The Issue: Promoting Tax Fairness
The Trudeau government deserves credit for ending the targeted assaults by the previous Harper government on public interest charities. It has also committed to reinvesting $444.4 million over the next 5 years in staff and structure at the Canada Revenue Agency (CRA) specifically to “crack down on tax evasion and combat tax avoidance.” These measures will go a long way to restoring public faith in the fairness and integrity of our tax system, ensuring federal programs are provided much-needed revenue, and that our members are well supported in serving these goals. But sustaining these promised reinvestments over the coming years and ensuring the investments address our longstanding concerns requires constant vigilance and encouragement by all Canadians, especially our members. Doing so will ensure:
- investments in investigation and enforcement more than pay for themselves in increased public revenues, and
- restoration of public trust in the fair and impartial application of Canadian tax laws.
- PIPSC represents approximately 12,000 auditors, audit managers, forensic accountants, economists, statisticians, actuaries, finance officers, commerce officers and other professionals employed by the CRA.
- While the precise amount is currently unknown, it is estimated that Canada and Canadians are owed billions of dollars in unpaid federal taxes. The Parliamentary Budget Office (PBO) recently renewed its call for the CRA to release taxpayer data so that it can calculate the so-called “tax gap” – i.e., the difference between what Canadians owe in taxes and what the CRA collects.1
- Canadians for Tax Fairness currently estimates the revenue lost from tax havens alone to be $7.8 billion, and that close to $199 billion of corporate Canadian money now sits in tax havens.2
- The previous Harper government announced cuts to the CRA that, between 2012 and 2017, were calculated to result in the loss of over 4,000 positions and nearly $1 billion from its annual budget.3
- These cuts have hindered the Agency’s ability to properly investigate and reclaim lost revenue from tax avoiders. Over 600 PIPSC positions have been affected, resulting in significant lost capacity to units such as Criminal Investigations, Special Enforcement, Offshore Tax Evasion and Aggressive Tax Planning.
- Compounding this damage are questionable policy decisions and misguided restructuring efforts by the Harper government that continue to hamper efforts at ensuring all Canadians – and especially the wealthiest – pay their fair share of taxes.
- A 2013 report prepared for Revenue Canada by Walker Consulting Group, and based on focus group interviews with Canadian tax accountants, raised “‘significant questions about the integrity of the tax system,’ and how little effort the agency seemingly puts in to chasing wealthy tax cheats, versus the resources it puts towards ‘smaller players who claim a few too many dollars in charitable donations.’”4
- The finance department’s numbers show a ten-dollar return for every dollar invested in combating international tax evasion and aggressive tax avoidance.5
- While the CRA has been given lists of account holders in tax havens to investigate, the relevant units at the CRA do not have the resources to investigate these lists in a timely manner.
- The integrity of the tax system should never be called into question. Yet that is exactly what has happened in recent years. Budget cuts and policy mistakes have contributed to an increasingly dysfunctional tax system.
- Restructuring efforts aimed at streamlining auditing processes and shifts in policy direction have resulted in reduced capacity, a loss of expertise and accusations that audits are increasingly politically motivated.
- Tax fairness, preservation of CRA’s reputation for impartiality, and return on taxpayer investment should dictate the current government’s course of action. That course should be directed towards catching big-time tax cheats.
- Less attention has been paid to big-time tax cheats and a greater share of the tax burden has been shouldered by small businesses, charities and middle-class families. It’s become more common to target overt mistakes on small returns than to target big and complicated tax avoidance strategies. That means less attention is being paid to the people trying the hardest to avoid taxes.
- Conditions at the CRA have prevented dedicated professionals at the Agency from carrying out their work to the best of their ability. Morale under the previous government was at an all-time low. Some have even spoken out publicly despite the potential consequences of doing so.
- We urge Members of Parliament to advocate for sustained reinvestment in the staff and structure needed within CRA to recoup unpaid taxes from international tax havens.
- A recent report by Canadians for Tax Fairness recommended 7 ways to fix the CRA and ensure tax fairness including:
- Boost capacity
- Prioritize and prosecute
- Investigate complex cases
- Close loopholes and fix laws
- Produce a Tax Gap Report
- Lead global efforts to tackle tax havens and reform corporate tax rules.
“Tax Havens: Canada’s $199 Billion Problem” Canadians for Tax Fairness, July 27, 2015,