Canada's Original Think Tank

Canada Revenue Agency — Tax Avoidance

Canada Revenue Agency — Tax Avoidance

Canada Revenue Agency — Tax Avoidance

Hon. Percy Downe: 

My question is for Senator Harder.

I’m delighted to see that the Conservatives are joining the overseas tax file. It’s unfortunate they were not involved a number of years ago when they were in government, when they were completely silent on that issue when I was raising it in this chamber. Nevertheless, colleagues, you get your allies where you can, and I’m glad they have joined the fight, even if it is late.

Senator Harder, I noticed you repeated the statement from CRA, because it’s the same information the Minister of National Revenue put out earlier about the $1 billion, which is over a number of years. You would know from a question answered in this chamber by CRA that, last year, they spent less than $40 million of that. So it’s a little misleading for the government to keep indicating there is $1 billion. There is $1 billion, but it’s a long way away from being spent.

Second, unfortunately, the 76 convictions number is nowhere on the CRA webpages. In fact, if you look, they talk about 15 convictions. When you ask the government where the convictions are, they won’t tell you about any of them that are overseas tax evasions. There is not one listed. They have a host of domestic tax evasions, where the CRA does an excellent job. If you cheat on taxes in Canada, you are likely to be caught, but if you hide money overseas your chances of being caught are very low.

Could Senator Harder advise us whether the government has given any new instructions to the CRA given the recent leak of the Paradise Papers?

Senator Harder: I thank the honourable senator for his question and his ongoing devotion to these issues. I can report — and the senator may well be aware — that the CRA has under way as of the end of April 30 of this year more than 990 audits and more than 42 criminal investigations related to offshore financial structures. That work continues to this date.

I should also report — and, again, I know the honourable senator is aware, because I know his office has been part of the discussions with the agency — that the government is studying the tax gap issue and is looking at how and whether Canada can implement an international component of the tax gap, as it hopes to be able to do in 2018.

As senators will know — particularly those who are experienced in this issue, as is the senator asking the questions — this is a particularly difficult measurement tool. A few countries are doing it, and that’s to their credit. Canada is seeking to learn from that experience, so that when we introduce this capacity, it is authoritative, without question.

Senator Downe: It was quite the learning curve, because I asked five years ago for the Parliamentary Budget Officer to collect the information and assess the tax gap. Eighteen countries around the world, members of the OECD and a host of other countries do it. Three weeks ago, the British released their yearly U.K. tax gap analysis. The sky didn’t fall. The British government continued, but the British public was informed about the degree of the problem.

Here in Canada, when I asked the Parliamentary Budget Officer five years ago, he contacted the CRA. They refused to cooperate.

I want to bring to the attention of Senator Harder and other senators the Parliament of Canada Act. Paragraph 79.2(1)(f) states that the PBO:

shall, if requested to do so by a member of the Senate or of the House of Commons, estimate the financial cost of any proposal that relates to a matter over which Parliament has jurisdiction.

Subsection 79.4(1) of the same act states:

. . . the Parliamentary Budget Officer is entitled, by request made to the head of a department or of a parent Crown corporation, to free and timely access to any information under the control of the department or parent Crown corporation that is required for the performance of his or her mandate.

Why would the government not tell the CRA to obey the Parliament of Canada Act and give the PBO the information so that he can assess the tax gap and tell Canadians what is owing?

Senator Harder: Again, I thank the honourable senator for his question. I’ll be happy to seek a specific answer to that question.

Let me also use this opportunity to again reference the work the CRA is doing with the Canadian Tax Foundation to come to a Canadian approach to identifying this gap. That work is under way. There was a conference in June. My understanding is the government is examining this expeditiously.