Annual Service Plan Reports 2004/05 -- Ministry of Provincial Revenue

To provide fair, efficient and equitable revenue and debt collection that supports public services to meet the needs of British Columbians.

Values

The ministry's core values guide the organization and employees in conducting the business of the ministry and achieving ministry goals. The following demonstrates how the ministry ensures these core values are carried into its daily operations. For further explanation see Appendix B.

*Accountability*	We provide leadership and set high expectations. We measure and report on our performance at all levels of the ministry.
*Quality Service*	We are accessible and responsible to our customers. We provide excellent service. We build and support partnerships with key customers.
*Innovation*	We seek new ways of doing business and explore new technologies.
*Integrity*	We behave with integrity towards customers and protect their confidential information. We respect and trust our colleagues.
*Productivity*	We ensure our activities add value. We simplify our processes and activities.
*Professionalism*	We are committed to excellence and serving the public interest. We promote teamwork and cooperation. We recognize and celebrate achievement. We pursue learning opportunities and promote personal growth.

Ministry Overview, Core Business Areas and Structure

Ministry Overview

The Ministry of Provincial Revenue was established in June 2001 to provide centralized revenue and debt administration services to the Province of British Columbia.

The ministry is the principal revenue collector for the Province, with administrative responsibility for $18.4 billion in 2004/05 or approximately 56 per cent of all provincial revenues. These revenues support government strategic goals and pay for vital government programs such as health care, education, transportation and social services. The ministry's strategic focus is on promoting voluntary compliance with the financial obligations that result from the legislation it administers.⁴

The ministry strives to be a public sector leader in revenue and debt administration, supporting its vision of creating a "centre of excellence for revenue and debt collection in government." The ministry's core business areas provide an effective and efficient central service for the collection of monies owed to government, are committed to providing services in a fair, equitable and timely manner, and continuously raise the bar for customer service. New technologies, improved business processes, highly-skilled and motivated employees, and effective relationships with our customers — individuals, the business community, industry and client ministries we serve — will all assist the ministry to accomplish its vision.

A key focus of the ministry is service excellence. In 2004/05, the Taxpayer Fairness and Service Code was developed with our partner organizations across British Columbia. The Taxpayer Fairness and Service Code details a taxpayer's right to timely customer service, courtesy, respect, fair treatment and confidentiality in all their dealings with the ministry. To ensure ongoing communication between the ministry, stakeholders and taxpayers, the Revenue Programs Advisory Committee was established in 1999 to provide a forum for industry representatives from various sectors of the business community to discuss current taxation issues. This forum provides opportunities for information and ideas to be exchanged on taxation, input to policy issues and networking with ministry staff.

The Ministry of Provincial Revenue provides revenue and debt administration and management services to other ministries including account management, billing, payment and remittance processing, and debt collection services. The ministry has implemented processes and accountabilities for transferring accounts receivable to the ministry that ensure continued high levels of service to its client ministries and their customers. The ministry also collects taxes and fees for other agencies such as the Greater Vancouver Transportation Authority, local service areas (for example, regional improvement districts) and local governments throughout the province. The ministry's relationship with these clients is managed through transfer and service agreements, and memoranda of understanding.

The Ministry of Provincial Revenue represents the Province in its relationship with the Canada Revenue Agency (CRA), which administers the Province's personal and corporate income taxes, under the authority delegated to the Government of Canada through the British Columbia-Canada Tax Collection Agreement (TCA). This arrangement allows a single administration and collection agency for provincial corporate and personal income taxes, thereby increasing efficiency and simplicity for the Province and taxpayers.

The ministry is supporting the current negotiation of a new TCA with the CRA that increases British Columbia's flexibility and capacity in tax policy and tax administration. A detailed British Columbia Work Plan has been developed jointly by the ministry and the CRA.⁵ This work plan, coupled with the TCA, will support the requirement that revenue due to the Province is identified and received.

In late 2004, the ministry entered into an alliance with EDS Advanced Solutions, Inc. (EAS), for the management and delivery of information and technology services, and revenue services under a single, consolidated revenue management system. This alliance allows the ministry to leverage private sector expertise, technology and investment capital, while transferring risk, to improve the management of a wide spectrum of government revenue management systems. In the next two years, the focus will be the integration and streamlining of ministry responsibilities associated with revenue services, including customer service, account management, billing, payment and remittance processing, and non-tax collections. In addition, up to 40 additional revenue systems across government will be consolidated into this new centralized system.

The ministry will manage this alliance through a benefits and performance based service contract. Service level commitments within the contract will ensure the ministry and its customers receive enhanced service for the base fee payments (equal to the Province's current cost to deliver revenue management, and information and technology services). The contract is structured to ensure performance and service levels are improved and sustained. As the Revenue Management Project achieves incremental financial benefits, EAS will share in those benefits to recover their capital investment. If no incremental benefits are generated, EAS will receive only the base fee payments.


⁴	Refer to Appendix C for a list of legislation administered by the Ministry of Provincial Revenue.
⁵	View the Summary of the British Columbia/Canada Revenue Agency Work Plan at http://www.rev.gov.bc.ca/bc_cra_work_plan_summary.pdf.

Ministry Organization

The ministry evaluated and reorganized its structure to better align its core functions, and establish and manage the ministry's relationship with EAS. As of December 2004, the ministry delivered on its programs through three divisions and 15 branches (see Figure 2), with staff located in a number of centres across the province including Victoria, Vancouver and Surrey. The reorganization resulted in the realignment of the ministry's business functions with its core business areas (see Appendix D).

The ministry relies on the integration of three core business areas to implement its strategic direction and achieve its goals and objectives. The linkage between the activities undertaken by the core business areas and ministry goals are presented in Figure 1, followed by a detailed description of key responsibilities by core business area.

Ministry Organizational Structure and Core Business Areas

The ministry's organizational structure supports the delivery of services, programs and key initiatives of each core business area. Figure 2 provides an overview of the ministry's organizational structure and primary responsibilities.

Ministry Core Business Areas

Revenue Programs

Revenue Programs carries out compliance and enforcement activities for taxes, fees and resource royalties for the province. This business area provides a single point of accountability for the service delivery for each of the tax statutes it administers. It promotes voluntary compliance with tax obligations through quality customer service, education and compliance programs.

The business area manages provincial consumption taxes (social service tax, hotel room tax, motor fuel tax, tobacco tax), property taxes (rural property tax, provincial school tax and property transfer tax) and other taxes (corporation capital tax, insurance premiums tax, and logging tax). This includes audit assessments and tax refunds, and the administration of tax credit and benefit programs. Resource sector revenue administration includes the collection of royalties, freehold production taxes and resource management fees levied on the production of minerals, oil and gas.

The ministry represents British Columbia with the Canada Border Services Agency which collects provincial tax on goods brought into the province, and with the Canada Revenue Agency. Strong links are maintained with municipalities and other government organizations collecting tax on behalf of the Province, and with local governments and service areas on whose behalf the ministry collects taxes. Provincial taxpayers — individuals, the business community and industry — are the primary customer base served by Revenue Programs.

Approximately $54,636,000 and 662 FTEs⁶ were dedicated to this core business area in 2004/05.


⁶	FTEs — fulltime equivalent employment is the estimate of a ministry's annual staff utilization. The term fulltime equivalent is defined as the employment of one person for one full year or the equivalent (for example, the employment of two persons for six months each).

Revenue Services

Revenue Services provides revenue and debt administration and management services for the ministry, its partner ministries and their customers. This includes account management, billing, payment and remittance processing, debt collection and other revenue management services provided through a combination of in-house services, and a private sector firm that is managed through the ministry's Alliance Management Office.

This core business area manages the collection of overdue accounts for all tax and non-tax programs that the ministry oversees for the Province. This includes debt collection related to taxes administered in the Revenue Programs core business area, as well as non-tax collections related to Medical Service Plan premiums, the Immigrant Sponsorship Program, the B.C. Ambulance Service, the British Columbia Student Assistance Program, the Employment and Assistance Program and court fines. A key focus for Revenue Services is the management of the ministry's relationship with EDS Advanced Solutions, Inc. (EAS), ensuring appropriate oversight while facilitating the success of the alliance on behalf of the ministry.

Revenue Services also manages and collects revenues resulting from invoices the Ministry of Forests issues to its forest industry clients. Collection action is taken when necessary to ensure payment of monies owing to the government. In addition, this core business area manages trust security deposits for tenure agreements issued by the Ministry of Forests.

Provincial taxpayers and client ministries are the primary customer base served by Revenue Services.

Approximately $13,982,000 and 74 FTEs were dedicated to this core business area in 2004/05.

Executive and Support Services

Executive and Support Services consists of the Minister's Office, Deputy Minister's Office, and strategic initiatives and administration, policy and legislation, and appeals and litigation services.

Key programs and services of this business area focus on the effective and efficient provision of corporate functions that assist the ministry in achieving its goals and objectives.

Strategic initiatives and administration services provide the ministry with financial management and human resource services, strategic planning and performance reporting, and information technology management. It also provides customer service and taxpayer information and education, and administers investigative operations directed towards enforcement of provincial taxation statutes.

Executive and Support Services provides leadership and executive support on all tax administration issues, issues tracking, and government relations services that promote and market the ministry as a service agency and centre of excellence for revenue management. This area also provides legislative and policy support, and facilitation and conduct of impartial appeals and required litigation management.

Taxpayers, legislators, other ministries and Ministry of Provincial Revenue employees are the primary customers served by Executive and Support Services.

Approximately $62,047,000 and 169 FTEs were dedicated to this core business area in 2004/05. Expenditures include those paid on behalf of the entire ministry, such as building occupancy charges, amortization costs, office supplies and expenses, and shared services costs related to the provision of information technology services, legal services, human resources and payroll management, and the corporate accounting system.

Ministry Operating Context

The following section provides an overview of the ministry's operating context, including external and internal factors that impact the ministry's success in meetings its goals and objectives, and the ministry's response to these factors.

Scope of Ministry Operations

The ministry provides centralized revenue and debt administration and management services to government, administering $18.4 billion or 56 per cent of all provincial revenues. It provides services to ministries, agencies, and local authorities. Services include:

Key Influences

The ministry's performance is impacted by several factors including its capacity, the strength of the provincial economy, the requirements of its client ministries, and its relationship with its customers.

Ministry Capacity

The ability of the ministry to meet its goals hinges on its capacity to deliver service. To meet its goals and objectives the ministry must maintain efficient and effective business processes, attract and retain skilled and knowledgeable employees, and ensure that employees have the tools necessary to do their job. Loss of skilled employees poses a key risk to the ministry (see Table 1 ). To mitigate this risk, the ministry is focusing on creating a culture of excellence and learning that will encourage staff development and retention. To enhance its business and service capacity, the ministry has entered into an alliance with EDS Advanced Solutions, Inc. (EAS) to leverage private sector investment and expertise to improve, consolidate and streamline revenue management across government (see page 9).

The Provincial Economy

The ministry administers revenues that are generated through provincial economic activity. The British Columbia economy grew 3.9 per cent in 2004, leading all provinces in Canada. Consumer spending, which accounts for about two-thirds of all economic activity in the province, grew 4.1 per cent in 2004, while growth in housing starts of 25.8 per cent in 2004 led to growth in residential construction investment of 14.8 per cent. With the overall strong performance of British Columbia's economy, ministry revenue grew by eight per cent over the past year, and by more than 18 per cent compared to 2002/03: $15.5 billion in 2002/03; $16.9 billion in 2003/04; and $18.4 billion in 2004/05.

Client Requirements

The ministry collects revenues on behalf of a wide variety of client ministries, agencies, local governments and local service areas. These clients make policy decisions that can impact ministry activities and the revenue the ministry administers. For example, when tax rates or exemptions are changed, the ministry must update its public information, change procedures and inform taxpayers, and adjust its revenue expectations. Policy changes may also impact on taxpayer compliance with financial obligations.

Some client ministries are accountable for delivering mandatory services and are not able to apply standard credit granting practices to determine whether a client should be allowed to access services (for example, Medical Services Plan registration). Other ministries provide services that are intended to serve or protect the broader public interest, regardless of the likelihood of repayment (for example, social assistance overpayments). In these circumstances, the Ministry of Provincial Revenue must ensure its mandate to maximize revenues and collections is not counterproductive to the goals and objectives of client ministry's programs.

Customer Requirements

The willingness of taxpayers to voluntarily meet their financial obligations is the foundation of the tax system in British Columbia. Their willingness is impacted by a wide variety of factors, many of which are outside the ministry's control. To support voluntary compliance, the ministry has focused on information, education and outreach activities that improve British Columbians' understanding of their financial entitlements and obligations.

British Columbians expect their government will provide high quality customer service, easy access to information, and will engage in mutually beneficial, collaborative relationships. Recognizing this, the ministry has worked to build a relationship with British Columbians that is strengthened by the commitments to fairness and service quality reflected in the Taxpayer Fairness and Service Code. The ministry also provides a forum for stakeholders' and taxpayers' input into taxation issues, and has increased electronic information, filing and payment options as a result of customer feedback.

Risk Management

The ministry faces both external and internal risks and opportunities that impact on its success in meeting its goals and objectives. The following table identifies key risks and opportunities faced by the ministry and the ministry's response. For further discussion on risk management see page 44.

External Risks and Opportunities
Situation	Risk/Opportunity	Ministry Response
Ministry revenue expectations are impacted by changes in the economy.	Strong economic growth presents the opportunity for increased revenue generation — new revenues, as well as increased revenue and debt collection through increased voluntary compliance. Slower economic growth has the potential to negatively impact the revenues that government receives and can result in increased non-payment of financial obligations.	The ministry maintains comprehensive regularized systems for revenue monitoring and reporting by revenue source. The ministry participates in taxation policy reviews, tax planning and revenue budgeting with the Ministry of Finance. The ministry advises government and clients about changes in revenue expectations on a timely basis.
Changes to policy and legislation affect the collectibility of revenues and debt.	Policy and legislative changes are under the sole control of the ministries that are responsible for determining how best to deliver their programs. The Ministry of Provincial Revenue must remain flexible to adapt to changing rules and consequent changes in the collectibility of accounts receivable. In addition, the application of legislation in specific circumstances can be the subject of legal challenge. Court decisions can require the ministry to implement changes to the way it administers its programs, and can impact revenue expectations.	The ministry collaborates with its customers and client ministries to be positioned to provide informed feedback to ministries contemplating legislative or policy changes which could impact revenues. The ministry works closely with the Ministry of Attorney General and Ministry of Finance to clarify the government's position in appeal situations, and develop legislative amendments where needed.
The ministry relies on the willingness of British Columbians to meet their financial obligations.	Taxpayers may be unaware of or unwilling to comply with their financial obligations to government.	The ministry delivers information, education and awareness programs to promote voluntary compliance with financial obligations. The ministry's audit and enforcement program promotes fairness and equity by leveling the playing field for the majority of taxpayers who are meeting their financial obligations voluntarily. These activities assist in identifying monies owed, educate taxpayers and debtors on their obligations and deter customers who might otherwise avoid paying.
Internal Risks and Opportunities
Situation	Risk/Opportunity	Ministry Response
The ministry requires quality client information to conduct its business.	The accuracy and integrity of client identifying information maintained by program ministries is critical for revenue and debt administration and collection.	The ministry works cooperatively with client ministries to improve the quality of client identifying information. New technology will improve the collection of, and access to, client identifying information which will assist in the administration of client accounts.
The ministry requires highly skilled, motivated and innovative employees to achieve its goals.	The ministry faces a major challenge related to the recruitment and retention of key staff. In the longer term, many employees will approach retirement age which may mean increased retirement rates, knowledge retention issues and the need to recruit for key organizational positions. In the short term, the ministry is challenged to recruit in a highly competitive market for individuals with financial expertise, particularly auditors.	The ministry supports a culture of excellence and learning to promote employee development and retention. The ministry supports job assignments that further professional and career development of interested employees. The ministry participates in the government's Corporate Succession Planning sponsored by the BC Public Service Agency.

New Era Commitments

The Premier's letter of June 2001 and the Core Review process provided specific direction to the ministry regarding key priorities (see Table 2). The ministry has made significant progress in meeting the direction provided, making progress or completing work on all five of the commitments.

Commitments¹	Ministry Progress
Integrate major sources of revenue.	The ministry has integrated accounts receivables for all tax statutes administered by the ministry. This includes consumption, income and property taxes. In addition, the ministry is responsible for resource sector revenue for mineral, oil and gas, and forests revenues. The ministry administers non-tax revenues for Medical Service Plan premiums, the Immigrant Sponsorship Program, the B.C. Ambulance Service, the British Columbia Student Assistance Program, the Employment and Assistance Program and court fines. The ministry's new revenue management system, currently under development, will see the integration, over time, of the remaining revenue management systems across government into this centralized system.
Maximize revenue collection within the principles of fairness and equity.	The ministry ensures its audit, enforcement and collection programs are adequately resourced and focuses efforts on areas at highest risk for non-compliance. These programs promote fairness and equity by leveling the playing field for the vast majority of British Columbians who voluntarily comply with their financial obligations. The ministry has introduced the Taxpayer Fairness and Service Code which formalizes the ministry's commitment to fair treatment and quality service. This means that taxpayers have the right to expect the ministry will apply the law fairly and impartially so they have confidence in the ministry when it carries out revenue and debt collection activities critical to the funding of public services.
Examine cost effectiveness of collection methods and, in co-operation with the Chief Information Officer, seek opportunities for electronic transactions.	The ministry offers customers a variety of electronic payment options depending on the payment type including electronic banking, personal computer and telephone banking, preauthorized payments and credit card payments. In 2004/05, 58.8 per cent of payment revenue was received electronically. The ministry is determining how to increase the number of electronic payment options available to customers.
A centralized collections/corporate accounts receivable system.	The ministry has entered into an alliance with a private sector firm (EAS) to implement a single, consolidated revenue management system. It will transform, centralize and streamline over 40 revenue management systems across government.
More effective processes including single business identification number, electronic filing/payment and targeted enforcement.	The Single Business Number project, a joint initiative of the Province, the Canada Revenue Agency and other Crown agencies, was completed in November 2004. This initiative represents the first step in establishing a more seamless and streamlined way of delivering online services to businesses in British Columbia. It enables businesses to use their federal Business Number as a single identifier when dealing with multiple government agencies. This reduces administrative red tape and saves business owners time and money. This initiative lays the groundwork for efficient service delivery to businesses for registration, maintenance of basic records, and reporting and remittance processing. Currently, businesses can access four government agencies (Ministry of Provincial Revenue - Social Service Tax and Hotel Room Tax; Corporate and Personal Property Registries (available to corporations only); Worker's Compensation Board; and Canada Revenue Agency). The Ministry of Finance, which operates the program, is working to expand participation in the single business number program among other government agencies. To ensure audit and enforcement effectiveness, the ministry, through its workload development section, targets its audit and enforcement activities by identifying areas where there is the greatest risk of non-compliance. To streamline the collection and processing of provincial taxes, the ministry has established services that allow taxpayers to send their tax return and payment electronically. Consumption taxes (social services, hotel, tobacco and motor fuel taxes) can be filed electronically through a financial institution. Property transfer tax can be filed electronically through a notary public or solicitor, while some mineral tax requirements can be filed electronically. Future enhancements will be realized through the development of the Revenue Management System.


¹	Commitments include those in the Premier's letter of June 25, 2001 and the ministry's core service presentation of December 5, 2001.

In addition, the ministry contributes to the achievement of the government strategic goal — "A Strong and Vibrant Provincial Economy". Specifically, the ministry is accountable to increase recoveries of revenues owed to government and to streamline accounts receivable collections.

The ministry's 2004/05 targets for revenue recovery and collection of overdue accounts receivable were exceeded. Ministry performance in these areas is described in the Report on Performance section of this document. In addition, negotiations with a private sector firm were successfully concluded and the ministry has entered into an alliance with EAS that will see customer service improved through the consolidation of debt portfolios, multiple channels for interacting with government, leading edge technologies, industry best practices, and streamlined billing, payment and debt collection processes.