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The Canada Revenue Agency is up to its old tricks — misleading Canadians and not upholding its responsibilities to collect taxes by those hiding their money overseas. When tax cheats aren’t caught, charged and convicted, and money owed isn’t collected, we have fewer funds to invest in our priorities while the rest of us pay higher taxes to make up for the shortfall.
Why the federal government allows this to continue remains a mystery. The government talks tough, that “overseas tax evasion is a high priority” and that “we will catch you if you cheat.” But their results 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 in fines and back taxes. Australia has recouped $92.8 million, Spain $164.1 million and the U.K. $252.7 million. Even tiny Iceland recovered $25.5 million.
Some 894 Canadian individuals, corporations and trusts were revealed to have accounts in the Panama Papers but the CRA hasn’t recovered a dollar.
It’s complex, we are told. They have “identified” money, we are told. Well, it’s complex for every country and other countries haven’t only identified money owing, they have also collected it.
Because Canada hasn’t 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 for 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’ll get away with it. Ottawa allows this double standard to continue.
To compound the dishonesty of the CRA, investigative reporter Christopher Nardi of the Journal de Montreal 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 combating tax evasion.” The reporter discovered this was false; the CRA had only hired 192 additional auditors since Jan. 1, 2016.
Other misleading CRA statements include:
• The 90-per-cent “success” rate for CRA call centres, later shown by the auditor general to be only 36 per cent.
• A series of newspaper articles in 2017 extolling the work of the CRA, which turned out to be paid for by the agency.
• The often-repeated claim of a “billion-dollar investment” over six years to fight tax evasion, of which only $107 million had been actually 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 has been trying to estimate the difference between what the CRA collects and what it’s owed since 2012. Other countries — the U.S., the U.K., Turkey and Sweden — publish their tax gap. In Canada, the CRA refuses to provide the parliamentary budget officer with the raw data he requires to inform the government and Canadians about the amount of unpaid taxes due to overseas tax evasion.
The parliamentary budget officer recently stated that it’s “very difficult to fix a problem that you cannot quantify” and yet the federal government seems comfortable with this continuing ignorance.
The CRA has failed Canadians. How many millions of dollars hidden overseas are owed to Canada aren’t being collected? No one knows and the federal government seems not to care. Why? It remains a mystery, but during the upcoming federal election Canadians should ask why people are being treated differently depending upon whether they’re evading their taxes at home or overseas.
Charlottetown Sen. Percy Downe’s Bill S-243, requiring the CRA to co-operate with the PBO in its independent study of the tax gap, and to report on all convictions for overseas tax evasion, has passed the Senate and is currently before the House of Commons.