Remarks by the Honourable Michael Chan, Ontario Minister of Revenue to the Southern Ontario Commodity Tax Consultation Group

Thursday, May 10, 2007

Good morning everyone – nice and early on a mild May morning.

I am here today to talk to you about tax collection, which I know is no big surprise.

But it is not often that I have the opportunity to speak to a group that shares such a deep and widespread interest in taxation.

I have learned a lot about how the Ministry of Finance functions – and its summary of service operations is impressive. 

In 2005-06, the Ministry:

• Processed 2.6 million tax returns
• Received over 700,000 telephone enquiries
• Imaged over 13.2 million pages of information
• Attended to more than 98,000 walk-in clients
• Registered 51,000 new retail sales tax vendors
• Issued payments to 130,000 Guaranteed Annual Income recipients, and
• Issued payments to 244,000 Ontario Child Care Supplement recipients.

I have also determined some of our immediate challenges and priorities.

That is what I will share with you this morning.

As you probably know, in December we introduced Bill 174 – the Strengthening Business through a Simpler Tax System Act, 2006.  We introduced the second reading just last week and have been debating the bill as recently as this week.

Inefficiencies in Ontario's corporate tax structure are costing our businesses time and money.

Not only are these inefficiencies unnecessary, but they can also be substantially reduced through Bill 174.

For some time now, Ontario's businesses have asked us to reduce administrative overlap and duplication. 

They have also told us they need a more competitive economy that reduces costs and simplifies tax rules.

The McGuinty government listens to Ontarians and we deliver what they ask for.

Bill 174 recognizes these concerns and presents a more streamlined tax administration system for Ontario businesses through a single combined federal and Ontario corporate income tax return.

If the bill passes – and I believe it will – combined corporate tax instalments to the Canada Revenue Agency would start as early as February 2008. Ontario businesses would benefit from:

• a single tax form
• a single tax collector, and
• a single set of income tax rules.

I want to stress how this act would help the businesses of this province by expanding opportunities and strengthening our economy.

All Ontario businesses would spend less time on paper- work and save up to $100 million annually in compliance costs by moving to one set of tax forms, one tax administration and one set of rules.

Businesses would save a further $90 million a year in Ontario income tax from a harmonized corporate income tax base.

Ontario's corporate and personal income tax provisions would be significantly streamlined – the total amount of legislation and regulations would be cut by more than half.

This legislation would allow businesses to spend less time on paperwork, and more time doing what they do best: creating jobs and fostering a strong economy.

Also, businesses have told us they do not want to wait until implementation of a single return in 2009 to start realizing compliance cost savings from a single corporate tax administration.

They want to realize these benefits as soon as they can, and so do we.

Both our Ministry and the CRA are looking at ways to achieve cost savings to businesses by integrating some administration processes for taxation years prior to 2009.

It is, however, one of many key initiatives our government has proposed – and implemented – to expand opportunities for businesses and ensure Ontario's continued economic strength.

Our government is also committed to providing Ontario taxpayers with high quality, cost -effective service. 

We established Ontario's Service Commitments and Standards for Tax Administration to measure and report our performance on an annual basis. 

Results outlined in this report reflect the Ministry's excellent level of service and the opinions expressed by Ontario taxpayers. 

It serves as a basis on which the Ministry continues to improve the quality of services we provide in applying tax laws with fairness and courtesy, and in treating taxpayers professionally and with respect.

The 2005/2006 results revealed that we met service standards in the area of registrations, refunds, account adjustments and tax roll updates on an average of 93 per cent of the time. 

While the results are encouraging, our goal is to perform at 100 per cent in all areas.

We are continuously trying to strike a balance between education, service and responsible enforcement. 

This is being done by forming partnerships with all levels of governments to add and enhance services to taxpayers. 

The federal and Ontario government's joint PST/GST tax seminars provide taxpayers with important information about starting a small business.  In 2005/2006 we held 308 joint seminars across the province with a total of 4,892 participants.

The Ministry also holds Tax Information Forums province-wide, giving small and medium-sized businesses with a one-stop opportunity to get information and ask questions about business-related programs.

We link with other Ontario ministries and other levels of government to provide these forums.

Our Client Service and Education Program has Ministry employees visiting new business vendors to further educate them on their responsibilities and obligations in their first, crucial year of operation.

This is just a sampling of our government's commitment to providing Ontario taxpayers with the information and resources they need. On March 22, 2007, Finance Minister Greg Sorbara presented our government's fourth Budget.

With the 2007 Budget, we have left behind the deficits we inherited and entered into a new era of balanced budgets and sustainable surpluses.

As tax professionals, you should be aware of these recent announcements in the 2007 Ontario Budget.

We see this new era as an opportunity for us to become an even stronger Ontario. And a stronger Ontario means a stronger Canada.

The 2007 Ontario Budget proposes more measures to simplify tax compliance and administration, and support corporate income tax base harmonization – a move that directly complements the provisions of Bill 174.

In the Budget, we've proposed a variety of programs and policies that to our commitment to encouraging a strong business climate, including:

• Accelerating the elimination of the Capital Tax to July 1, 2010, from January 1, 2012.
• Reducing high Business Education Tax rates by $540 million, benefiting more than 500,000 businesses in 321 municipalities across the province.
• And providing more than $2 million to the Canadian Youth Business Foundation, which helps young Canadians create their own successful businesses.

In addition, to help support a strong, dynamic and globally competitive business environment in Ontario, our 2007 Budget provides for a four-year extension of the Apprenticeship Training Tax Credit and the addition of six eligible trades.

More recently, on April 20, the Finance Minister announced that Ontario is proposing to parallel the corporate income tax incentives in the 2007 federal budget that benefit manufacturing and support clean energy generation.  

The Ontario tax relief provided from these measures will help encourage job creation and economic growth in communities throughout Ontario and investment in green technologies. 

As you may know, the province also provides property and sales tax relief for low- and moderate-income individuals and families through the Ontario Property and Sales Tax Credits program. 

These refundable tax credits are delivered annually through the personal income tax system.

In 2004, the government enriched this program by increasing the underlying property tax credit amount for seniors by 25 per cent, from $500 to $625.

In 2005 and 2006, the government increased the income threshold at which senior couples' benefits begin to be reduced ($22,250 for 2005 and $23,090 for 2006).

This year's Budget proposes a further increase to the income threshold for senior couples for 2007 so that those receiving the guaranteed minimum level of income from the Ontario and federal governments would continue to receive the full benefit of the Ontario Property and Sales Tax Credits.

The 2007 minimum level of income guaranteed by governments for eligible senior couples is rising because of increases to Old Age Security and Guaranteed Income Supplement payments.

For the 2007 taxation year, the Ontario Property and Sales Tax Credits program is expected to provide an estimated $740 million in property tax relief to Ontarians who own or rent their principal residences.

I also wanted to let you know that Revenue is making Ontario's tax administration services more modern and accessible.

Through the modernization of our systems for tax administration, we are improving client service, ensuring fairness in the tax system and securing the province's tax revenue stream. You will hear more about the modernization project from Cordelia Clarke Julien.

In the meantime, I would like to say we have heard loud and clear from our taxpayers that they want to minimize the time, cost, inconvenience and effort required to fulfill their tax obligations.

We are doing this through work that is currently underway to move to an Ontario tax administration – or ONT-TAXS – that meets the expectations and needs of the taxpayer.

You'll be happy to know that an important component of this initiative, ONT-TAXS, will be enhanced E-enabled services.

We know that taxpayers want service innovations that are flexible, effective and above all else, customer-service driven.

We are working hard now to make available to the taxpayers of Ontario a broader range of online services that will take a "my account" approach to e-services.

Through "my account", you will be able to:

• View your account balances
• Pay taxes and file returns online for additional tax programs
• Grant access for third-party authorization
• Obtain online help for tax-related questions
• Register for tax-information forums and training, and
• Track the status of an audit or Notice of Objection.

I mentioned securing the province's tax revenue stream. Well a huge piece of that is our extensive involvement in fighting the underground economy throughout the province.

With more auditors involved in more activities, we are helping to decrease tax avoidance and increase tax compliance to level the playing field for all businesses in Ontario.

For example, we are taking steps to aggressively combat illegal contraband cigarette sales. 

I would like to remind you that many sources of contraband cigarettes involve areas of federal responsibility; Ontario cannot solve this problem on its own. 

Ontario has been working with the federal government and our provincial colleagues to further strengthen tobacco enforcement.

The Ministry's convictions under the Tobacco Tax Act have doubled in the last three years as a result of steps we have taken.

In last two fiscal years, 14 million contraband cigarettes, 112,000 cigars, and significant quantities of fine-cut tobacco were seized by Ministry of Finance officials.

During a recent nine-month period, more than 330 tobacco seizures were conducted by inspection staff.

Additional steps to combat the spread of contraband include strengthening Ontario's Tobacco Tax Act by:

• Increasing fines and penalties
• Improving enforcement powers
• Providing for new offences
• Permitting sharing of intelligence information with other agencies that enforce tobacco-related laws
• Assigning additional investigators, inspectors, and auditors to enforce the Act, and
• Proposing, as announced in the 2007 Budget, to prohibit retailers from selling tobacco products if they repeatedly contravene the Tobacco Tax Act and/or the Smoke-Free Ontario Act.

It is an ongoing struggle, but I think we are progressing − we are working smarter and along with our partners we are making progress in the battle against illegal tobacco products.

In concluding, I would just like to assure you that the new Ministry of Finance will be an evolving, progressive component of the Ontario Government.

We are striving toward the highest possible levels of tax compliance, customer service and transparency.

We are making it easier to do business in Ontario – and proving once again that Ontario works best when we work together.

And we are making it easier for you to do your jobs because we are simplifying, modernizing and streamlining the Ontario tax administration system.

Thank you

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