Current Tax Collection in Canada
The Canada Revenue Agency (CRA) collects federal income taxes and, under tax collection agreements, also collects provincial income taxes for all provinces except Quebec. Provinces set their own tax rates and brackets, but the CRA handles administration, enforcement, and collection.
The Quebec Model
Revenu Québec has collected Quebec's provincial income tax since 1954. Quebec residents file two tax returns annually: one federal (to CRA) and one provincial (to Revenu Québec). The agency employs approximately 12,000 people and handles all provincial taxes.
What a Provincial Agency Would Mean for Alberta
An Alberta Revenue Agency would:
- Administer and collect Alberta personal and corporate income taxes
- Require Albertans to file two tax returns
- Employ provincial staff for auditing, enforcement, and collection
- Provide data directly to the provincial government
Key Considerations
Arguments for Provincial Collection
- Policy Flexibility: Ability to design tax programs not possible through CRA agreements.
- Data Access: Direct access to tax data for provincial policy planning.
- Independence: Not relying on federal agency for provincial revenue.
Arguments for Staying with CRA
- Cost: A single return is cheaper for both government and taxpayers.
- Convenience: One tax return instead of two.
- Economies of Scale: CRA's national infrastructure may be more efficient.
- Setup Costs: Creating a new agency requires significant investment.
What the Panel Recommends
The Alberta Next Panel recommends a detailed cost-benefit analysis before any decision, acknowledging that the financial case is not yet clear.
Questions to Consider
- Is the convenience of a single tax return worth potential loss of provincial flexibility?
- What would be a reasonable cost for provincial tax independence?
- Are there policy goals that require an independent tax agency?