Ahead of Budget 2025, Prime Minister Mark Carney Anunciado that the Canada Revenue Agency will begin autofiling taxes for low-income Canadians. The rationale Carney gave for making the announcement is to ensure low-income Canadians get the benefits to which they are entitled. The program — first announced by former prime minister Justin Trudeau — is expected to impact more than five million Canadians within three short years.
When framed according to Carney’s rhetoric, autofiling sounds like a win for taxpayers. After all, if someone is entitled to government benefits, they ought to have access to them. Yet, as with any shiny new government announcement, the devil is in the details. And, when you start to dig into the logistics, red flags start to pop up, beginning with the costs.
In the 400-plus-page presupuesto, the Carney government estimates the total cost of autofiling will be $71 million over five years. That’s far from cheap. But, as with any government program, there’s no guarantee it won’t run over budget. There’s a long list of government programs that have blown past their budgets, some by billions of dollars. The Phoenix pay system, for example, was originally budgeted for $310 million but ended up costing over $5 billion. ArriveCAN went from $80,000 to over $54 million. And even the TransMountain Pipeline expansions went vastly over budget, jumping from $7 billion to more than $30 billion.
For the sake of argument, let’s assume the program only costs $71 million and stays on budget. How much, in terms of unclaimed benefits, is Ottawa predicting will be claimed because of the program? The answer is underwhelming when compared to the costs.
According to the Carney government’s own estimates, the program will administer $174 million in unclaimed benefits. That means Canadians are going to spend $71 million to spend another $174 million. That isn’t exactly a great ratio, and that only holds if the program doesn’t run over budget at all. If autofiling ends up like some of those other government programs, it’s entirely possible Ottawa could end up spending more on the program than the program sends out in benefits.
But that isn’t the only issue with the program. There are also flags being raised over what happens if the CRA files your taxes for you but gets it wrong. Based on how the tax filing system works, the CRA doesn’t know, and can’t know, various things about your filing that might impact your taxes. For example, the CRA has no way of knowing your out-of-pocket medical expenses, your childcare expenses, or any charitable donations. If the CRA is autofiling your taxes, you’ll have 90 days to make the necessary changes, but having to make those changes yourself is an awful lot like having to file your taxes as we already do now, which renders it obsolete.
Whenever a major policy is announced, we have to look at what the program is intended to accomplish. For autofiling, the goal is to get benefits into the hands of vulnerable Canadians, but the issue is that many vulnerable Canadians don’t file taxes at all, which means that the CRA doesn’t have information on them and can’t autofile on their behalf.
What the program will end up doing is simply subsidizing tax filing for those who are already filing their taxes, and if you are already filing your taxes, you’re getting all of the benefits you’re entitled to.
Should Canadians, especially those who are the most vulnerable, get the assistance they deserve? Of course they should. However, autofiling taxes won’t help the most vulnerable, because if you don’t file taxes at all, the system provides you with no benefits. This segment of the population is also generally eligible to access free tax preparation options on the market, thereby undermining the government’s argument that some people cannot afford to file.
And there is a looming question of whether the CRA is actually the best agency to administer benefits at all. In fact, we have a national agency, Employment and Social Development Canada (ESDC), with more than 35,000 employees, which is supposed to be responsible for social programs. That might be a better solution for distributing benefits to those who need them, given the glaring shortfalls of the CRA.
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