Ontario tax collectors not ‘aggressive’ enough: Auditor-General

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Tax collectors in Ontario do not act quickly enough to pursue delinquent accounts, forcing the cash-strapped province to chalk up $1.4-billion owing to it as a bad debt.

Bureaucrats in charge of chasing unpaid corporate and retail tax debts took an average of seven months before attempting to make contact. In several cases, bureaucrats took two to five years to get in touch, and they rarely made personal visits. They also seldom used enforcement tools at their disposal, including liens and warrants that would allow the government to seize assets.

"They weren't being aggressive," Auditor-General Jim McCarter said at a news conference. "It was seven months before they even picked up the phone. They should be sending a field officer out to the business to knock on the door and say, 'Where's my money?'"

The revelation that the province will likely walk away from $1.4-billion in taxation revenues at a time when it is struggling with a $14.4-billion deficit is contained in Mr. McCarter's annual report, released on Wednesday. The report highlights areas where Premier Dalton McGuinty's government is not getting the best bang for its buck.

At a time when the government is attempting to usher in an era of restraint and is embroiled in an escalating dispute with teachers over legislation freezing their wages, costs for criminal justice and policing are soaring even though crime rates are dropping. The auditor also criticized cost overruns at the province's transportation planning agency. Metrolinx has spent more than $700-million developing the fare card Presto – ranking it one of the most expensive such systems in the world – but the agency has failed to create a region-wide, integrated transit fare system for the Greater Toronto and Hamilton areas, where the card would be used.

The Auditor-General's report is traditionally tabled in the provincial legislature, where opposition members have an opportunity to question the Premier and other cabinet ministers about its findings. But with the legislature prorogued, Mr. McCarter was forced to deliver his 10th annual report to the Clerk's Office.

"It's frustrating and disrespectful that Question Period has been cancelled," New Democratic Party Leader Andrea Horwath told reporters.

Many government officials responded to the report via press release. Aly Vitunski, a spokeswoman for Finance Minister Dwight Duncan, said in a statement that the Ministry has already written off $600-million of the $1.4-billion owing to the province as of March 31, 2012, and may need to write off the rest in future years. She said this does not affect the fiscal plan because the government makes a provision for bad debts. The $1.4-billion accounts for just 1 per cent of the tax revenues collected by the province over the past five years.

Mr. McCarter says in his report that the $1.4-billion consists mainly of older corporate and retail sales tax accounts that accumulated over a number of years. His report also notes that the collections branch lost three-quarters of its staff last year after the province's retail sales tax was replaced with the harmonized sales tax administered by the federal government. The shortage of staff will further hinder collection efforts, Mr. McCarter warned, and "may well result in even more write-offs than expected at present."

On Presto, Mr. McCarter said it is the latest example of how "challenged" the government is when it comes to managing big, complex information technology projects – the eHealth digital medical record system is another, he said.

Transportation Minister Bob Chiarelli countered in an interview that the $700-million cost to develop Presto is comparable to or less than what other jurisdictions spent developing a fare card.

"If you go to all of the major transit systems that have a smart card, none of them have bought anything off the shelf," he said.

Highlights from Auditor-General Jim McCarter's annual report:

• Too many Ontario Provincial Police officers work 12-hour shifts to take advantage of more days off, resulting in over-staffing during slow morning hours. The OPP’s operating costs are increasing well above the inflation rate, despite a decline in crime rates and serious car accidents.
• The number of crown attorneys has more than doubled over the past two decades, even though the number of criminal charges they handle in a year has barely changed.
• About 20 per cent of x-rays, ultrasounds and other diagnostic tests done by private, for-profit medical clinics may be “inappropriate.”
• The waiting time for elderly patients to get into a long-term care home has almost tripled to 98 days from 36 days since 2005. In fiscal 2011-12, nearly one in six patients waiting for a bed died before getting into a facility.
• The mandatory Drive Clean program is doing little to combat smog in Ontario. More than three quarters of the reduction in auto emissions since 1999 is due to more stringent manufacturing standards and federal requirements for cleaner fuel.
• A not-for-profit organization that received government funding for diabetes education programs in Northern Ontario was paying a $5,000 monthly retainer for advice on “election strategizing.”