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June 17, 2013

Time for Premiers to Demand
Canada Revenue Agency Accountability on Overseas Tax Evasion

Charlottetown Senator Percy Downe has written Canada’s Premiers, urging them to use their nominees to the Canada Revenue Agency’s (CRA) Board of Management to demand accountability and action on the issue of overseas tax evasion.

Currently, the failure of the CRA to take any meaningful action on overseas tax evasion is costing our country an untold amount of lost revenue – money that could be used to fund programs and pay down the national and provincial debt.

“A concerted effort by the provinces to impress upon the leadership of the Canada Revenue Agency the seriousness of the problem of overseas tax evasion could prove helpful in encouraging the Federal Government to tackle this problem, to the benefit of federal and provincial coffers, and the nation as a whole” says Downe in the letter.

CRA’s Board of Management is responsible for overseeing the organization and administration of the Agency. The Board may “advise the Minister [of National Revenue] on matters that relate to the general administration and enforcement of program legislation.”

Downe suggests in his letter that it would be within the Board’s mandate to “request an update of the Agency’s effort to combat overseas tax evasion”, and that instructing their respective nominees to demand accountability and action on the part of the CRA “would show great initiative on the part of provinces”.

The letter also suggests Premiers add the issue of overseas tax evasion to the agenda for the next meeting of the Council of the Federation, and that they write to Prime Minister Stephen Harper, urging him to take action on the issue.

An October 2010 internal audit by the Canada Revenue Agency expressed concern that:

Cases that could potentially represent significant criminal non-compliance can be rejected by a specific TSO enforcement group because of limited resources or other workload pressures. . . (O)ffices are choosing smaller cases of a lower dollar value that do not necessarily represent the greatest risk. This supports the observations by some program staff that offices are choosing smaller cases that represent ‘quick hits’.”

The fact that the Canada Revenue Agency may be abandoning serious cases simply because they are too difficult to pursue speaks to either a lack of leadership or a lack of resources, and addressing it will require more leadership and concerted action than the Agency has demonstrated in the past on behalf of the Canadian Government.

Although it is not illegal to hold an account overseas, any revenue generated from that account must be reported to the CRA. In Budget 2013, the Federal Government announced a reduction of $259 Million in cuts to the Revenue Agency over the next five years, in addition to the job cuts of over 3000 – the most of any agency or department of Government.

The double standard in our tax system -- where it appears that the Revenue Agency lacks the resources to pursue Canadians who have hidden money overseas to avoid paying taxes while domestic tax evaders have the full resources of the Government of Canada tracking them down and forcing them to pay -- will lead to erosion in the confidence of the fairness of our tax system, and Downe believes that this important aspect will also be of concern to premiers.

“It is in the interests of fairness as well as fiscal responsibility that I ask you to use your good office to keep pressure on the Federal Government to effect the policy changes necessary to put an end to overseas tax evasion,” concluded Downe.

 

For further information:
Senator Percy Downe: 613-943-8107
Or toll free at 1-800-267-7362   
www.sen.parl.gc.ca/pdowne

 
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