Ceci pushed on corporate taxes
Ceci says his government is taking action to crack down on delinquents
As Alberta’s unpaid corporate taxes continue to grow, opposition parties are calling on the NDP government to crack down on delinquent tax filers following warnings the province must improve its collection system.
Unpaid corporate income taxes in Alberta climbed to $ 1.12 billion for the fiscal year that ended March 31, up from $ 741 million two years earlier, with the bulk of the uncollected amount tied to taxes disputed by businesses.
Allowances for doubtful corporate tax accounts — when collection can’t be reasonably assured by the government — were pegged at $ 431 million, a 74- per- cent increase during the same two- year period.
Appearing Tuesday before a legislative committee, Finance Minister Joe Ceci said his department is taking action to improve the collection of outstanding taxes owed by companies.
“Boosting efforts to collect delinquent unpaid corporate taxes was part of our campaign and we’re committing to following through on that promise,” he told Alberta Party Leader Greg Clark as MLAs reviewed his department’s budget estimates.
The finance minister said the government is improving training for its staff and adopting additional targets to increase the effectiveness of the province’s tax collection system — two recommendations made last year by Alberta auditor general Merwan Saher.
“The auditor general has weighed in on this whole issue and said the processes need to be improved,” Ceci said Wednesday.
“That’s what the Treasury Board and Finance officials have done. They are hiring more workers, collection agents, so we can have a better handle on that.”
The department says four collection staff were added last year and there are plans to hire three more officers this year.
But opposition members say the province needs to become more aggressive with the unpaid bills, particularly as the government’s deficit is projected to hit a record $ 6.1 billion this year.
The province expects to collect $ 4.7 billion in corporate income taxes in 2015- 16, down sharply from $ 5.6 billion last year as Alberta businesses — particularly those in the energy sector — grapple with the repercussions of low oil prices.
“Paying your taxes should not be optional,” Clark said Wednesday. “I’m not seeing evidence the NDP are taking it seriously enough.”
Alberta is one of only two provinces — Quebec also has its own system — that doesn’t use the Canada Revenue Agency ( CRA) to collect corporate taxes.
Last fall, the auditor general found Alberta’s Finance Department has an adequate system in place to collect corporate taxes, but it must improve “to deal with the increasing number of outstanding taxes.”
With a significant amount of accumulated uncollected taxes on the department’s books, Clark suggested the province issue default assessment returns when companies don’t file their tax returns, something done by CRA.
He also questioned if the province should consider giving up corporate tax collection to the federal agency.
“If Alberta can’t collect taxes effectively, then we should ship it, we should ask the CRA to do it,” said the Calgary- Elbow MLA.
Wildrose finance critic Derek Fildebrandt said he’s uncertain if it makes sense for the province to ask Ottawa to collect corporate taxes, but he wants Alberta’s system to be fixed.
“It’s critically important that we ensure taxes due are being paid in full,” he said Wednesday.
“We have a significant sum of outstanding corporate taxes that we should be focusing on collecting before we raise taxes on businesses that are playing by the rules.”
But Ceci said there is a clear benefit to Alberta collecting its own corporate taxes.
On average, it costs $ 10 million a year for the province to administer its own collection and it writes off about $ 20 million annually in bad debt.
However, because the government administers its own system, it also collects fees, related penalties and interest payments amounting to almost $ 105 million annually, he said.
“We want to maintain our own collection,” Ceci told the committee. “We think it’s good public policy.”
Boosting efforts to collect delinquent unpaid corporate taxes was part of our campaign and we’re committing to following through on that promise.