Canada Revenue Agency misfires again in targeting employee discounts

Sometimes you write a column and hope that by the time you press the Publish button events have rendered it dated. Let’s see how this goes in the next 700 or so words.

These days there are impolite ways to react when you hear something incredulous.

“Huh?” is a throwback. It no longer suffices. There is a more modern, coarse version, likely what many said when they heard the Canada Revenue Agency (CRA) was going to tax employee discounts.

When one hears about this, the mind goes: Who thought this up? What were they thinking? Can they be serious? What kind of world are we living in? What kind of world are they living in?

Our first jobs are often attached to a sector offering employee discounts. We know them well: they don’t pay profoundly, but they build new muscle groups physically and emotionally. Full-time, they usually meet the bills; part-time, they provide walking-around money.

Some of us stay – either we love the role or move up the ladder and into management – or use these jobs as way stations to wider ambitions.

While we are in them, though, we can benefit (though barely) from perquisites of the gig: discounts for ourselves, sometimes surreptitiously for friends and families. Depending on the place, these discounts are meaningfully spiffy for lower-wage workers.

For employers they serve dual roles – the nicest one being incentives to reward good employees, the clever role circulating payroll expenses back into businesses.

There could be no crueller discounting of this discounting practice than to tax someone on them. But it became evident in the last while that the decision-makers at the CRA had this in mind.

The CRA’s recent tax folio set out to clarify that, contrary to longstanding belief and practice, the perqs were a form of taxable benefit. It wanted businesses to keep track of them – and, presumably, employees to declare them as income.

In a very pure world of everybody living entirely by the book, such a notion might make a scintilla of sense. In the real world, it’s stupid.

The idea is tone-deaf to the reality of longer hours, greater workloads and the pressure of living costs. Taxing an employee discount takes perverse pleasure.

Purists might argue that perqs are uncaptured revenue, even if they are on the scale of the last drop of water in a giant bucket. But they are a terrible place to look for tax efficiency.

They would burden business – or at least the ones that would choose to comply – with adminstrivia. They would saddle workers – or at least the ones that would choose to comply – with taxes that will mitigate the discount’s benefit. They would likely generate an even more vibrant underground economy.

For the last 48 hours, it has me worried that the Trudeau government is coming next for my company’s coffee machine.

True to form for any deer in the headlights, the government’s first gesture this week was to freeze and defend the territory, even if the idea had seemingly come from the bureaucracy. To mix the metaphors, it is more common for officials to circle the wagons than throw anyone under the bus.

But as the week progresses, the crawl down on the post-Thanksgiving turkey is under way and the bus is coming down the road.

The revenue minister, Diane Lebouthillier, seemed to suggest Tuesday that the government had no intention of targeting retail workers, but then didn’t say the folio would be withdrawn or reviewed. Strike one.

Officials then told reporters that the gesture was aimed at car dealers or those whose discounts were significant. Strike two.

As the day progressed, the minister took a minute to leave the batter’s box and use the pine tar. Before the strikeout was complete, emails to reporters were distancing the minister from her ministry. It was someone else’s idea, her aides said, and she didn’t know about it. This speaks volumes, but no matter.

As best we can tell, on Wednesday the government has said it will indeed pull the folio and review it in consultation with industry groups.

The government is already annoying small businesses, farmers and corner store operators with its broad-brush-stroke tax proposal. But that would have been a brushfire compared with the blaze that would await the disappearing discount.

As for whose idea it was, well, it will be like the product of the vague review that buries the idea: we stand a better chance of finding Jimmy Hoffa’s body.

I press the Publish button gratefully, but shaking my head.