'It’s not surprising that Legault, an old separatist, should try this trick—grabbing another jurisdiction from Ottawa and getting the feds to pay for it. But what is Scheer as the leader of a national party doing, other than showing how desperate he is to pick up seats in the province?'

Four years ago, a special Quebec commission came up with an eminently logical suggestion to end a six-decade-old problem — the duplication of income and corporate tax collection in the province.

In 1954, under the nationalist-reactionary regime of Maurice Duplessis, Quebec decided to start collecting its own income tax, a great symbol of provincial autonomy but a colossal waste of time and money for Quebec taxpayers ever since.

While in the rest of Canada, taxpayers fill out a single income tax form with a few tweaks for provincial taxes, in Quebec everybody must go through the whole process twice. What’s more, Ottawa offers a pretty sweet deal to the other nine provinces. The Canada Revenue Agency does all the heavy lifting and, with a few exceptions, hands over billions to the provinces without charging them anything.

The Quebec commission, led by Lucienne Robillard, a former federal minister, said that if Quebec City were to act rationally, like other provinces, and hand over collection of its provincial income tax to the cheaper and more efficient CRA, Quebec could save $400 million a year. Presumably, businesses and corporations would save even more.

Faced with this conclusion, Quebec’s nationalist politicians freaked out. “Maurice Duplessis must be turning over in his grave,” the PQ said. François Legault, then in opposition, turned the report’s conclusion on its head and said that to end the duplication, the feds should stop collecting income tax in Quebec and hand over the whole business to the smaller and less efficient Revenu Quebec.

And so, an effort by Quebec to solve its own tax duplication problem morphed into a massive new power grab by the Quebec government, aided and abetted by Conservative Leader Andrew Scheer, who has figured his road to power will be facilitated by becoming the Quebec premier’s convenient federal pawn.

So here’s Legault’s idea, rejected by Trudeau, but backed by the clueless Scheer. The CRA would stop collecting federal income tax in Quebec and hand over the responsibility to Revenu Quebec. And guess what? Ottawa would pay for the privilege. “We’d expect compensation from Ottawa,” Legault said, noting that he estimates the duplication is worth $500 million a year.

Huh? Federal taxpayers would have to compensate Quebec to end its inefficient tax system. It’s truly mind-blowing.

Furthermore, the CRA would be left with 5,500 employees in Quebec with absolutely nothing to do, since the feds, in an earlier questionable move, handed over collection of GST to Quebec in 1991, for which it still pays Quebec $141 million a year.

The union representing CRA workers in Quebec is understandably worried to death about the prospect, particularly since half its members are in tax centres in Shawinigan and Jonquiere, where working for the feds is about as good a job as you can get. Legault hasn’t promised them jobs in this combination and even if he did, the province pays its employees significantly less than Ottawa does.

Scheer says that’s no problem. He would simply assign all 5,500 of the CRA’s Quebec employees to work on tax evasion. Of course, they couldn’t be working on any Quebec files, since the CRA would have no jurisdiction in the province anymore. Why in the world would the CRA have employees in Quebec to chase after would-be tax cheats in Regina and Halifax while having no jurisdiction in Montreal and Quebec City?

And the skills of CRA employees in Shawinigan and Jonquiere, most of whom have spent their career as collection agents, are nowhere near the sophistication needed by highly trained auditors tracking down tax evasion.

Asked about Scheer’s plan to redeploy the workers, Marc Briere, who heads the union representing the tax workers, is apoplectic. “It’s absolutely insane to say something that stupid,” he says.

The loss of 20 to 25 per cent of its business would also make all of the CRA much less efficient, forcing the federal government to pay more for collecting each dollar of tax in the rest of the country or requiring it to scale back operations, including its headquarters in Ottawa.

And there are other problems as well. Revenu Quebec has no jurisdiction outside the province. So if a Quebec business person were to move all their assets out of Quebec and place them in Alberta to escape the taxman, Revenu Quebec has no legal jurisdiction to go after them. And that would presumably be the case even when Revenu Quebec would be collecting federal taxes.

It’s even more serious when it comes to international tax evasion.

In a federation, it’s the national government that’s responsible for treaties and international agreements. When it comes to tax agreements, it’s the federal government (CRA) that’s party to dozens of tax collection and information agreements with other countries. A subnational government, like Quebec, has no standing in most of these agreements and no seat around the table at organizations like the Organisation for Economic Co-operation and Development.

Furthermore, harmonizing taxes between Quebec and the federal government is going to take a lot more than merging computer systems and laying off several thousand employees. Over the past 60 years, Quebec has designed its tax system on its own. It defines taxable income differently than Ottawa does, for example.

In the rest of the country, the provinces by and large accept the federal rules, making a single tax form possible. Quebec would have to harmonize its tax system with Ottawa’s to make it work. Though Quebec may dream of getting Ottawa to align its tax system to the province’s approach, that’s impossible since it would lead to the absurd situation of people paying differing federal taxes depending on where they lived.

It’s not surprising that Legault, an old separatist, should try this trick — grabbing another jurisdiction from Ottawa and getting the feds to pay for it. But what is Scheer as the leader of a national party doing, other than showing how desperate he is to pick up seats in the province?

And it’s all so unnecessary. Appeasing Quebec nationalists by handing the province money or jurisdiction was done in the 1970s and 1980s by Ottawa politicians petrified by the separatist threat. Last time I looked, separatism is going into retirement along with its baby-boomer supporters. So why can’t politicians in Ottawa, even Andrew Scheer, simply say no to unreasonable demands from Quebec?

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