REACTION TO THE USER FEE HAS BEEN FAVORABLE
The Government`s use of user fees is well established
in Canada. According to the officials with whom we spoke, the general
public accepts user fees as a way of life. User fees that Canadians
typically pay include fees for processing passports, immigration
documents, and driver`s licenses. Therefore, the implementation
of a user fee for replacement SIN cards was not unusual.
The Human Resources Development Canada--the Agency
responsible for producing the SIN cards--conducts periodic reviews
to collect public perceptions related to its services. The reports
show that most people generally are pleased with the services they
receive. Although some individuals complained about having to pay
a user fee, especially if the loss of a card was not their fault
(e.g., theft), most either did not rate it as a concern or mentioned
that they found the fee to be nominal.
The Government Publicizes Changes Related to
the Replacement Card User Fee
The Canadian Government makes every effort to inform
the public regarding changes to policies on user fees. Fee policy
changes are published in the Canada Gazette--similar in purpose
to the Federal Register. If the change is significant, the
Government may purchase advertising space in newspapers to alert
the public of the change.
PRIMARY PURPOSE OF THE USER FEE IS TO GENERATE REVENUE
The Canadian Government has reduced in size drastically
over the last few years. Officials mentioned that reductions in staffing
and budgets have exceeded 20 percent in many cases. With no
relief in sight, agencies frequently have turned to user fees to
The Human Resources Development Canada imposed the
user fee to help recover the cost of producing SIN cards. In a 12-month
period ended March 31, 1996, Human Resources Development
Canada collected more than CAN$2.1 million through the use of user
fees for replacement SIN cards. (Overall, Human Resources Development
Canada produced 994,707 total SIN cards during this time period and
has approximately 31 million total SIN cards in circulation.)
Exceptions Exist to Charging a User Fee for a
The law allows for specific, limited exceptions to
charging a user fee. To be granted a waiver, documentation usually
is required. The legally allowed exceptions are as follows:
- a legal change in the name of the number holder;
- an official error (e.g., a Government employee
incorrectly entered the individual`s name resulting in an incorrect
spelling appearing on the card); and
- loss of the card due to a natural disaster.
We observed official correspondence from individuals
or their representatives requesting that the user fee be waived due
to a lack of resources needed to pay the fee. In every case that
we observed, the Government denied the request.
By Law, User Fees Cannot be Excessive
In general, user fees are not to exceed the cost of
providing a given service. The law specifically states that fees
and charges for a service ". . . provided by
or on behalf of Her Majesty in right of Canada . . . may
not exceed the cost to Her Majesty in right of Canada of providing
the service . . . ." If the fee exceeds
the cost of providing the service, it is considered a tax and is
governed under a different set of laws.
The Costs Used to Determine the User Fee Are
Each year, the Internal Audit Bureau or a contractor
audits the costs associated with a user fee. The major categories
used in the SIN card audit include:
- Transportation and Communications (e.g., postage
for SIN cards)
- Information (e.g., printing costs for SIN
- Professional and Special Services
- Rentals (e.g., renting space outside building
- Repairs and Maintenance
- Material and Supplies
- Acquisition of Machinery and Equipment
- Central Government Services (e.g., charges
for accommodation of office space)
- Contribution to Employee Benefits
- Indirect Costs (e.g., salary and non-salary
expenses for local and regional, finance, personnel, and administrative
support services provided to operations by the department)
The total administrative costs associated with producing
all SIN cards--both initial and replacement cards--is added and this
total is divided by the total number of SIN cards produced during
the year. The resulting dollar amount, rounded up to the nearest
whole dollar, becomes the basis for the replacement card user fee.
COSTS AND WORKLOAD IMPACT OF THE USER FEE ARE MODERATE
The workload impact of the user fee activity on local
offices is minimal. This is because the work force is already in
place and the fee collection is a relatively small and integrated
portion of the SIN card application process. For additional information
regarding the SIN card production process, please refer to Appendix A.
Internal Controls Used to Track Receipt of User
Fee Are Not Overly Burdensome
When a local office receives a replacement SIN card
application, the clerk must record the receipt of the user fee. The
fee is recorded into an electronic data base, called the Automated
Receipt and Deposit System (ARADS), which generates a receipt number.
The clerk writes this number in the appropriate location on the application
form. If the clerk fails to include this information, the Social
Insurance Registry--the Agency that physically produces the cards--will
not process the application.
In order to prompt a deposit in compliance with procedures,
ARADS will tell the clerk when total receipts, since the last deposit,
exceed CAN$500. The SIN coordinator for the local office periodically
receives reports showing the number of replacement cards that the
office processed, as well as the total deposits. This procedure provides
verification that the office has made all appropriate deposits.
If an individual mails an application for a replacement
card, two clerks open the mail and record the receipt of any
funds received. This prevents anyone from taking the fees and then
claiming that the applicant failed to include the fee. According
to the officials with whom we spoke, applicants rarely claim that
they did not receive proper credit for a mailed user fee.
Costs Associated with Collecting the User Fee
Are Included in the Fee
The method used to determine the user fee includes
costs associated with receiving, recording, and depositing the user
fee; therefore, the costs of receiving the fee are included in the
fee itself. The Canadian Government does not bear additional costs
as a result of charging a user fee.
SOCIAL INSURANCE NUMBER CARD PLAYS A LESSER ROLE IN CANADIAN
When the Social Insurance Registration Program began
in 1964, it introduced the SIN as a vehicle to register individuals
for two Federal Government programs: Unemployment Insurance and the
Canada Pension Plan. Since this time, its official use has expanded
moderately. The programs authorized to use the SIN are all Federal
programs, including, but not limited to, Revenue Canada-Taxation,
Old Age Security, Family Allowances, Child Tax Credit, and Citizenship
and Immigration Canada.
It is the Government`s policy that the SIN not become
a universal identifier. Although the Government cannot specifically
prohibit an organization from using the number, it strongly discourages
such activity. The Government itself goes to extremes to ensure that
it does not use the SIN improperly. The officials with whom we spoke
mentioned that they have employee identification numbers that are
different from their SINs.
HAS EXPERIENCED LOWER REPLACEMENT CARD RATES
Over the last 5 years, Canada`s replacement card
rate has been nearly 3 times less than the rate SSA has experienced.
Canada`s replacement rate has remained around 20 percent over
the last several years. In contrast, SSA`s replacement rate has
exceeded 56 percent for FY 1992 through FY 1996. The following factors
may help account for this difference.
- Fewer Uses. As described above,
the SIN card has fewer uses than the SSN card. Some of the officials
with whom we spoke mentioned that they had lost their cards years
ago, but not suffered as a result. As long as they could provide
their SINs when needed, the cards were unnecessary.
- Older Applicants. Canadian law
requires individuals to have a SIN when they begin participating
in insurable employment. As a result, many individuals do not apply
for SINs until they begin working as teenagers.
- Plastic Cards. Canada`s
cards are made of plastic as opposed to paper. Although some individuals
have criticized the material for being too brittle (believing this
to be a reason why they should not have to pay a user fee), at
a minimum the plastic is more durable than the paper SSN cards.
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