Thousands of Revenue Canada employees have begun rotating strikes after talks with the government broke down.

About 8,000 employees of the federal tax agency walked off the job Wednesday in Ontario and British Columbia. A picket line went up this morning at the regional taxation centre in Sudbury, Ont., where 1,400 workers are off the job. But office in Ottawa were untouched.

About 25,000 employees of the Canada Revenue Agency are in a legal strike position. The dispute involves members of PSAC, the Public Service Alliance of Canada. They do everything from processing tax returns and GST refunds to answering phones. The major stumbling block is wages.

The union says the job action will slow the flow of tax money into federal coffers, but not the flow out.

Child tax credits and GST rebate cheques will head out in the mail because those services have been declared essential.

This isn't the only dispute going on between the federal government and its unionized staff. Parks Canada employees, who are also members of PSAC, have been on rotating strikes since Aug. 13.

And many Customs Canada workers at border points across the country are also working to rule. They've been waving many people across the border, often without making them pay taxes on goods bought in the U.S.

The government is reportedly offering union members less than that recommended by a mediator. Workers were asking for an increase of about eight per cent over three years; the government offered around six per cent, both sides said.

In a statement released Tuesday night, Revenue Canada called its offer reasonable.

"The CRA's wages and benefits are already competitive with Treasury Board and other federal public service employers," the statement said.

"In addition, some recent studies have shown that compensation for most federal public service employees is also competitive with that of their counterparts in the private sector."

PSAC's national president says no further talks are scheduled.

Martin comments

A small but noisy group of protesters forced Prime Minister Paul Martin to shift a press conference at the end of his two-day cabinet meeting in Kelowna, B.C. indoors.

"All labour negotiations, especially when they lead to strike action, are very difficult," he told reporters on Wednesday.

"We have enormous respect for the dedication of the public sectors employees and we really hope that we'll be able to arrive at a settlement fairly soon. We certainly do want a settlement that is fair to everyone."

CTV's Rosemary Thompson told Newsnet besides the challenge of making a deal on health care with the premiers next week, Martin has PSAC "poised for strike action.

"It's a big contract, it's worth a lot of money. Obviously the government doesn't want a prolonged walkout."