The complexity of Canada’s tax code has come under scrutiny following a report from the Auditor General regarding the Canada Revenue Agency (CRA) call centers. The report reveals that both taxpayers and CRA agents struggle to navigate the intricate rules, leading to widespread confusion and misinformation.

The Auditor General found that the CRA provided accurate responses to general individual tax inquiries only 17 percent of the time. This means that 83 percent of the time, taxpayers received incorrect information. For business tax questions, the accuracy rate was slightly better at 54 percent, but the completeness of those responses was only 31 percent.

Accessing CRA agents has also proven difficult. Last year, only 32 percent of Canadians' calls were successfully connected to an agent. This has led to a growing frustration among the public, with Finance Minister François-Philippe Champagne acknowledging that the issues faced by Canadians with CRA call centers are "unacceptable."

The report highlights a fundamental issue: Canada’s tax code is excessively complicated. The Income Tax Act spans over two million words across 3,600 pages, comparable in length to the entire Harry Potter series. Chartered Professional Accountants Canada has also called for an overhaul of the tangled tax system, indicating that the complexity is a significant factor in the high volume of inquiries directed at the CRA.

Despite an increase in staffing, the CRA's performance has not improved. The agency currently employs 1,000 more call center agents than five years ago, yet the service has declined. In the 2019-20 fiscal year, 43 percent of calls were answered within the service standard of 15 minutes. By the 2024-25 fiscal year, this figure dropped to just 18 percent, despite having 4,547 agents.

The CRA is one of the largest federal government entities, employing 52,499 bureaucrats. In comparison, the Internal Revenue Service (IRS) in the United States has 90,516 employees, serving a larger tax base. This translates to one CRA bureaucrat for every 800 Canadians, while the IRS has one for every 3,800 Americans.

The government’s response to the CRA’s shortcomings has included plans to expand automatic tax filing for more Canadians. Prime Minister Mark Carney announced efforts to extend this service to middle-class Canadians with straightforward tax situations. However, critics argue that the CRA’s poor track record raises concerns about its ability to accurately file taxes automatically.

With the CRA providing incorrect information 83 percent of the time, questions arise about whether it would undercharge or overcharge taxpayers if tasked with filing their returns. Additionally, with less than a third of calls reaching an agent, taxpayers may find it challenging to resolve issues if the CRA mishandles their filings.

The ongoing issues with the CRA underscore the need for a simplification of Canada’s tax code rather than merely increasing the agency's power. The complexity of the rules is a significant barrier to effective communication and service, necessitating a reevaluation of the tax system to better serve Canadians.