Canada's five worst tax loopholes provide 99% of their benefit to the richest half of Canadians and cost the federal government $10.4 billion in 2011. That's the conclusion of an in-depth study of tax expenditures published by the Canadian Centre for Policy Alternatives.
CCPA Senior Economist David Macdonald examined who benefitted from a list of 64 personal income tax expenditures. They ranged widely from the Guaranteed Income Supplement to the Stock Option deduction. He found that 59 of them provide more benefit to the top 50% of income earners than the bottom half, with the largest share going to the richest 10%. Using data from 2011 he found that the cost of those 59 expenditures totalled $100.5 billion.
The Auditor General has exposed serious efficiency problems in how the Canada Revenue Agency deals with regular taxpayers. And those problems point straight to a series of cuts over the past decade that have impacted how the CRA serves Canadians and collects revenues.
According to the latest AG report, the CRA takes too long to respond to objections to its income tax decisions – an average of 263 days for individual income tax objections registered between 2011 and 2016 – and uses incomplete and inaccurate methods to evaluate how well objections are handled. AG Michael Ferguson says 65 per cent of the objections he reviewed were eventually resolved either fully or partially in favour of the taxpayer. Those findings suggest more can be done ahead of time to resolve issues prior to objections being filed.
The international tax dodging industry is profiting from anemic international co-operation on tax rules and standards,” says Canadians for Tax Fairness executive director Dennis Howlett. The Panama Papers, Luxembourg Leaks, and other global schemes have exposed large-scale tax evasion and avoidance. Individual governments can make some changes to stop it – but just like fighting international terrorism or environmental degradation – countries are more effective when they work together.
Multinational e-commerce outfits like Facebook and Google are hoovering profits in Canada and then shifting them offshore without paying tax on them.
It is legal because outdated tax rules say they are deemed to not be "carrying on business" here. So while CEOs make billions in profits, students face a mounting pile of debt and are often not able to feed themselves properly.
Donald Trump’s contention that it is “smart” not to pay your fair share of taxes has provoked public outrage. But there are lots of Canadian multinationals incorporating that mantra into their business plans.
There is a powerful Bahamian connection in the mess that is Canada's offshore tax haven epidemic. Now a new leak to the International Consortium of Investigative Journalists and media reports are blowing its cover.