Article in the Blacklock's Reporter - Reform Bill Thin, Senate Told
Reform Bill Thin, Senate Told
A regulatory reform bill lauded by cabinet as one of the first of its kind in the world has numerous loopholes and fails to address the Income Tax Act as the biggest generator of paperwork, say senators. Compliance with federal regulations typically costs small business $3,444 a year, by Industry Canada estimate.
“The bill does not include the Income Tax Act per se,” said Senator Paul Massicotte (Liberal-Que.); “If you look at the polls, it’s the number one irritant.”
Bill C-21 An Act To Control The Administrative Burden proposes that any new federal regulation or “administrative burden” be offset with the repeal of some obsolete rule under a so-called “one-to-one” standard. Burdens are defined as “anything that is necessary to demonstrate compliance with a regulation, including the collection, processing, reporting of information and the completion of forms.”
The bill specifically excludes tax measures, though a 2013 survey by Industry Canada found businesses rated tax compliance the most time-consuming chore of any federal regulation. Seventy-two percent of respondents rated federal rules as more burdensome than local government regulations, including filing corporate and sales tax installments and payroll remittances, according to the study SME Regulatory Compliance Cost Report.
“People have to pay their taxes,” said MP Dan Albas, Conservative parliamentary secretary for the Treasury Board; “Canada will now be one of the first countries in the world to legislate a one-for-one rule to control red tape.”
At hearings to review the bill, the Senate national finance committee noted C-21 contains several other loopholes including a blanket exclusion for any regulation deemed vital under section 7; and a blanket section 8 exclusion that “no regulation is invalid by reason only of failure to comply with this Act.”
“We’re not trying to reduce the burden for lawyers here,” said Senator Joseph Day (Liberal-N.B.), the committee chair. “It sounds to me like more will be developed.”
“Menial & Cumbersome”
The Chartered Professional Accountants of Canada appealed to senators to expand red tape reduction to Tax Act matters. The Act in the past two years has grown from 2,956 pages to 3,282 pages, more than double the size of Tolstoy’s War And Peace.
“The Income Tax Act is very complicated,” said Gabe Hayos, accountants’ vice president of taxation; “It is not the best use of our time and effort for us to do things that are menial and cumbersome.”
Hayos proposed the Canada Revenue Agency adopt practical measures like simplifying forms, and appointing an independent oversight committee to “question whether some of the regulatory burden is quite appropriate.”
“This tax system has seen a layer of new rules and regulations year after year, and there’s a point at which you need to review this,” said Hayos; “Without the government’s commitment to something like that, I don’t think you can make substantial changes to ease the burden on taxpayers.”
Accountants have appealed for Canadian adoption of a U.K. Tax Simplification Office established in 2012 as an advisory panel for parliamentarians. The British office was created after legislators noted that country’s tax code had grown fifteen-fold since 1965.
By Paul Delahanty