Tax Evasion Canada: Harper Government Accused Of Stonewalling 'Tax Gap' Estimate
March 8th, 2013 - 2:16pm
By Daniel Tencer, The Huffington Post Canada
The federal opposition is accusing Revenue Minister Gail Shea of working to block efforts to find out just how much money Canada’s government loses to tax evasion.
Critics charge that although Shea insists it is “almost impossible to calculate” what the federal government loses to illegal tax dodging measures, there is in fact a method to calculate the “tax gap” and it is being used by the U.S., the U.K. and other countries.
According to documents from the Parliamentary Budget Office (PBO), the Canada Revenue Agency has refused to release the data that would make such an estimate possible.
“What is the government trying to hide? Why will it not release the data we need to take action on tax evasion?” NDP MP Murray Rankin asked during a debate in Parliament Wednesday. Liberal Senator Percy Downe asked the PBO last fall to calculate an estimate of Canada’s federal “tax gap.” When the PBO asked for that data from Revenue Canada, the agency’s response was little short of a brush-off.
“The CRA does not generate information on the ‘tax gap,’” stated a letter to the PBO from a Revenue Canada deputy commissioner. “The CRA is not aware of a recognized or reliable methodology for determining the ‘tax gap’.”
Downe points out that there is a method to estimate the gap, based on the difference between assessed income and actual, reported income -- a method used by about half of OECD countries.
But according to a letter the PBO sent to Downe, the CRA “is unable to share the relevant data” needed to make the estimate.
“Canadians want, and deserve, to know just what type of figures we are dealing with. And yet, this government not only lacks the will to calculate it, they are not too keen on anyone else calculating it either,” Senator Downe said in a statement.
Shea’s office may be softening its stance on the issue. In a statement emailed to The Huffington Post, the minister’s office said it is “considering the PBO’s request, and will respond in due course.”
A spokesperson for Shea noted that the minister had been quoting an OECD official when saying it is “almost impossible to calculate” the tax gap.
The spokesperson would not comment on whether the tax gap methods used by the U.S. and other countries could be adopted by Canada.
There have been some estimates made on how much Canada loses to tax evasion. According to numbers cited by Canadians for Tax Fairness, federal and provincial governments may be losing up to $80 billion in revenue per year to tax fraud and evasion.
An analysis of StatsCan data carried out by economist Toby Sanger last year estimates that tax evasion is a growing problem in Canada. The percentage of foreign investment by Canadians into countries known to be tax havens has grown from about 10 per cent of GDP in 1987 to 24 per cent in 2011.
Shea's office argues the current government has been better than its predecessors in tackling tax evasion.
"Since 2006, the CRA has audited thousands of cases and identified over $4.5 billion in unpaid taxes abroad," Shea's office said in a statement "This compares to a mere $174 million in the last year of the Liberal Government.”