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Would you trust the CRA to do your taxes for you?

Author: Aaron Wudrick 2020/10/02

If someone can’t handle the tasks required of them at their current job, is it wise to hand them a massive new set of responsibilities? If you think not, consider the implications of the Trudeau government’s recent Throne Speech pledge to implement what it calls an “automatic tax filing” system.

It won’t actually be “automatic,” of course, but rather would entail entrusting the army of nearly 44,000 bureaucrats working at the Canada Revenue Agency (CRA) to file millions of Canadians’ income tax forms on their behalf. And though most people would certainly enjoy being spared precious hours on a task that can by turns be painfully complex and mind-numbingly tedious, given the importance of the job and the track record of the agency in question, it’s fair to ask how much faith one should have in the final product.

For starters, the CRA has a huge vested interest in maximizing the revenue it can generate. That can’t bode well for taxpayers when there’s a subjective call to be made between paying a little bit more tax or a little bit less. After all, the CRA’s job is not to save you money. Its job is to try and squeeze as much as it can out of you.

Consider, too, that even with thousands of CRA bureaucrats, the agency has routinely failed to do such basic things as answer the phone, with a 2017 report by the federal Auditor General concluding that 54 per cent of the time when Canadians called the agency failed to pick up at all.

It gets worse. The same report found that even if you did manage to get through to an agent, about 30 per cent of the time you would be given incorrect advice. In one cited example, responses to a question about when interest owed would begin to accrue, CRA agents gave the wrong answer a shocking 84 per cent of the time.

In a final display of incompetence, the CRA’s quality control system, which was designed for the specific purpose of catching inaccurate responses by agents, failed to identify the mistakes, leaving the CRA in the dark until the Auditor General’s investigation.

International precedents don’t offer much comfort, either. Across the pond, British taxpayers have already been guinea pigs in just such an experiment, after the U.K. tax office implemented automatic tax filing back in 2010. Out of a total of about 40 million British taxpayers, almost six million received incorrect filing notices, with nearly 75 per cent of those ultimately getting reimbursements after initially being shortchanged by their tax office.

Montreal Economic Institute study found that a full quarter of French taxpayers received incorrect assessments when a similar program was rolled out in their country in 2006. And though the numbers have improved since, as of 2018 about 500,000 French taxpayers still had to correct their revenue agency’s work.

Unfortunately, as anyone who has the misfortune of dealing with the Canada Revenue Agency will tell you, getting our tax collectors to admit when they make mistakes can be a long and arduous battle. Just ask B.C. resident Irvin Leroux, who lost all his savings and had to fight the CRA in court for 19 years before it was ordered to correct its errors in a ruling that recognized the CRA owes a duty of care, not just to its minister, but also to Canadian taxpayers.

The CRA has a long and dubious record of failure and incompetence. The last thing politicians should be doing is asking it to do our taxes for us.


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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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