Download - Statement from Bernard Gilles, Revenu Quebec
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Mandatory billing in the restaurant sector
Forum on Modernizing Sales Tax Collection
New York State
April 6, 2016
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REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
AGENDA
• Introduction
• Mandatory billing in the restaurant sector
• Results
• Questions
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REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
QUÉBEC AT A GLANCE
• Largest Canadian province
• 8.1 million inhabitants (23% of Canada’s population)
• 79% native French speakers
• GDP: $357 billion (20% of Canada’s GDP)
• 1 Canadian dollar = 0.75 U.S. dollar
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REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
REVENU QUÉBEC
• Under an agreement reached by the federal and Québec governments, Revenu Québec administers the GST in Québec in accordance with the rules set by the federal government.
• The goods and services tax (GST) and the Québec sales tax (QST) are collected on sales or supplies of most property and services:
– the goods and services tax (GST), which is calculated at a rate of 5% on the selling price.
– the Québec sales tax (QST), which is calculated at a rate of 9.975% on the selling price excluding the GST.
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5LOST TAX REVENUE
• The underground economy represents about 4.2% of the GDP.
• Losses in government revenue are estimated at $3.5 billion.
• The losses are concentrated in certain sectors of the economy.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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6WHY CREATE THIS PROJECT?
• To reduce annual tax losses in Québec’s restaurant industry, which were estimated at $420 million for 2007-2008.
– $136 million of QST charged by restaurant operators, but not remitted to the government.
• To strive towards the Québec government’s goal of ensuring tax fairness; all taxpayers must pay their fair share to fund public services.
• To ensure that taxes paid by customers are remitted to the government and that restaurant establishments report all their income.
• To foster healthy competition in the restaurant industry.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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7SCOPE OF THE PROBLEM
• Revenu Québec confirmed the scope of the problem using a representative sample of restaurants:
– Inspectors went into restaurants as clients and bought meals (10 times for each selected restaurant)
– They made unannounced visits to find the meals they bought in the sales recording systems
• This step was necessary to:– ensure the project was politically accepted – document how income was under reported– accurately evaluate tax losses
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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8NECESSITY AND PERTINENCE A THE SOLUTION
• We demonstrated the impact of the problem:– on government finances– on fair competition– on restaurant-sector employees (loss of social benefits)
• We showed the limitations of the methods that were being used by tax administration bodies to deal with the problem.
• We acquired the political support needed for the success of the project.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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9A LARGE-SCALE PROJECT
• 3 years of implementation.
• 33,000 SRMs installed in close to 20,000 establishments over a period of 14 months.
• Implementation costs: $34.4 million.
• Subsidy program for restaurateurs: $53 million.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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10MANDATORY BILLING IN THE RESTAURANT SECTOR: A FOUR-PART PROJECT
4 measures
2Obligation to produce bills using the SRM
1Obligation to provide a bill
4Public awareness
campaign
3Inspection activities
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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11DATA FLOW
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
SALES RECORDING MODULE (SRM)
At the heart of the technological solution, the SRM: •records sales in its secure memory
•transmits sales information required to print bills bearing a barcode and a unique digital signature that guarantee each bill’s authenticity• creates standardized accounting records for all
restaurants in Québec
• produces sales summaries that must be sent to Revenu Québec each month;
• collects data from all Québec restaurants which is stored in a central database and analyzed to help detect attempts at tax evasion
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13LEGAL ASPECTS
We adopted new legislative measures, including incentives to comply, in the laws and regulations Revenu Québec administers:
– Act respecting the Québec sales tax– Regulation respecting the Québec sales tax– Tax Administration Act
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14KEY SUCCESS FACTORS
• Demonstrate the existence and scope of the problem.
• Demonstrate technological capability using prototypes to gain political support.
• Conduct a six-month pilot project to evaluate the impacts the new measures could have on restaurant operations.
• Create working committees and collaborate closely with various partners and organizations of the restaurant sector.
• Put in place a support team for restaurant operators.
• Develop good communications strategies.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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15RECOVERED REVENUE EXCEEDS EXPECTATIONS
• On March 31, 2015, the Québec government had recovered over $940 million in lost taxes.
• By 2018-2019, Québec will have recovered $2.1 billion in consumer and income taxes that would otherwise have remained unpaid by restaurant operators.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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16OTHER BENEFITS
• The cost to inspect a restaurant has decreased from $4,400 to $190 (a 96% reduction).
• An inspection that used to take 70 hours now takes only 3 hours.
• The number of annual inspections has increased from 120 to 8,000 and most of the work can be done electronically with minimal disruption to the business.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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17THE BAR SECTOR
• Since February 1, 2016, all operators of bars and resto bars are also required to meet the same obligations.
• Close to 6 200 establishments.
• Annual tax losses in the bar sector are estimated at $76 million.
• The Québec government will recover $42 million in lost taxes per year.
REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
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18A SOLUTION FOR THE FUTURE
• This solution was developed in such a way that it could be applied to other sectors, such as the service and retail industries.
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REVENU QUÉBEC ― Modernizing Sales Tax Collection in New York State – April 2016
THANK YOU! ANY QUESTIONS?