The Auditor General has exposed serious efficiency problems in how the Canada Revenue Agency deals with regular taxpayers. And those problems point straight to a series of cuts over the past decade that have impacted how the CRA serves Canadians and collects revenues.
According to the latest AG report, the CRA takes too long to respond to objections to its income tax decisions – an average of 263 days for individual income tax objections registered between 2011 and 2016 – and uses incomplete and inaccurate methods to evaluate how well objections are handled. AG Michael Ferguson says 65 per cent of the objections he reviewed were eventually resolved either fully or partially in favour of the taxpayer. Those findings suggest more can be done ahead of time to resolve issues prior to objections being filed.
“This report shows that Canadians are now paying the price for the previous Conservative government's ill-thought out cuts at the CRA totalling over $300 million and over 3000 jobs,” says Dennis Howlett, executive director of Canadians for Tax Fairness. “It shows what happens when an ideological government implemented deep spending cuts to deal with a deficit that – ironically - were caused in large part by unfair tax cuts that mainly benefited large corporations and wealthy individuals.”
Howlett says that public expectations of timely response to tax issues have been seriously compromised. “Canadians need to trust the fairness of our tax system,” he says. “But their direct experiences are telling them that there is a culture of chaos at the CRA.”
Howlett also points to some improvements. Earlier this week, the CRA announced that it was testing new measures to crack down on tax-evasion schemes by reviewing all electronic funds transfers of more than $10,000. That operation is financed by the federal government commitment to spend $444million over five years to fight tax havens.
“Boosting CRA capacity to deal with tax havens is a welcome move,” he says. “But there are areas of CRA capacity that are woefully inadequate.”
Last year, Canadians for Tax Fairness published What’s Wrong at the CRA? And How to Fix It a comprehensive report on the inner workings at the agency.