Canada's Senate has started a debate on the Fairness for All Canadian Taxpayers Act. The legislation was introduced by Charlottetown Senator Percy Downe, a long-time critic of government inaction on tax havens. "This is about the right of Canadians to know that their tax system is fair. The current state of affairs suggests a failure on the part of the Canada Revenue Agency to come to terms with overseas tax evasion. It has created a problem that is costing the Canadian government billions in lost tax revenue."
In theory, governments aren’t supposed to tax essential items.Yet every year the CRA collects an estimated $36 million from federal tax on tampons.That's just the tip of the iceberg. Sadly, the tampon tax is loose change compared to other ways tax policy fails women and costs them and their families.
It turns out that Senator Mike Duffy is no great fan of tax fairness. Surprised?
Press Progress sleuths have turned up an entry in the beleaguered senator’s diary that shows he communicated with the Minister of National Revenue’s Chief of Staff for help on a speech defending the Canada Revenue Agency. It indicates that Duffy’s speech would be defending the CRA from “attacks re:offshore tax cheats.”
Assets officially held by Canadian corporations in the top ten tax havens reached $199 billion dollars last year. This is up from $187 billion in 2013. It is a stark and expensive reminder that Canadian corporations are continuing to shelter funds offshore while the government does little to curb the practice. Prime destinations for the money are Barbados ($71B) and Cayman Islands ($36B) – two notorious tax havens that have been a consistent destination for Canadians seeking to avoid paying taxes. In the one year period between 2013-2014, Canadians funnelled $8B to those two havens alone.
More than half a billion dollars was cut from the CRA budget during a two year period in 2012-2013. In Budget 2015, the Finance Minister is proposing to return only $16 million a year over the next five years.
“It is good that Mr. Oliver has put money back into the CRA," says Tax Fairness' Dennis Howlett." But this doesn’t replace damage done over the past several years."These major cuts to CRA staff and lack of focus on the biggest tax cheats has resulted in a record high $178Billion of Canadian money in offshore tax havens. Much of that money remains untaxed.
Is the government serious about tackling offshore tax evaders? You decide.
Tax evasion convictions in Canada have dropped by more than half since 2009. The figures show that in 2010, 216 were found guilty. Three years later, in 2013, that number dropped to 98.
Do these numbers mean that there are fewer tax cheats? Or could it mean that widespread cuts to both the CRA and the Department of Justice have hobbled efforts to crack down on Canadians who try to play the system?
Taxpayers feel the system is stacked against them when politicians use tax fairness as a slogan and not a principle. It has happened again and again in federal budgets. Will Budget 2015 be any different? Here are four actions that would speak louder than words.
Former Parliamentary Budget Officer Kevin Page knows his way around a balance sheet. So when he was asked for his assessment of the Conservative plans to double the TFSA limit he expressed a lot of concern. "Will it generate the savings for the middle class, the lower class? You would have to be quite wealthy to have $11,000 in savings after all the debt you'd have to take care of through the course of the year," he told CBC's Evan Solomon, adding that the government's focus should be on infrastructure investment. "I think the bigger issue is we need to grow the economy," he said.
In 1972, billionaire K.C. Irving of New Brunswick moved to tax-free Bermuda and placed ownership of his empire into a series of Bermudian trusts to avoid taxes in Canada.
The Irvings will insist what they - and other like-minded multinationals -are doing is legal. But should it be? Is corporate social responsibility just a matter of making well-publicized donations to hospital foundations and inner-city poverty projects? Or should corporations pay their fair share of taxes so that governments have the revenue needed to invest in social and physical infrastructure that will benefit corporations as well as its citizens.
Tax Fairness' Dennis Howlett recently talked to New Brunswick filmaker Charles Theriault about these and other questions. Here is Charles' report. It is well worth watching.