires and interviews to identify the level of taxpayer satisfaction in the areas of audit, assessment and appeal activities. All three of these areas are, in my view, tremendously important and I am happy they are being attended to in this way.

Another area of increased service to the public is a recent pilot project which saw the creation of nine seasonal tax assistance centres for the peak filing season. These centres were established for the sole purpose of making the Department more accessible and making information more readily available to the tax paying public. The effectiveness of this service, which was available to approximately 300,000 taxpayers across the country, is now being evaluated. Depending on the outcome of that evaluation, this additional face to face assistance may well become a permanent feature in coming years. I would also point out, Mr. Speaker, that this service is in addition to the existing network of some 30 district offices and the several sub-offices which were introduced in the last few years.

I believe the spirit in which the taxpayer service is being upgraded is embodied in a recent letter from the Minister of Revenue Canada, Taxation to his Deputy Minister, Mr. Harry Rogers. I believe most Hon. Members already have a copy of that letter. It is a letter dated April 2, 1984. I will not read all of the letter but there are certain parts which are quite relevant at this time. That letter, in part, covered the following points:

Letters and messages to taxpayers should be reviewed and, if necessary, revised to make them more understandable, personalized and courteous.

This, of course, is in respect of the attitude of the Department of National Revenue about which so many people have complained. Another point in the letter was:

Where appropriate, correspondence should include an outline of taxpayers' rights and responsibilities.

This, in my view, is absolutely essential as a step in the right direction. Other points in the letter were:

Officials of the Department should consider the introduction of more storefront services and additional sub-offices to make tax help more accessible to more Canadians.

The Department should ensure the establishment of liaison committees with tax practitioners in each of the district offices and examine ways to more effectively distribute interpretive material to taxpayers.

There is now under way, Mr. Speaker, a process which will generally ensure greater personal contact with taxpayers, provide additional checks and balances to protect the rights of taxpayers, and provide training of department staff to better ensure the fair and equitable application of the legislation. In fact, all training will reflect a commitment to taxpayer service

and the communication of taxpayer rights. I feel that is absolutely essential.

These measures have been put in place, Mr. Speaker, to provide better service to taxpayers and, at the same time, to maintain public confidence in our self-assessment system of taxation because, without that public confidence, the system will not work. I believe we have some confidence, and I hope and trust we will have more in the future, because the vast majority of Canadian taxpayers have little or no problem with Revenue Canada, Taxation. Notwithstanding the media attention, less than half of 1 per cent of taxpayers filed notices of objection last year. Of these, the majority were settled at the local level to the taxpayers' satisfaction. That leaves the balance of about 16 million taxpayers with routinely filed and processed returns. I doubt very much if many private sector enterprises enjoy such a low rate of unsatisfied customers. Nevertheless, the numbers of unsatisfied taxpayers should be further reduced. It is hoped that many of these proposals will be helpful in this regard.

I believe it is also important to note, Mr. Speaker, that the steps I have outlined represent only the beginning of the general upgrading of service to taxpayers. More long-term improvements will follow the study by the Woods-Gordon group and, certainly, changes in the Budget will have a lasting effect when they are passed into law. That brings me to the other vital player in this process of change and improvement to taxpayer service, namely the Department of Finance. As Hon. Members know, the Department of Finance is the source of budget change, and the last Budget provided for a number of changes in the Income Tax Act which will directly affect taxpayers. Proposed simplification of the legislation will not only provide tax savings for a number of groups, but will also substantially reduce paper work for almost 300,000 small companies. In fact, Mr. Speaker, approximately two-thirds of the legislation relating to small business will actually be removed from the books. That is really a step in the right direction. Small business is going to be very happy about that.

Proposed changes in the Budget will also exempt in the order of 350,000 senior citizens from having to pay quarterly tax instalment payments, and the same holds true for about

50,000 small businesses. Other measures will make it easier for taxpayers to file an objection to an assessment, and there is now no restriction on the amount a taxpayer may be awarded in costs upon completion of a successful appeal. I believe this satisfactorily takes care of the amendment to the motion which was put forth by the Hon. Member of the New Democratic Party.

All these measures are in addition to existing services such as the more than 600 different forms and guides produced to assist a wide variety of taxpayers in filing returns. To further improve communications and help develop stronger ties with the business and financial communities, the Department established the taxation advisory committee in 1970. Composed of tax experts from these sectors, the committee meets regularly with departmental officials to offer constructive criticism of the Department's policies and procedures. Departmental offi-

cials also meet annually with representatives of the joint committee of the Canadian Institute of Chartered Accountants and the Canadian Bar Association. I understand that the Hon. Member for Wellington-Dufferin-Simcoe has a copy of the latest publication of both the Canadian Institute of Chartered Accountants and the Canadian Bar Association. Unfortunately, I have not received a copy as yet. He seemed to be able to get it much more readily than myself.

To help taxpayers plan or make decisions involving complex business transactions, the Department also offers an advanced rulings service.

These initiatives, Mr. Speaker, demonstrate the good faith of a government which sincerely wants to encourage open dialogue with all sectors of the tax-paying public. The wide variety of tax information material made available free of charge illustrates an awareness of the special needs of the many different groups and individuals who participate in the self-assessment system. Take for example the information circulars and interpretation bulletin series, to which I am sure many Hon. Members subscribe. Intended primarily for lawyers, accountants and other tax consultants, these publications explain the Department's administrative interpretation of tax law as the Department's own auditors and assessors apply it. I think it is fair to say that there are few Departments in the federal Government which have greater direct contact with the general public. It is equally fair to say that there are few Departments with a greater information flow to and from the general public. The process now under way will not only increase that contact but also increase that two-way flow of information.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-REVENUE CANADA
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LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

There now follows a period of up to ten minutes for questions and comments.

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-REVENUE CANADA
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PC

Henry Perrin Beatty

Progressive Conservative

Mr. Beatty:

I have a question, Mr. Speaker, but I might start by associating myself with my friend's remarks regarding the NDP amendment. One would be hard pressed to think of a more irrelevant amendment that could be moved. Nothing to date could better characterize the NDP contribution to the Revenue Canada debate than the fact that the task force made its report which recommended lifting that ceiling on the awarding of costs at the Tax Court of Canada on April 8, and on April 25 the Minister of Finance (Mr. Lalonde) tabled his amendments which did precisely that. A month later the NDP comes along and puts itself squarely in favour of a policy which has already been announced. Certainly one wonders where it has been throughout this debate, if it has been serious about this.

I want to ask my friend about another matter. I was somewhat confused about one part of his speech where he seemed to be implying that the fact that a high percentage of the notices of objections filed by taxpayers are resolved in favour of the taxpayers was proof that the system is working well. Would it not be more correct to argue that in fact it was proof that the Department was wrong, in whole or in part, in

Supply

70 per cent of the cases where a notice of objection was filed? Is that not proof of how badly the system is working instead of how well?

Topic:   GOVERNMENT ORDERS
Subtopic:   BUSINESS OF SUPPLY
Sub-subtopic:   ALLOTTED DAY, S.O. 62-NON-CONFIDENCE MOTION-REVENUE CANADA
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May 31, 1984