In a Sept. 29 column, “Taxes, meet ethics,” Russell Wangersky praised automatic tax filing as an easy way to ensure everyone gets back the tax refunds they are owed. While we’re sure virtually no Canadian likes filing their taxes, entrusting the government to do them for us would be a bad idea.
It was Louis XIV’s finance minister, Jean-Baptiste Colbert, who best described a tax collector’s role when he said: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
By its very nature, the Canada Revenue Agency’s objectives are at odds with taxpayers’ objective when it comes to filing taxes. While the former aims to maximize revenue collection, the latter aims to keep as much money as possible in their pockets.
By its very nature, the Canada Revenue Agency’s objectives are at odds with taxpayers’ objective when it comes to filing taxes.
Given those contradicting objectives, it isn’t far-fetched to imagine how the Canada Revenue Agency’s tax filers would be more incentivized to correct mistakes that allow them to bring in more money, than to correct mistakes that would leave more money in taxpayers’ pockets.
That’s exactly what British taxpayers went through back in 2010, when the government implemented automatic tax filings. Out of a total of 40 million British taxpayers, it was reported that nearly six million of them received incorrectly filed tax returns from their revenue agency. Out of those six million, 75 per cent of them were overbilled by their government.
British taxpayers were not alone in seeing their tax collectors wrongfully assess how much tax they owed. In its first year, roughly one in every four tax returns tax return prepared by France’s automatic tax filing system contained mistakes. And while the system has gotten better since, there were still a full half-million French citizens who reported receiving incorrect assessments from their tax authorities in 2018.
And when revenue agencies make mistakes, it can be quite a daunting task to get them to correct those mistakes. Just ask British Columbia resident Irvin Leroux, who fought for 19 years and lost all his savings in order to get the Canada Revenue Agency to recognize its mistake after it had overbilled him and admit it owed a duty of care not just to the minister of national revenue, but also to all 30 million taxpayers across the country.
Making sure every Canadian can get back the money they are owed by our tax authorities is a laudable objective. Entrusting government bureaucrats with our annual tax filings isn’t the way to do it though.
One of the key reasons why Canadians might be leaving some money on the table when making their income tax filings is due to the overwhelming complexity of our tax code.
When the Income Tax Act was first passed in 1917, it was only 11 pages. Today, it is 3,227 pages. All those extra pages contain a flurry of tax credits, exemptions and other mechanisms that simultaneously complicates tax filing for everyday Canadians and makes it easier for those with deep pockets and talented accountants to aggressively reduce their annual tax bills.
It is by simplifying this act that we’ll be able to simplify the process and make sure all Canadians pay the taxes they owe, and not a cent more. And while it still entails having to file our own income taxes, it would protect us from being at the mercy of overzealous tax collectors.
Renaud Brossard, interim Atlantic director
Canadian Taxpayers Federation
