OttawaEvery April, the country performs a strange and expensive ritual. The country instructs each of its citizens to retrieve a small pile of forms, T4s from employers, T5s from banks, T2202s from universities, RRSP receipts from the firm holding the account, donation receipts from charities, medical expense receipts from the pharmacy, child-care receipts from the daycare, and to copy the numbers from those forms onto another form, the T1 General. The citizen then signs the T1 General and submits it, by paper or by software, to the Canada Revenue Agency. The Agency, on receipt, checks the numbers the citizen has submitted against the originals the Agency has, in its own database, already received from the same employers, banks, universities, firms, and charities. The Agency then issues a notice of assessment, in which it either confirms what the citizen submitted or, in the cases the country dreads, asks for a correction.

The ritual costs the country, by the Canadian Federation of Independent Business's most recent estimate, somewhere in excess of seven billion dollars a year in compliance time, professional fees, software licences, and the avoidable anxiety of a population that is, on balance, neither numerate nor calm. The ritual produces, in the end, a set of tax returns whose data the Agency already had. It would be merely wasteful if it were not also frightening.

What the Agency already knows

The Canada Revenue Agency, on the first business day of March in any given year, possesses electronically the great majority of the information that any salaried Canadian's tax return will eventually contain. The Agency has the T4, the T4A, the T5, the T5008, the RC62 child-benefit ledger, the RRSP-room calculation, the carryforward of the previous year's losses, the basic personal amount, the spousal and dependant claims registered against the citizen's account, the tuition-credit eligibility for the citizen and the citizen's children. For most ordinary employees in this country, there are roughly five facts on the tax return that the Agency does not already possess. Three of them are receipts the citizen could upload in under a minute through the Agency's existing portal. The remaining two are edge cases that the Agency could resolve, in nearly every instance, by sending the citizen a single email.

None of this is news to the Agency. The Agency's own internal modernization plan, published every five years since 2011 and quietly missed every time, contemplates a transition to what most other G7 countries already operate: a return-free or pre-filled tax system. In the Estonian system, often cited because it is the cleanest in the world, the median citizen logs in, sees the entire return the country has already filled out, scrolls to the bottom, presses a button, and the matter is finished in under ninety seconds. In the New Zealand system, used by every employee in the country who does not have additional income, no return is filed at all unless the citizen has a reason to amend. In the Swedish system, the citizen receives the return by text message and accepts by replying with a single digit. In the United Kingdom, anyone whose income is entirely PAYE pays no attention to taxes from one year to the next.

Why the country still does it this way

The country still does it this way for two reasons. The first is institutional inertia, by which is meant that the country's tax-preparation industry, taken as a single trade group, is one of the most effective lobbying constituencies in Ottawa. The industry, the software vendors, the accounting firms, the H&R Block franchises in strip malls in every postal code, has a structural interest in keeping the return complex enough that the median citizen pays for help. The industry's revenue, in this country alone, is in the low billions annually. The industry does not, in its public submissions to the Department of Finance, lobby against simplification. It does, however, lobby for "ensuring taxpayer choice," which is the polite phrase under which the lobbying actually happens.

The second reason is more honest. The Agency's mandate is, in the country's working culture, audit-first rather than service-first. The Agency was built, between the 1920s and the 1970s, to investigate. It was retooled, in the 1990s, to administer benefits. It has never been redesigned, in any cycle since, to deliver service to the citizen as a citizen. The citizen, in the Agency's internal vocabulary, is the "taxpayer." The taxpayer is, in the Agency's institutional posture, a party to be verified. The country has not been asked, in this generation, whether it would prefer to be served.

The Agency was built to investigate, retooled to administer benefits, and has never, in any cycle since, been redesigned to deliver service to the citizen as a citizen.

The self-employed, who get the audit

If the salaried Canadian is bothered by tax season, the self-employed Canadian is, on the same calendar, terrorised by it. The Agency's audit attention is structurally concentrated on the self-employed, on the grounds that the self-employed have more opportunity to misreport. This is, in a narrow sense, true. The self-employed report income that does not arrive on a T4. The self-employed claim expenses that do not arrive on a structured slip. The Agency's audit risk model treats the self-employed file as elevated by default.

What this means, in practice, is that the country's growing population of freelancers, consultants, contractors, sole proprietors, gig workers, ride-share drivers, food-delivery couriers, tradespeople, hairdressers, photographers, and small studio operators are, on average, audited or post-assessed at multiples of the rate applied to a salaried employee with equivalent income. The audit, when it arrives, is invasive, document-heavy, and stretches across months. The auditor is, in most cases, professional and reasonable. The auditor is also, in most cases, retrieving information the Agency could have obtained, more efficiently and less invasively, by integrating with the bookkeeping platforms the self-employed citizen already uses. The country has not built the integration. The country has built, instead, the audit.

What a country could choose, by next April

By next April, the country could deliver, to every Canadian whose income is entirely T4-based, a pre-filled return that the citizen could accept with a single tap. The country could, in the same software, offer a simple upload interface for the four or five receipts the citizen would optionally claim. The country could, for the self-employed, integrate directly with QuickBooks, Wave, FreshBooks, and the three or four other small-business bookkeeping platforms most of the country's self-employed actually use, and produce a continuous reconciliation that would, in the great majority of files, render the post-year audit unnecessary. The country could publish, in plain language, the audit risk model. The country could give every citizen an Agency caseworker the citizen could reach by name and email.

None of this requires legislation. All of it requires a serious modernization budget at the Agency, the political will to ignore the tax-preparation industry's submissions for the duration of a single Parliament, and a Minister of Finance willing to redefine the country's relationship with its own citizens in a way that prefers service over verification. None of these is, in this magazine's view, a moonshot. Each is a budget item. Each has been deferred, in this country, for thirty-five years.

A modest demand

Stop bothering the citizen. The country already has the citizen's data. The country issued most of it itself. The country is, in every honest accounting, asking the citizen each April to perform an act of clerical theatre whose only function is to make the citizen feel that the country is watching. The country is watching. The citizen knows this. The country could stop pretending otherwise and start, in its place, doing the small, unglamorous work of being a country that lets its citizens get on with their lives. Most of the developed world has decided to do this. This country has not. Next April is, on the present trajectory, going to be exactly like this April. It need not be.