MEDIA RELEASE: Latest CRA tax gap report shows need to strengthen corporate compliance, enforcement
For immediate release: Dec 17, 2020
OTTAWA – Canada Revenue Agency’s tax gap report today confirms that investments in compliance and enforcement pay off, but the federal government must do more to close the tax gap, particularly for large corporations.
The total payment gap –how much is owed versus collected-- declined by 59% between 2014 and 2020, a period when the federal government restored funding for the CRA. Even with this overall drop, there remains a significant gap, especially for corporations. The pay gap for individual filers decreased by 76% while the gap for corporations only declined by 38%.
“For all the fanfare and fear-mongering we heard this year about CERB, today’s report reveals what we already know -- individuals are better than corporations at paying taxes owed. The federal government should zero in on where the real money is and increase compliance efforts for large corporations,” said Toby Sanger, director of Canadians for Tax Fairness.
Last year’s CRA corporate income tax gap report found corporations accounted for $10 billion, or 40% of the overall tax gap. Another study by the Parliamentary Budget Officer found Canada could be losing as much as $25 billion to international corporate tax dodging each year.
“We applaud the CRA for publishing these tax gap reports, which provide a better picture of how much tax revenue is owed, versus how much is collected. While these reports help, much more transparency is needed from the federal government to close Canada’s overall tax gap and ensure some of the largest corporations pay their share,” said Sanger.
C4TF recommends Canada do more to close this tax gap by:
- Strengthening compliance, enforcement and prosecution activities against large corporations
- Reforming tax laws to reduce tax dodging by corporations
- Publish information on how much corporations make in profit and pay in taxes, as is done in Australia
- Make large multinational country-by-country reports public
- Help tax authorities by establishing a publicly accessible Canadian registry of beneficial owners, which more than 50 countries including the UK and EU members already have
Erika Beauchesne, Communications Coordinator, Canadians for Tax Fairness
Canadians for Tax Fairness is a non-profit organization that advocates for progressive taxes to fund important public services, reduce inequality and strengthen the economy.