Hey there, time traveller!
This article was published 29/4/2019 (395 days ago), so information in it may no longer be current.
Many Canadians will be scrambling this week to file their taxes before the April 30 deadline. For some, that means paying professionals to do the paperwork for them, an expense not everyone can afford. For others, it might have entailed a whole weekend compiling, then inputting the information on their own. One study estimated it costs Canadians an average of over $200 each in expenses and time to file their taxes each year, or $4 to $6 billion annually. There is an easier, less pricey option that we should seriously consider – having the government do it for us.
Preliminary tax filing has been successfully adopted in many European nations such as Norway, Sweden and Denmark. There’s no reason it couldn’t work here as well. The Canada Revenue Agency already has information on Canadians’ employment and earnings, geographic location, banking and family status — enough details to provide everyone with a draft tax return. Under the voluntary system, taxpayers could review the form, make any necessary updates and be on their way, without spending a dime or hours in front of a computer screen.
Another advantage of pre-filled tax forms would be helping all Canadians claim the benefits that they’re entitled to. Those of us who can’t navigate the tax system ourselves or afford professionals to do it for us could be losing out on special tax benefits and credits, especially when the tax system is increasingly being used to deliver important and significant benefits, including the Canada Child Benefit, the Canada Workers Benefit and the new Climate Action Incentive payments.
It’s generally those with the lowest incomes and the most vulnerable — those who need these benefits the most — who don’t file their taxes and so miss out on these benefits. This is even more important in today’s climate, when false news or misleading information about taxes can be used to play politics among parties. Having the CRA assign eligible benefits could help ensure that Canadians who need the most help do not miss out.
So, why isn’t every country experimenting with this? The tax preparation industry, which includes big companies such as H&R Block and TurboTax, stands to lose millions in profits if tax filing were to fall to government, rather than citizens. In the U.S., the industry spent $6.6 million lobbying against government tax preparation, according to a recent article in The Conversation. There is even a bill before Congress that would limit government from introducing its own tax return software.
Anti-tax lobbyists also have an interest in keeping the system complicated because when citizens are frustrated, they are less likely to support new taxes or rate increases. While the U.S. isn’t always comparable to Canada, we do have this in common — a complex tax system that promotes anti-tax sentiment. The Income Tax Act has become increasingly complicated since it was first introduced 100 years ago. Even business associations such as the Canadian Chamber of Commerce and the Business Council of Canada have called on government to simplify the current system.
What could be simpler than getting government to do our taxes for us?
Denmark was the first to bring in pre-filled tax filing, followed primarily by Nordic countries, but regions such as Chile and Spain have also come on board with some form of pre-populated tax forms. Even the state of California has an optional system for taxpayers.
Beyond saving Canadians time and money, there’s another upside to government doing our taxes for us. Simplifying the process could change the public’s perception of taxes from a burden to an investment in the services they want to see. In turn, this popular support can help government make the right decisions when it comes to spending on social programs, whether it’s funding schools and hospitals or building better roads and infrastructure.
All Canadians stand to benefit when the tax system is fair and accessible. Tax season is a sensible place to start.
Erika Beauchesne is the communications coordinator for Canadians for Tax Fairness, a non-profit organization that advocates for fair and progressive tax policies.
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