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| Alan Baggett to All |
| Canada Revenue Agency fought to keep tax |
| 08 Nov 17 01:44:24 |
From: AlanBaggett@volcanomail.com Canada Revenue Agency fought to keep tax-gap data secret : CRA SOTW Dozens of pages of correspondence between three different parliamentary budget officers and CRA officials, obtained by a Toronto Star/CBC investigation, detail a five-year battle for data that has ended in a stalemate — and no information shared. By Alex Boutilier Ottawa Bureau Reporter and Robert Cribb Investigative Reporter Mon., Nov. 6, 2017 Over the past six years, three different parliamentary budget officers — mandated to report to parliament on matters of fiscal importance — have requested federal data to calculate the difference between taxes due and those actually collected. The records required to find the figure — called the tax gap — never came. Dozens of pages of correspondence between the parliamentary budget officers and Canada Revenue Agency (CRA) officials, obtained by a Toronto Star/CBC investigation, detail a five-year battle for data that has now concluded in a stalemate — and no information shared. “It is disappointing,” says Jean-Denis Fréchette, Canada’s current parliamentary budget officer, sitting with a large stack of paper and folders in his Ottawa office, evidence of the five-year tug-of-war with the CRA. “It can go on and on and there’s no way out at one point, if you don’t have a full team of lawyers negotiating something with CRA.” Eventually, the PBO “had to walk away” Fréchette said. “We had legal counsel, they had legal counsel. One said we should have access and the other said no . . . At some point you say, ‘Do we keep negotiating?’ ” For more than 50 years, the U.S. has measured and publicly reported the country’s tax gap. The U.K. began doing the same in 2009, annually detailing the amount of taxes — from both domestic and offshore sources — that never make it into the country s tax coffers. In all, more than a dozen Western countries — including Australia, Sweden, Poland, Belgium, Portugal, Mexico and Denmark — measure their uncollected taxes in order to understand the size of their shortfalls and plot public policy strategies to address the problem. Canada lags. Even as the federal Liberals invested $1 billion over the past two years in rooting out offshore tax evasion, the government has never conducted a comprehensive calculation of the size and scope of the offshore tax collection problem it seeks to correct. In Canada, the country’s overall tax gap — including the billions lost offshore — remains a known unknown. Diane Lebouthillier, the federal minister of national revenue, declined interview requests for this story. In a statement, a ministry spokesperson wrote that the integrity of the tax system and the confidence of Canadians “are of utmost importance to the CRA,” and that while the agency “worked with the PBO to identify data it could legally share,” there were privacy concerns around information related to individual Canadians. “Generally speaking, the PBO has the authority to obtain financial or economic data from government departments. However, this does not supersede the confidentiality protection provided for in Section 241 of the Income Tax Act.” Mark Mahabir, general counsel for the PBO, says his agency challenged that interpretation, arguing that it only ever wanted anonymized data that allowed for a broad tax gap calculation. “Our position is that we work for Senate and the House of Commons so they should give it to us,” he says. “They said, ‘We will give it to you, but it will cost a lot of money,’ and then they moved back to the old position (of denying the records).” Last year, the CRA published a report about GST tax losses, concluding that about 5.6 per cent in potential revenues went uncollected every year from 2000 to 2014. Earlier this year, the agency released a report saying Canada forfeited $8.7 billion in 2014 domestic taxes as a result of unreported underground economy income and unpaid taxes. But those reports ignored the white elephant in the room: uncollected offshore taxes fuelled by the billions flowing out of the country and often into foreign tax havens. That offshore chunk, say experts, should be the government’s tax gap focus. “They’ve just gone for the low-hanging fruit and left the important matters alone,” says Liberal Senator Percy Downe, a vocal advocate for tax gap reporting in Canada. The best guesses from credible sources place Canada’s tax losses to offshore havens at between $6 billion and $7.8 billion each year. But those estimates are theoretical. And that means public policy is being made in a knowledge vacuum, says Frechette. “The measurement of this gap is . . . showing to Canadians and parliamentarians who are making these decisions that there is a serious problem in terms of collecting that money or protecting the tax collection system of Canada,” he says. “That’s what other countries are . . . saying as well. It’s not only the value of the billions of dollars that you can collect, it’s to measure it and do something, improve your system.” Methodologies differ among agencies that conduct their own analyses. For example, the U.S. Internal Revenue Service — which most recently estimated a gross tax gap of $458-billion (U.S.) based on averages from 2008 to 2010 — uses a different formula than U.K. tax authorities — which estimated a tax gap there of £34-billion in 2013-14. International tax gaps These numbers were calculated by each country's respective tax agency. However, comparing figures is difficult because there isn't one commonly accepted methodology. All figures are in Canadian dollars. $70B - The United Kingdom's estimated tax gap (2013-14) $24B - Sweden's estimated tax gap (2007) $2.8B - Australia's estimated tax gap (2014-15) $261B - The European Union's estimated tax gap (2013) $689B - Estimated tax gap in the United States (annual average for The Paradise Papers is the second major leak in two years showing how billions of dollars flows out of countries and into offshore tax havens, sheltering the money from domestic tax authorities. [continued in next message] --- SoupGate-Win32 v1.05 * Origin: you cannot sedate... all the things you hate (1:229/2) |
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