Measuring, disclosing Canada's tax gap key to combatting evasion

I have introduced Bill S-258, the Fairness for All Canadian Taxpayers Act, in the Senate, requiring the Government of Canada to disclose all convictions for overseas tax evasion and to measure the “tax gap”—the difference between what taxes should have been collected by the Canada Revenue Agency (CRA), and what is actually collected. The proposed legislation would amend the Canada Revenue Agency Act to require the CRA to report on all convictions for tax evasion, including a separate report listing all convictions for overseas tax evasion, in an annual report tabled in Parliament. As well, it would require the Minister of National Revenue to report to Parliament on the tax gap every three years. It would also require the CRA to provide the Parliamentary Budget Officer (PBO) with data it has collected on the tax gap, and any additional data the PBO considers relevant to its own independent analysis of the tax gap. Many other countries—the United States, the United Kingdom, Turkey, and Sweden among them—measure their tax gaps and have found it to be a valuable policymaking tool. They all agree that money hidden overseas must come home, and that tax gap information helps to identify the dollar amounts involved and the measures required to fight overseas tax evasion. The Parliamentary Budget Officer (PBO), Yves Giroux, testified before a Senate committee in March 2020, stating that, based on his own analysis: “I am convinced ... having worked both at the CRA and been PBO for a year and a half now, that there are hundreds of millions, if not billions of dollars, in taxes that go undeclared, unreported, and that escape Canadian tax authorities, probably on an annual basis due to the international transactions that take place.” For its part, the well-respected Conference Board of Canada published a report in 2017 titled Canadian Tax Avoidance: Examining the Potential Tax Gap, concluding that up to $47-billion worth of taxes could be going uncollected by the Government of Canada. CSG Senator Percy Downe. The Hill Times photograph by Ulle Baum The CRA has produced some information about the tax gap, after having been compelled to by the government, but we need more information. We need a series of reports to measure the effectiveness of CRA’s action; to see what’s working, and what is not. This bill would enshrine that into law. What the CRA is not doing is obvious by its inactivity on the 2016 Panama Papers disclosure, which revealed hundreds of Canadians had money hidden overseas in Panama. In the years since the release of the names of account holders, countries around the world with citizens identified in the Panama Papers collected more than $1.36-billion in taxes that were owed to them but hidden in Panama. As of 2021, the last year for which information is available, Australia had recovered nearly $138-million; Ecuador, $84-million; Spain, $166-million; and even Iceland, a country of 340,000 people, had recovered $25-million. Canada has not announced the recovery of a nickel. Zero. This bill will not, by itself, solve the problem of overseas tax evasion, but it would help to clearly identify the size of the problem in Canada and will force the government to make that information available to Canadians. The lack of convictions for overseas tax evasion undermines Canadians’ confidence in our tax agency and our government. Why are Canadians who hide their money overseas treated differently than the rest of us? In the words of the November 2018 report of the Auditor General of Canada on the Canada Revenue Agency: “It is ... important for Parliamentarians and the public to have complete and transparent information. They need to assess whether the Agency is meeting the government’s objective to crack down on non-compliant taxpayers, so that all taxpayers pay the right amount of taxes.” Transparency is at the heart of this bill. It would require the Canada Revenue Agency to be more open about what it is doing—and what it is not doing—to ensure Canadians have faith in the fairness of their taxation system. Otherwise, we have two classes of Canadians: those with the means to hide their money in tax havens, and the rest of us, who have to pay more than our fair share to make up the shortfall. Senator Percy Downe is from Charlottetown, P.E.I., and is a member of the Canadian Senators Group. The Hill Times

Measuring, disclosing Canada’s tax gap key to combatting evasion

Bill S-258 would amend the Canada Revenue Agency Act to require the CRA to report on all convictions for tax evasion, including a separate report listing all convictions for overseas tax evasion, in an annual report tabled in Parliament.

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Measuring, disclosing Canada’s tax gap key to combatting evasion

Bill S-258 would amend the Canada Revenue Agency Act to require the CRA to report on all convictions for tax evasion, including a separate report listing all convictions for overseas tax evasion, in an annual report tabled in Parliament.

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