Despite increased funding, CRA delivers average performance: PBO
The Canada Revenue Agency (CRA) doesn鈥檛 stray far from the middle of the pack on key performance indicators when compared to international counterparts, according to a from the Parliamentary Budget Officer (PBO).
Analyzed against 11 鈥渟imilar鈥 tax administrations, the agency performed better than average for about half of the indicators in the study, and worse for the other half.
鈥淚n most cases, Canada is never quite far from the average, usually performing marginally better or marginally worse than the comparable countries,鈥 reads the report from Yves Giroux.
The office looked at 21 indicators from the International Survey on Revenue Administration (ISORA)鈥檚 2020 results. ISORA is administered every two years and collects data on the previous two fiscal years from more than 150 national or federal tax administrations.
The indicators are grouped in to four sections: cost of collection, payment compliance, audit performance, and organizational indicators.
Canada 鈥渟ignificantly鈥 outperformed competitors in terms of the value of additional assessments for value added tax (VAT) and the number of audits conducted per auditor.
鈥淭his is expected since the CRA conducts a high volume of relatively less complex VAT audits,鈥 Giroux said.
On the flip side, Canada performed 鈥渞elatively poorly鈥 with respect to corporate income tax and VAT debt. The report said this grade could be indicative of a CRA preference not to pursue 鈥渁ggressively鈥 certain taxpayers.
Canada is among the worst performers when it comes to cost of collection ratios for total revenue collected, outperforming only Germany. The PBO warns cost of collection ratios 鈥渕ust be interpreted with caution.鈥
鈥淎n underfunded tax administration is likely to present a high-performance ratio (as it collects revenues from self-compliant taxpayers) but might be losing a lot of potential revenue because it does not have strong compliance mechanisms,鈥 the report reads.
The PBO said it鈥檚 important to understand the CRA鈥檚 outputs given recent pledges to enhance its services since the 2016 budget.
More than $3 billion has been earmarked between the 2016-17 and the 2025-26 fiscal years for a variety of initiatives, with nearly $2 billion targeted specifically for compliance activities.
鈥淲hile the PBO has produced cost estimates for some of these proposals and found that there was a positive return on such investment, the most recent cost estimates published during the last electoral campaign warned that, given the significant increase in resources received by the CRA in the last decade, it was unclear that it could continue to absorb new cash inflows in an effective manner,鈥 the report reads.
Giroux recommends that as future governments consider additional funding to the agency, all parliamentarians should 鈥減ay attention鈥 to its performance.
CTVNews.ca reached out to the CRA for a statement about the report but at the time of publication didn't recieve a response.
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