February 8, 2021
Introduction
The Canada Revenue Agency (CRA) recently announced that it will, for the first time, be providing financial support to host organizations that run CVITP clinics. As the CRA has previously denied that it could provide such support, this is an important change. And in principle, it is one that we support.
In this series of four short articles, we look at three areas of concern within this pilot project to provide financial support to some host organizations:
1. Targeting
3. Administrative arrangements
In each case, we outline what CRA is proposing and identify any elements we think that weaken the project. Then we suggest alternatives to address these weak points. In our conclusion, we discuss some of the challenges the CRA will face in assessing the success of this pilot.
1. Targeting
The CVITP is intended to serve individuals and families on low and modest incomes. Yet, the current project design does not bear any explicit link to this objective. The News Release for this new grant program makes clear the purpose of this funding: “The CRA expects that the grant program will make the work for these free tax clinics a little easier and encourage more organizations to sign up. This will let them help more taxpayers to file their tax returns.” Nothing is stated about the characteristics of the additional clients that the CRA hopes will be served as a result of the expansion that this grant program is expected to stimulate.
Although the funding application process indicates that the host organization is eligible for the grant if it files a minimum of 10 returns of eligible individuals, the CRA does not have the means to easily confirm the eligibility of these individuals.
The CRA should establish specific criteria, linked to the grant funding, to ensure that individuals and families on low and modest incomes are given prioritized access to these services.
At present, the CRA only suggests income guidelines which allow host organizations to serve clients who are considerably above the poverty line. The CRA leaves the final determination of income guidelines to host organizations. And it does not track for this, counting only the total number of people served by host organizations. The CRA does this despite the federal government citing the CVITP as an initiative in support of its Poverty Reduction Strategy, which makes explicit use of the poverty line as its measure of progress in reducing poverty in Canada.
If the CRA is to ensure that the CVITP is living up to its promise, then it needs to link its funding to the income characteristics of client returns. The CRA should be counting the number of returns filed by a host organization with client incomes that fall at or below the poverty line. To encourage host organizations to prioritize offering their free CVITP services to clients with lower incomes, the CRA should define a minimum percentage of a host organization’s returns which must fall at or below the poverty line for the organization to qualify for the grant funding.
As we point out elsewhere, the CRA also needs to be doing more to address the problem of non-filers and the CVITP is well-placed to help the CRA make significant inroads with this problem. As part of a multipronged strategy in working host organizations on the issue of non-filers, the CRA should offer a larger financial incentive for the returns filed by host organizations for previous non-filers.
The minimum percentage of returns filed for clients with incomes falling at or below the poverty line, and the size of the financial incentive to be offered for the returns filed by host organizations for previous non-filers could vary from year to year. However, both would need to be announced at the outset of the eligibility period for counting returns filed in order to signal to host organizations the importance they should attach to these two client groups.
The Questions and Answers page of the grant program explains that the CRA will make use of what it calls escalators:
“Escalators are activities, options and demographics that are being highlighted by the grant. Organizations that satisfy any of the escalators will receive an increase in funding. Escalators are subject to change annually as governmental and/or program priorities change and community needs shift. The annual escalators for a grant period will be announced at the beginning of each new grant period.”
These escalators could be used to define both the minimum percentage of returns filed for clients with incomes falling at or below the poverty line, and the size of the financial incentive to be offered for the returns filed for previous non-filers.
In summary, the CRA should:
– Target grant funding to ensure host organizations are providing support to those who need it the most;
– Make the client income level a criterion, using the poverty line as the threshold;
– Set a minimum percentage of a host organization’s client returns that must meet or fall below the poverty line to qualify for any grant funding;
– Offer a larger financial incentive for returns filed by clients who are previous non-filers; and
– Establish and publicize the minimum percentage and the size of the financial incentive at the outset of the grant funding period.
Read about the financial resources here.