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Senator wants new Canada Revenue Agency head to rein in overseas tax cheats
By Jordan Press, Postmedia News
November 4, 2012

OTTAWA — One of the first books a visitor notices in Sen. Percy Downe‘s downtown Ottawa office is one about foreign tax havens. His desk has piles of papers on overseas tax evasion, including a fact sheet — a Coles Notes version of five years of work.

He has been a lone actor for the most part, save for the help his staffers offer, but things changed in the last four weeks as MPs in the House of Commons began taking an interest in why not one fine, or one charge has ever been made public after years of investigating foreign tax evaders in one European country.

You would expect a Liberal in the Commons to listen to a fellow Grit, and that’s what Scott Brison did. But when New Democrat revenue critic Hoang Mai started asking questions of the government, it widened the number of Downe’s allies to include a member of a party that wants to see the Senate abolished.

On Monday, he will take his case to the Prime Minister’s Office, hoping that the growing backing could lead Prime Minister Stephen Harper to appoint a new head of the Canada Revenue Agency to double efforts to crack down on and collect taxes from Canadians hiding their cash in tax havens overseas.

“It’s a non-partisan issue. Conservatives should be concerned about this as well. It didn’t happen in the last three or five years — it’s obviously been going on for a long time and nobody’s been paying attention to it,” Downe said in an interview. “The Liberals, NDP and Conservatives — the Conservatives are in power now, they have the power to fix it, but it’s not a partisan issue. It’s an issue that can provide all kinds of money back to Canada that we’re currently losing.”In a letter that will be sent Monday, Downe writes that if the problem is a matter of resources, “the problem can be easily solved” by adding more money to its budget. If there is a leadership vacuum, the current vacancy at the head of the CRA gives the government the chance to  appoint “an individual with strong management skills” who could ensure “our tax laws are fully enforced and guarantee a just and effective taxation system for all Canadians.”

“This is a great opportunity for step one to clean up the mess at the revenue agency,” Downe said. “The government has to put in senior managers, (and) staff up the department.”

For five years, Downe has been pushing this issue from his corner office overlooking Parliament Hill. It started in 2008 with one line in a National Post column about Canadians implicated in secret accounts in a small European country, Liechtenstein. Questions to the Canada Revenue Agency about cracking down on Canadians hiding cash overseas to avoid paying taxes ensued, and more questions followed with what Downe described as “vague answers.”

Before 2008, Downe never saw a problem with the Canada Revenue Agency, even during his almost 10 years working for the Chretien Liberals, including a stint as Jean Chretien’s chief of staff. It was one of those departments that didn’t receive much attention because it had strict privacy rules to follow: “I don’t want to know your income tax, you don’t want to know mine,” Downe said. The Liberals never sent a “rising star or old hand” over to run the CRA, he said, because it was “simply overlooked for privacy reasons.”

Downe stopped overlooking the agency five years ago, when the Liechtenstein affair broke. Suddenly, German authorities were going after its citizens whose names appeared on a stolen list of account and trust holders in LGT Bank. Canada also received the names of 106 Canadians with bank accounts or trusts at LGT Bank.

The numbers swelled two years later when Canada received the names of 1,785 Canadians with accounts or trusts with Swiss banking giant UBS. At the time, then revenue minister Jean-Pierre Blackburn told the Financial Post that Canada planned to use the information to go after the people on the list.

The fines for tax evasion range from between 50 per cent and 200 per cent of the amount of tax evaded, or a prison term of up to two years. Canadians can avoid those charges through the CRA’s voluntary disclosure program, which allows taxpayers to correct mistakes or add missing information in their tax returns. According to the government, the CRA has audited thousands of files since 2006 and identified more than $4 billion in unpaid taxes.

“CRA aggressively pursues all information it receives and we take this issue very seriously,” said Clarke Olsen, a spokesman for National Revenue Minister Gail Shea.

“Thanks to the efforts of this government, Canada is now party (to) over 100 international tax agreements,” Olsen said. “Our government will continue to make progress on a file that previous Liberal governments virtually ignored.”

Going after those who have illegally hidden cash in those havens, Downe argues, would give government coffers and the economy a large infusion of cash.

Citing figures from the Canada Revenue Agency, which Downe obtained through access to information laws, a 2005 investment of $30 million in the CRA yielded a fiscal impact of $2.5 billion up to 2009. He also likes to tout how Australian officials, since 2006, have recouped more than $680 million from Australians hiding cash in overseas havens.

The government has signed tax information sharing agreements with numerous countries, and plans to sign more to help crack down on tax cheats, but Downe is fond to point out that Liechtenstein isn’t one of them.

“If these people are cheating on their taxes, then we all have to pay more to make up the shortfall. There’s no magic pot of money — there’s one pot of money,” Downe said. “It lowers the capacity of the government to fund programs, infrastructure, health care, defence and so on.” © Copyright (c) Postmedia News

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