Finance committee  Third, more, not less, needs to be done to tackle tax havens. There have been some encouraging steps made by the federal government. The last two federal budgets had measures designed to do something about tax havens, but I'm very worried that with recent actions, including, according to a report in The Globe and Mail, Finance Minister Oliverquietly stopping efforts to investigate the corporate use of tax treaty shopping, and the recent cuts to the Canada Revenue Agency, it would seem that the government is going back on its commitment to tackle tax havens.

Finance committee  That's not the information I've seen in government answers to order paper questions about this. It may depend on what year you take as the comparison point. But the information I've seen in order paper question answers are that there is a slight—not a huge, but a slight—decrease in the number of auditors working in the international and aggressive tax auditing sections of CRA.

Finance committee  No, $367 million.

Finance committee  With regard to the Auditor General's report, he identified a number of problems, but the two I would underline are, first, problems with the training of auditors. It's very difficult to go after tax cheats using tax havens, and companies pushing the envelope on profit shifting, and so on.

Finance committee  —and exceeding what is really allowed by law. So the training of auditors is critical because a quarter of the CRA top-level auditors are due to retire in the next five years. They are already seriously understaffed. They were hit with more staff cuts than any other government department, and even though the international audit program was spared the full brunt of the tax cut, they still have reductions from previous years in the staff working in that area.

Finance committee  Those laws continue to need to be tightened up. There were a few small steps in this implementation bill, which I applaud, but there is much more that needs to be done.

Finance committee  Yes. I did consult my colleagues in Europe, part of the Tax Justice Network, who are monitoring the OECD process very closely. They reported that Canada is not taking a very active role, which I suppose may be a good thing, at least there are no reports of Canada actively resisting it.

Finance committee  Roughly half of the OECD countries do tax gap measures. A couple of years ago, the OECD put out a very good report, assessing the different efforts. The Canadian Parliamentary Budget Office did make use of the best-case efforts, looking at other countries, and have done some work on a tax gap report, but couldn't complete their study because of certain CRA information they would still need.

Finance committee  There are further legislative changes that I think are warranted, particularly improving the GAAR.

Finance committee  GAAR is the general anti-avoidance rule and it relates to corporate profit shifting and other tax-evasion schemes. Government's ability to go after corporate profit shifting and aggressive tax-avoidance schemes would be significantly strengthened if the Income Tax Act were amended to require the courts to consider economic substance in determining whether there is an avoidance transaction or whether an avoidance transaction results in misuse or abuse.

Finance committee  The OECD does actually recommend to their members that a tax gap estimate can be a very useful tool. If you look at the literature from the OECD—

Finance committee  It may be difficult to pinpoint the exact amount, but the point of doing it is not to embarrass the government. It's to help the government identify—

Finance committee  —areas where their efforts should be focused. So it is a tool that can be helpful to improve the government's performance and know where to put the resources most effectively—

Finance committee  That's correct. The point here is that it's a growing problem. Despite some initial efforts by the G-8 and the OECD to begin to address this issue, we're a long way from getting a handle on it.

Finance committee  This committee is probably aware that just this week the Auditor General released a report on aggressive tax planning, and found that there are some problems with Canada Revenue Agency's capacity to go after tax cheats. Just this week I met a senior CRA staff person who confirms that there continues to be a serious lack of staff capacity in the international audit division to combat tax haven related tax evasion.