New collections officers hired
“The risk of not collecting the taxes owed by corporations is that the government won’t have the money it needs to pay for programs,” assistant auditor general Brad Ireland said.
“And the longer these amounts are left outstanding, the less likely they are to ever be paid.”
In response to the watchdog’s report, the department said Wednesday that new collections officers have been hired and caseloads are being adjusted inside the corporate taxation unit.
“Training has been and will continue to be adjusted as we develop additional performance measures and targets for staff with the goal of increasing the effectiveness of our tax collections area,” spokeswoman Carolyn Gregson said in a prepared response.
“Management is continuing to work on identifying legislation, policy and collection strategies — this work will be ongoing in the months ahead.”
The NDP campaigned during the recent election on boosting efforts to collect delinquent and unpaid corporate taxes, and Finance Minister Joe Ceci said Wednesday he has asked his department to make changes quickly.
“The auditor general has given us until 2017 to implement these recommendations, but I believe we need to move faster on this,” Ceci said in a statement.
“The vast majority of Albertans and Alberta companies do the right thing and pay their taxes, and they expect others to do the same.”
One of only two provinces that do not contract with Canada Revenue Agency to collect corporate taxes, Alberta spent $ 34 million last year to collect $ 5.6 billion in corporate taxes.
While running its own administration meant Alberta got to keep about $ 230 million in interest and penalties it collected last year, it also means the province has to assume the risk if taxes assessed go unpaid and ultimately have to be written off.
Nearly half of the $ 1.1 billion outstanding, or some $ 547 million, relates to nearly 900 corporate returns that are being disputed by businesses.
Alberta’s tax law currently only allows the department to collect 50 per cent of the amount assessed as owing from larger corporations who are fighting an assessment.
Wildrose finance critic Derek Fildebrandt predicted the amount of contested taxes will grow as a result of the NDP’s recent hike to rates levied against large businesses.
“There will be an increased incentive for businesses to find ways to reduce their liability and to battle when they think the amount they’re asked to pay is unfair,” Fildebrandt said.
“And it’s important that there be a presumption of innocence when a tax assessment is disputed.”
But, he said, the official Opposition supported efforts to improve collections where the amount was not in dispute.
“When corporations don’t pay what they should,” said Fildebrandt, “it puts a greater burden on those who are compliant.”
A spokeswoman for the Canadian Taxpayers Federation said the mounting unpaid tax bill under the former Tory regime is concerning and she’s looking forward to seeing how the NDP government plans to address the problem.
“I think it’s positive that they have made this a priority,” said Paige MacPherson, “but they should have probably looked at collecting what they were owed first before raising corporate taxes.”