December 7, 2020
We concluded in the first article in this series by suggesting that the purpose of the CVITP is to help individuals on modest and low incomes, and especially vulnerable individuals, to file their income tax and benefit returns. Therefore, we believe the performance indicators for the CVITP should give insight into how well the CVITP is doing in achieving its purpose. The performance indicators of the CVITP should also suggest a clear contribution to the result – “Canadians are receiving their rightful benefits in a timely manner” – associated with the CRA’s Benefits core responsibility.
As we demonstrated in the second article in this series, the performance indicator the CRA currently uses for the CVITP fails to do this.
Below, we suggest four quantitative performance indicators and associated targets which we believe offer a better way of measuring the effectiveness of the CVITP in achieving its intended purpose. Each performance indicator is designed to help answer a separate question.
1. Who is not filing?
You may ask why we are discussing the performance indicator and target for non-filers in an article on the results framework for the CVITP. As we explain in another article, this is because the CVITP is a natural fit for tackling the problem of low-income non-filers.
It is likely that the CVITP clinics are currently one of the main ways former low-income non-filers manage to file but no data is reported on this. (This seems odd, given that the CRA considers the CVITP to be a great success and is keen to get previous non-filers to file.) Furthermore, given that CVITP host organizations are based within the local community and offer this free service, they are especially well positioned to help the CRA improve its efforts in getting low-income non-filers to file.
At present, the CRA has a performance indicator for its work on non-filers: “Percentage of taxpayers (benefit recipients) who filed as a result of a CRA intervention.” The target presently is to have 10% of these non-filers file a return. This is not just a very unambitious target; the performance indicator is also not very useful.
To illustrate, if the CRA were to reach out to only 10 non-filers in a particular year and subsequently only one were to file, under the current performance indicator and target, this would be deemed a success. But it says absolutely nothing about the scale of the problem and just how well the CRA is doing in addressing it. And although it is assumed that most non-filers are low-income, this indicator also says nothing about the income level of the people who changed their behaviour and filed.
As we note elsewhere, the CRA does not report publicly on the number of non-filers; however, we also show that it is possible to arrive at an estimate based on Statistics Canada annual reporting. Thus, we believe the CRA has a good estimate of the number of low-income individuals who are presently not filing. Instead of focusing on the performance of its own intervention, the CRA should focus its reporting on how well it is doing in helping to reduce the number of low-income non-filers over time.
We recommend a performance indicator which tells us who is not filing.
Performance indicator:
What is the percentage of people falling below the poverty line who are not filing?
- Data type: income
- Data collection frequency: annual
- Data source: based on data from Statistics Canada data on official poverty lines and data from CVITP clients’ returns
- Data owner: CRA and Statistics Canada
- Target: established using the first year where this data is gathered as the baseline
(For example, in the first year where estimates are generated for the percentage of poor who do not file, if the CRA determines that this number is 20%, the CRA may wish to set a target for reducing this by 2% per year.)
2. Is the CVITP helping non-filers to file?
Using good data on non-filers, the CRA can think more strategically about how to steer the CVITP toward effectively helping to address this problem.
We recommend a performance indicator which tells us who is filing through the CVITP but classified the previous year as a non-filer.
Performance indicator:
What is the percentage of CVITP clients falling below the poverty line who were classified the previous year as a non-filer?
- Data type: income
- Data collection frequency: annual
- Data source: based on data from Statistics Canada data on official poverty lines and data from CVITP clients’ returns
- Data owner: CRA and Statistics Canada
- Target: established using the first year where this data is gathered as the baseline
(For example, in the first year where estimates are generated for the percentage of CVITP clients falling below the poverty line who are filing for the first time, if the CRA determines that this number is 2%, the CRA may wish to set a target for increasing this by 1% per year.)
3. Who is being served by the CVITP?
At present, we are given only the numbers of individuals assisted as the performance indicator. We know nothing about the income profile of the people assisted. As the CRA suggests income ceilings, it is assumed that host organizations make use of these ceilings to establish client eligibility.
However, there are two problems even if this assumption is warranted. First, clients may get served even when they do not meet the income ceilings. Second, and more importantly, as we note elsewhere, the income ceilings serve only as a rough approximation to the poverty lines.
We recommend a performance indicator which tells us who is being served by the CVITP.
Performance indicator:
What is the percentage of CVITP clients falling below the official poverty line?
- Data type: income
- Data collection frequency: annual
- Data source: based on data from CVITP clients’ returns and Statistics Canada data on official poverty lines
- Data owner: CRA and Statistics Canada
- Target: established using the first year where this data is gathered as the baseline
(For example, in the first year, if the CRA determines that 50% of individuals served by the CVITP fall below the poverty line, the CRA may wish to set a target of increasing this by 2% per year.)
4. Who is not being served by the CVITP?
The 2019 and 2020 targets aim to increase the number of individuals assisted. Perhaps it is assumed that if more individuals are assisted, a greater percentage of the eligible client population will be assisted. But this is not assured.
We recommend a performance indicator which tells us who is not being served by the CVITP.
Performance indicator:
What is the percentage of the people falling below the official poverty line who are not CVITP clients?
- Data type: income
- Data collection frequency: annual
- Data source: based on data from Statistics Canada data on official poverty lines and data from CVITP client returns
- Data owner: CRA and Statistics Canada
- Target: established using the first year where this data is gathered as the baseline
(For example, in the first year where clients’ locations are compared with the number of people falling below the poverty line in those regions, if the CRA determines that 40% of individuals in the regions are not being served by the CVITP, the CRA may wish to set a target of decreasing this by 2% per year.)
Here you will find our recap with additional reasons why we think this makes for a better group of indicators.