For the skeptics who claim that innovation in government is an oxymoron, the notion that a tax collection agency could be innovative seems even more oxymoronic. Yet my intuition tells me that the Canada Revenue Agency indeed has bragging rights to such a claim.
Historically, it has been a rapid adopter of information technology, using it to enhance service by providing for payment online or over the telephone and to enhance compliance through aggressive data mining. Its status as a special operating agency, discussed in David Brown’s article in the most recent issue of Canadian Public Administration, has likely facilitated its innovativeness.
More recently, the Harper Government has likely become a driver of innovation, because of its use of tax credits – rather than spending programs – to implement social and economic policy. This philosophy of government tends to leave the program departments sitting on their hands but puts the onus on CRA. Some recent examples that come to mind are tax credits for child care, child fitness, disabilities, public transit use, and now home renovations.
For each such initiative, CRA has to come up with a precise definition of what is creditable, communicate the ensuing rules to the public, and ensure compliance. The latter would involve requiring taxpayers, or their income tax preparers, to keep receipts and occasionally auditing. The home renovation tax credit will be an interesting case. It has been widely advertised and tremendously popular. As the end of the eligibility period and this year’s tax filing date approach, the question that comes to mind is what sort of auditing CRA will do to ensure that taxpayers have been following the rules. Given the populist nature of this program – with a maximum permissible claim of $ 9000 in expenditures – the standard practice of auditing the few biggest users won’t work. The possibility of the program being extended in the upcoming budget underlines the importance of effective administration.
While the next federal budget is likely to involve expenditure cuts or constraints, I would be very surprised if the Harper Government didn’t extend its philosophy of populist tax credits in some other area, again calling upon CRA for implementation.
As a public management blogger and a taxpayer who has taken advantage of several of these programs (universal child care, child fitness, home renovation), what I see is the tip of the iceberg. Below the waterline is what CRA is doing to implement these initiatives. I think there is an interesting story here of innovative policy implementation for a public management researcher to explore.