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Politics Ottawa rejects Quebec proposal to collect, and transfer, federal income tax

The federal government is rejecting growing calls to let the Quebec government collect all income taxes in the province and then transfer back the federal portion to Ottawa.

“The Canada Revenue Agency will continue to collect income taxes in Quebec,” Revenue Minister Diane Lebouthillier said in an interview. “The Conservatives and the NDP have laid out a proposal in public without having taken the time to conduct the proper analysis of all of the consequences.”

Ms. Lebouthillier said there would not only be job losses at the CRA’s 13 facilities in Quebec, but also a loss of expertise in recovering unpaid taxes and fighting tax evasion.

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“It’s the Canadian government that deals with revenue agencies in other countries. … Sharing information is at the heart of the fight against tax evasion and that is what Canada does with its partners,” she said.

Quebec is the only province that forces individuals and businesses to file separate returns with the federal and provincial governments.

Federal Conservative Leader Andrew Scheer, with the support of his Quebec wing, recently started to advocate for a single income-tax return in the province. The NDP was the first major federal party to back the proposal at a convention earlier this year.

Last week, all parties in Quebec’s National Assembly adopted a unanimous motion in support of a single tax return that would be administered by Revenue Quebec. Quebec is jealous of its responsibility for its provincial income-tax system, which was created by premier Maurice Duplessis in 1954 as part of a quest for greater autonomy.

The National Assembly’s motion last week made it clear that if a single tax return were to be implemented, it would be filed with Revenue Quebec. The provincial agency is already in charge of collecting and redistributing revenues from the goods-and-services tax (GST) in the province.

Advocates of a single tax return argue that further harmonization would make it easier for taxpayers to navigate tax-filing season.

“We are already moving toward the use of a single form that can be used by the two revenue agencies,” Quebec Finance Minister Carlos Leitao said last week. “Now, in relation to further integration, we will continue to pursue that objective.”

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The proposal was supported at a recent meeting of Conservatives in Quebec, and now needs to be put to a vote at a national convention in Halifax in August. Conservative MP Gérard Deltell said the GST deal is a precedent that opens the door to the next step, namely income-tax collection.

“It would be our intention for the Quebec government to do it,” Mr. Deltell said.

NDP MP Alexandre Boulerice said negotiations would be necessary to avoid job losses at the CRA. He added that getting Quebeckers to fill out a single income-tax return simply makes sense.

“As part of our Quebec proposals, we want to give a bigger role and more influence to the Quebec government,” he said. “I think Quebeckers would be more at ease sending their income taxes to the Quebec government rather than the federal government.”

The union that represents a majority of CRA employees, including more than 3,000 in Quebec, said members should keep in mind the differing positions of the NDP, the Conservative Party and the Liberal Party in an upcoming by-election in Chicoutimi-Le Fjord. The riding is located only a few kilometres away from the Jonquière Tax Centre, which means that many CRA employees will vote in the by-election on June 18.

“I have a hard time thinking that our members would support a party that would eliminate their jobs,” said Marc Brière, the national president of the Union of Taxation Employees.

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