Overseas Tax Evasion: Fairness can only come from The FACTs

  • National Newswatch

We are living in tight fiscal times, where every dollar counts and many Canadians have had to suffer the effects of the numerous cutbacks of government programs.And yet, did you know that there are billions of dollars in taxable assets illegally hidden by some Canadians in overseas tax havens? However, the most unbelievable fact is that the Government of Canada has absolutely no idea just how much revenue it should be collecting: are we losing $3 billion to overseas tax evasion or is it $30 billion? I don't know, you don't know and more importantly, the Government of Canada doesn't know.In the pursuit of trying to find out exactly how much money is being lost to our public coffers as a result of overseas tax evasion, I have introduced a bill in the Senate: Fairness for All Canadian Taxpayers: Measuring the Tax Gap to fight Overseas Tax Evasion (FACT Act). In essence, this bill seeks to gather accurate data to measure the difference between just how much revenue the Government of Canada is actually collecting as opposed to how much it could be collecting, an amount known as the “tax gap”.The Canada Revenue Agency's justification for this refusal to measure the tax gap may be partly found in their attitude toward the tax gap itself: they simply do not understand the value of it. This tax gap analysis would disclose the amount of dollars owed but not paid by overseas tax cheats to the federal government, an amount which would no doubt astound Canadians and could further expose the Agency's failing efforts to combat overseas tax evasion.Canada's Revenue Agency does not have much company in its dismissive attitude toward calculating the tax gap. The United States, the United Kingdom, Denmark, France, Belgium, Slovenia, Mexico, Luxembourg, Israel, Estonia, Turkey: they all produce regular estimates of their tax gap, seeing it as, in the words of the United States Internal Revenue Service, a means of enabling government to "make better decisions about tax policy and the allocation of resources for tax administration". Such an attitude even extends to the state of California, which estimates its tax gap to be approximately US$10 billion.This is not an endeavour these agencies take lightly. Her Majesty's Revenue and Customs (HMRC), the United Kingdom's (UK) equivalent of the CRA, produces yearly estimates of their tax gap, calling them a "foundation for HMRC's strategy", which enables the agency to measure the effectiveness of its programs. In fact, it even looks to other countries' estimates of their respective tax gaps for other policies that might be worth adopting by the UK. Similarly, the Swedish National Tax Agency uses their estimate as a means of risk management, helping to determine the best allocation of their Agency's resources.And still Canada refuses to measure the tax gap.Bill S-226 would require the Canada Revenue Agency to provide a public report of all convictions for overseas tax evasion; compiling them all in a single report to show Canadians the consequences faced by those who hide their money in tax havens, and also demonstrate the seriousness with which their government takes overseas tax evasion.Canadians are also concerned about the difference in treatment between domestic and overseas tax evasion. CRA does a very good job catching and punishing Canadians who keep their money and earnings in Canada and try to avoid paying taxes. Check the CRA website; there are all kinds of convictions for domestic tax evasion: a real estate agent in British Columbia, a house painter in New Brunswick, a doctor in Saskatchewan. But none for overseas tax evasion are listed.This Bill is about the right of Canadians to know that their tax system is fair, and fairly administrated. That fairness – and confidence in that fairness – must be the cornerstone of government policy, and its laws in particular. As in all things, justice in our taxation system must be seen to be done. This bill seeks to bring some much needed transparency to that system, so that Canadians might see for themselves whether the results match the rhetoric.There is something seriously wrong at the Canada Revenue Agency and we have a responsibility to ensure that those Canadians who work hard, pay their taxes and play by the rules, are treated the same as all other Canadians. A double standard cannot be allowed to continue to exist allowing some Canadians who hide their money overseas to pay no taxes, while the rest of us make up the shortfall.Percy Downe is a Senator from Charlottetown.