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Canada Revenue Agency unable to tackle overseas tax evasion: Senator Downe
June 17, 2019
OPINION
image Percy E. Downe
Percy E. Downe
Lib. - (Prince Edward Island - Charlottetown)

The Canada Revenue Agency (CRA) is up to its old tricks: misleading Canadians and not upholding its responsibilities to collect taxes owed to our country by those hiding their money overseas. When tax cheats are not caught, charged and convicted, and money owed isn’t collected, we have less money to invest in our priorities while the rest of us pay higher taxes to make up the shortfall.

Why the federal government allows this state of affairs to continue year after year remains a mystery. The government talks tough, “overseas tax evasion is a high priority”, “we will catch you if you cheat” and other reassuring words. Their results, however, speak for themselves: they have none.

Recently, on the third anniversary of the release of the Panama Papers, we learned that other countries have recovered more than $1.2 billion dollars in fines and back taxes. Australia has recouped $92,880,415, Spain is counting $164,104,468 in their coffers, the United Kingdom has recovered $252,762,000, and even tiny Iceland was able to recover $25,525,959. Some 894 Canadians (individuals, corporations and trusts) were revealed to have accounts in the Panama Papers, but Canada’s Revenue Agency hasn’t recovered a dollar.

It is complex, we are told. They have “identified” money, we are told. Well, it is complex for every country and other countries have not only identified money owing, they have collected it.

Because Canada has not recovered any money, three things have happened: we don’t have that money to fund our priorities without incurring a deficit; the rest of us have to make up the shortfall by paying more taxes; and Canadians are wondering why we have a two-tier justice system for tax evasion. Try to cheat on your domestic taxes, and the CRA will likely find you, charge you, convict you and force your repayment. Hide your money overseas, and you likely will never be charged or convicted. The odds are good you will get away with it, and your federal government allows this double standard to continue.

To compound the dishonesty of the CRA, investigative reporter Christopher Nardi of the Journal de Montréal, recently examined repeated public comments made by the Revenue Minister, who said, “In our current mandate, we hired 1,300 new auditors to work on combatting tax evasion.” The reporter discovered this was totally false; in reality the CRA had only hired 192 additional auditors since January 1, 2016.

Regrettably, this is not the first instance of deception from the CRA. In fact, the list of misleading statements is a lengthy one:

  • The 90% “success” rate for CRA call centres was later shown by the Auditor General to be only 36%.
  • A series of newspaper articles in 2017 extolling the work of the CRA turned out to be paid for by the Agency itself.
  • The often-repeated claim of a “billion-dollar investment” over six years to fight tax evasion — actually only $107 million had been spent by the end of the second year. Moreover, the Agency has admitted that some of that money went to fund previously-agreed-to wage increases.

The government doesn’t even know the size of the problem of overseas tax evasion. The Parliamentary Budget Officer (PBO) has been trying to estimate the tax gap (the difference between what the CRA collects and what they are owed) since 2012. Other countries—the United States, the United Kingdom, Turkey, and Sweden—publish their tax gap. In Canada, the CRA refuses to provide the PBO with the raw data he requires to inform the Government and Canadians about the amount of unpaid taxes due to overseas tax evasion.

The PBO recently stated, "It's very difficult to fix a problem that you cannot quantify", and yet your federal government seems comfortable with this ongoing ignorance.

The CRA has failed Canadians. How many millions of dollars hidden overseas are owed to our country and are not being collected? No one knows and the federal government, notwithstanding their soothing statements, seems not to care. Why? It remains a mystery but during the upcoming federal election, Canadians may want to ask why people are being treated differently depending upon whether they’re evading their taxes at home or overseas.

 

Senator Percy Downe represents Prince Edward Island in the Senate.

This article appeared in the May 16, 2019, edition of Policy Options.