Quick. Can you name Canada’s Minister of National Revenue?
We thought so.
For someone who is in charge of collecting the money to keep this country going, Kerry-Lynne Findlay keeps a pretty low profile. So Tax Fairness was happy to hear that the minister had sent a commentary to the Charlottetown Guardian about the operations of the CRA. Good thing. When your country loses at least $7.8 Billion a year to offshore tax havens, you have some explaining to do.
Unfortunately her letter did little to clear up the confusion. Instead of tackling tax havens she penned an attack on Senator Percy Downe’s opinion article about tax haven abuse, which was published a few weeks ago in the Charlottetown Guardian.
Here are some excerpts from that exchange:
Senator Downe writes: “Eight years ago, the Canadian Government was given the names of 106 Canadians with secret bank accounts in Liechtenstein. The information they were handed showed that the amounts in Canadian-held Liechtenstein bank accounts totalled over $100 million — one account had over $12 million. Not one account contained less than half a million dollars. These are very rich Canadians. Since Liechtenstein, the Government of Canada has been handed the names of Canadians with secret accounts in a bank in another tax haven, Switzerland. As an example of the size of the problem facing the federal government, just these two banks had accounts for over 1,800 Canadians. Imagine how many other accounts exist throughout the world? In the eight years since this information has come to light, not one of these Canadians who have hidden their money abroad in those accounts to avoid paying taxes in Canada has been charged or fined…Any ordinary resident of Canada who is found to not be declaring their income would be hounded by the Canada Revenue Agency (CRA). Why the double standard for Canadians with foreign bank accounts?”
Findlay addresses neither the longstanding issue of the Swiss and Liechtenstein accounts nor the double standard. Instead she accuses the Senator, who is a Liberal, of expressing “the politically biased and ill-informed opinions of his special interest group friends.”
We assume she means Canadians for Tax Fairness because Downe had accepted our invitation to speak at a very successful Town Hall in Charlottetown at the time of the premiers meeting. Just for the record, we work with any politician who believes that everyone should pay their fair share. That should be all of them, right?
We’ve applauded government measures aimed at staunching the offshore flow. Findlay says there have been 85 such measures since 2006. We didn’t know there were that many. A list would be helpful. But we wonder how many of those measures would actually be helpful.
Canadians for Tax Fairness is not alone in its concern that the effort doesn’t measure up to the size and complexity of the challenge. The numbers should tell the tale.
Minister Findlay says:
“The Canada Revenue Agency (CRA) has audited over 8,000 cases through our efforts to combat aggressive international tax planning, identifying approximately $5.1 billion in federal tax owing. The CRA has audited over $4.5 billion in offshore tax. This is in addition to nearly $1.5 billion of offshore income and assets that has been driven into voluntary disclosures.”
In a follow up letter to The Guardian, Senator Downe writes:
Identifying money is a different matter from collecting it, and how much the CRA has actually recovered is an amount that does not make it into her letter…
Recent years have seen about 2500 jobs lost at the Canada Revenue Agency – the most of any single part of the government - with more to come, including budget cuts totalling $259 million. Yet somehow, this is not going to have an impact on its ability to collect revenue. It talks about more auditors, but fails to mention that the number of people working on International Audits and Aggressive Tax Planning (the main bodies that deal with issues like overseas tax evasion) has been declining over the past five years...CRA officials are taking the easy way out, rejecting risky cases of large-scale overseas tax evasion in favour of more certain, smaller victories – contractors, waitresses and other ordinary Canadians who represent the low-hanging fruit that is easier for the Agency to pick, rather than the wealthy Canadians who have the resources to hide their money overseas.”
This week, the Globe and Mail reported that Finance Minister Joe Oliver has quietly bowed to pressure from resource companies. He will not follow through on Jim Flaherty’s commitment to crack down on companies who set up subsidiaries in tax havens and use what is called “treaty shopping” schemes to lower their taxes.
Canada’s corporate tax rate is already the lowest in the G7 – yet many well-known companies are paying much less than what the Income Tax Act outlines.
Guess who makes up the difference? Minister Findlay may describe those who ask that question as “special interests”. We think ordinary taxpayers deserve more respect than that.