Canada Revenue Agency blocking attempt to calculate tax evasion: opposition

By Elizabeth Thompson

The Canada Revenue Agency is hampering Parliamentary Budget Officer Kevin Page’s attempt to determine just how much the Canadian government is losing to tax evasion, the opposition charged Wednesday.

But while the agency initially failed to supply Page with the data he is seeking to calculate Canada’s “tax gap,” the CRA now says it will respond to him “in due course.”

Meanwhile, Revenue Minister Gail Shea suggested it was “almost impossible to calculate” Canada’s tax gap, despite the fact the opposition pointed out it is already being done in a number of countries including the United Kingdom and the United States.

The seeds of the latest skirmish between the government, the opposition and Canada’s Parliamentary Budget Officer were planted last October when Liberal Senator Percy Downe wrote to Page, asking the PBO’s office to prepare an estimate of how much tax evasion costs the federal government. In recent years, Downe has been indefatigable in his quest to delve into the issue of tax evasion, particularly those who evade taxes via offshore tax havens like Switzerland and Liechtenstein.

Under the rules governing Page’s office, any parliamentarian can ask the PBO to look into a question. Earlier this week, however, Page reported that his attempt to determine how much Canada was losing through tax evasion had hit a brick wall.

“Following our meeting in December 2012, my staff submitted two information requests to the Canada Revenue Agency (CRA) to obtain the data and information we believe are required to address your query,” Page wrote in a letter dated March 2. “Unfortunately, CRA has informed us that they are unable to share the revelant data with my office. As such we are unable to fulfill your request.”

Page said a 2010 survey for the Organisation for Econonomic Co-operation and Development (OECD) found that almost half of the 14 OECD jurisdictions calculate their tax gaps. For example, the U.K. found in 2010-11 that it was losing 6.7 per cent of its total tax liability through tax evasion, roughly 32 billion pounds. In 2006, the U.S. estimated tax evasion was costing it 14.5 per cent of its potential taxes or $385 billion US.

Page, whose mandate terminates at the end of the month, went on to outline what his staff believes would be the best method to calculate Canada’s tax gap should the CRA make the data available.

Downe says CRA is “stonewalling.”

“They hide behind secrecy, they are undermining Canadians confidence in the tax system,” Downe said in an interview with iPolitics. “If they don’t know the size of the tax gap, how do they know what resources they need to fight it.”

Downe did not rule out the possibility of invoking privilege if CRA continues to refuse to supply the data the PBO has requested.

In the afternoon, the debate spilled over into Question Period. NDP Revenue Critic Murray Rankin demanded to know why the CRA has not released the data Page’s office needs to calculate how much tax revenue Canada is losing.

“The first step to addressing tax evasion is to figure out just how much money we are losing, which is likely millions of dollars,” Rankin told the House. “That is what governments that are serious about tax evasion have already done. The United States, the U.K., Australia – but the Conservatives refuse to follow suit.”

Speaking after Question Period, Rankin said he has proposed a motion in the finance committee for the committee to call on CRA to provide it with the data it has not released to Page so the tax gap could be calculated. In Question Period, however, Shea suggested the exercise was pointless.

“In a recent appearance at the Standing Committee on Finance, even the OECD acknowledged that the tax gap is almost impossible to calculate,” Shea told the House. “That is why the OECD says that all countries should have robust auditing and that is exactly what we are doing and our record speaks for itself.”

Shea said the Conservative government is doing a better job of cracking down on tax evasion than its Liberal predecessor. She said thousands of cases have been audited and more than $4.5 billion worth of unpaid tax identified compared with $174 million in the Liberal government’s last year.