Fairness for All Canadian Taxpayers Act (measuring the tax gap to fight international tax evasion)

An Act to amend the Canada Revenue Agency Act (reporting on unpaid income tax)

Status

Second reading (House), as of May 16, 2019

Subscribe to a feed (what's a feed?) of speeches and votes in the House related to Bill S-243.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Canada Revenue Agency Act to require the Canada Revenue Agency to report on all convictions for tax evasion, including international tax evasion, and on the tax gap in the annual report it submits to the Minister of National Revenue for tabling in Parliament. It also requires the Minister to provide data on the tax gap to the Parliamentary Budget Officer.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

May 16th, 2019 / 6:10 p.m.
See context

Conservative

Michelle Rempel Conservative Calgary Nose Hill, AB

Mr. Speaker, for the people watching today, what Bill S-243 would do, in technical jargon, is amend the Canada Revenue Agency Act to require that the CRA report on all convictions for tax evasion, including international tax evasion, and that the tax gap or the difference between estimated taxes owing and actual taxes collected be included in the annual report it submits to the Minister of National Revenue for tabling in Parliament. It would require the minister to provide data for calculating the tax gap to the Parliamentary Budget Officer.

The Conference Board of Canada estimates the tax gap at between $9 billion and $50 billion. That is a lot of money. What could that be used for? It could be used to reduce the deficit, spend money on things that we need and maybe not tell veterans in Canada that they are asking for more than we can give.

I find the parliamentary secretary's speech ridiculously hilarious and I do not even know how to summarize her defence of voting against this bill. I am going to give this lecture to the CRA bureaucrats in the lobby who wrote that audacious speech that she did not even bother to edit before coming in here and reading it.

To the CRA bureaucrats watching, first, none of us on this side of the House would be the man and then take the man's talking points into the House of Commons to argue why CRA bureaucrats would not provide this data for not doing their job, number one. That is just ridiculous. It is actually laughable.

Second, some poor political staffer put the one attack line in her speech. My colleague from Calgary Rocky Ridge made a wonderful comment, which was summarized as follows: “Conservatives should be ashamed of themselves for not doing 10 years ago the thing that we are not going to do today.”

Come on. We know that this is important, which is why my colleague has spoken against it, but the delicious part of the argument to not support it was the argument of privacy for financial records.

I am going to give credit in a nod of bipartisanship to this point. The lobby coordinator of the New Democratic Party, Anthony Salloum, said it is really rich for the Liberals to be making an issue about the privacy of personal banking records when it was they who wanted Statistics Canada to dive deep into people's individual banking records and then stood day after day in the House of Commons saying it was all good. They said there was no problem with the government being able to see if people went to the 7-Eleven at 10 o'clock at night and bought a delicious blue Slurpee, because that is the role of government.

They did that for a month. Day after day, they said it is the role of government, that the man should be able to see everything people buy, that there is no issue with privacy and everything is A-okay. Now, today, they are saying that Canada Revenue Agency bureaucrats are all of a sudden concerned with privacy.

As a member of Parliament, I have to hire someone in my office just to do casework, and I have had cases in which people had their files locked in some CRA bureaucrat's desk or left by the water cooler. The incompetence of this bureaucracy is staggering at best and irresponsible at worst. Anytime somebody stands in the House of Commons to talk about privacy, that person should at least read the speech that the bureaucrats provided and think about whether it makes the individual sound like a super-villain. I think the parliamentary secretary forgot to do that today.

In all seriousness, we need to ensure that we are addressing the issue of the tax gap, because it is a source of revenue that we are not tapping into and it disadvantages Canadians who are paying taxes fairly if we are not collecting taxes in an appropriate manner. In fact, it creates a disproportionate burden of taxpaying on one aspect of Canadian society as opposed to another.

Since I have a moment to talk about the Liberal government's ability to prosecute tax evaders, I am going to point to a CBC story in 2018 that talked about governments around the world being able to recover $500 million in taxes thanks to the Panama papers.

However, the article said that this is in stark contrast to the CRA's effectiveness at catching offshore tax cheats and comes in the wake of a CBC investigation that found that few, if any, of the criminal convictions the agency cites in defence of its record have anything to do with offshore tax evasion.

In fact, of the court cases the government had cited in Parliament to defend its record on cracking down on offshore tax evasion, a 2017 CBC article said that few, if any, had anything to do with millionaires hiding money in overseas tax havens.

As a further point of proof, the parliamentary secretary's boss, the Minister of National Revenue, or the minister of bluster, since she has a tendency to stand in the House and repeat nonsensical talking points that have nothing to do with the question asked, said in 2016 that her agency had already started to identify 45 targets for audits. However, three years later there are no tangible outcomes.

The nice thing about this bill is that it would force the bureaucrats who wrote that very staid and weird speech to determine what our tax gap is on an annual basis and help ensure that Canada is retrieving those taxes, so that complying Canadians do not shoulder this burden of taxes on their own.

I want to point out the government's hypocrisy. When it saw that it was potentially losing billions of dollars to tax evasion, its action was to increase taxes on law-abiding Canadians. In terms of the results of its tax increases, my colleague, the shadow minister for finance, made a wonderful intervention in the House that is worth repeating.

He stated that the CRA data that had recently been released demonstrated that “in the first year after the tax increase took effect, the government actually collected $4.6 billion less from the wealthiest 1%.”

He went on to say:

Finance Canada released documents almost exactly a year ago today in its annual financial report, on September 19, 2017, in which it revealed almost exactly the same phenomenon. Revenues went down from the wealthiest 1%.

As my colleague pointed out, the government said that this was all “due to one-time factors”, but we know there were some wealthy individuals who moved money around to avoid paying their fair share.

It is worth pointing out that one of those individuals was the Minister of Finance himself; the minister of the french fry yacht. He announced a tax increase to take effect on January 1, 2016. He sold shares in his own company, Morneau Shepell, just 30 days before that, in order to ensure his capital gain would be taxed at the earlier, lower rate and he would not have to pay the same higher taxes he imposed on everyone else.

We see the Liberals' record and the absolute ridiculousness of making the argument on privacy after they were going to allow Statistics Canada to look at Canadians' personal banking records. We see the track record of the Minister of Finance on this. We understand that bureaucrats are not motivated to have transparency in terms of their efficacy. The role of the executive branch is to go to bureaucrats and thank them for their public service and let them know that it has a fiduciary responsibility to taxpayers and is going to make these changes. This is what we need to do in this place.

By voting against this bill, we understand what real change means to the Liberal government. It means absolutely nothing.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

May 16th, 2019 / 6:05 p.m.
See context

King—Vaughan Ontario

Liberal

Deb Schulte LiberalParliamentary Secretary to the Minister of National Revenue

Mr. Speaker, I would like to start by thanking the member from the other place, who initiated this bill, for his efforts to bring attention to Canada's tax gap through Bill S-243, and the member for Calgary Rocky Ridge, who sponsored this bill so that we can have a healthy debate on it in this House.

Our government agrees that when the tax gap information is publicly available, it demonstrates a commitment to transparency and helps to identify opportunities to make a fairer tax system for all Canadians. Bill S-243 has put a spotlight on the importance of understanding Canada's tax gap. We thank the senator for that.

The Minister of National Revenue has been very clear about her commitment to fighting tax evasion and to measuring the tax gap, helping to shine a spotlight on the cost of tax evasion.

I find it a bit rich to hear the Conservative opposition members speak in support of the bill. They seem to have completely erased from their memory the Harper government's attacks on the PBO and the utter refusal to consider studying the tax gap. As a matter of fact, I would like to draw the attention of members to what the former vice-chair of the public accounts committee and Conservative MP for Don Valley West, John Carmichael, said in 2014, when talking about the tax gap. He decided to explain to the opposition the mechanics of measuring the tax gap in order “to explain why deriving such an estimate would be overly complex, inefficient, and a total waste of time.” He followed this statement by saying that studying the tax gap was “nonsensical”.

Let us talk about something that is nonsensical: the Conservatives pretending to care about measuring the tax gap and wanting more transparency for Canadians. We have 10 years of Harper's track record on tax evasion to know that studying the tax gap is no priority for that side of the House. Unlike my colleagues on the other side, I am very proud of my government's track record on this issue.

While we agree with the spirit of this bill, due to the requirements and importance of protecting the confidentiality of taxpayers' information, and our concerns related to the proposed legislative vehicle in this bill, our government cannot support it.

This bill asks to change the Parliamentary Budget Officer's model of access to information by compelling the Minister of National Revenue to provide data to the PBO through amendments to the Canada Revenue Agency Act. This act is not the right legislative vehicle to change the PBO's model of access to information. lt would pose concerns for the confidentiality of taxpayer information. The current report to the PBO is issued in a format that protects taxpayers' information. This bill would also create an unnecessary administrative burden for the CRA, as the tax gap is already being reported on.

Allow me to elaborate. To start, Bill S-243 would require the Minister of National Revenue to collect, compile, analyze and abstract statistics on the tax gap every three years and to publish them in the annual report to Parliament of the Canada Revenue Agency. The CRA already publishes research and estimates on various components of the tax gap and has a strong public commitment to continue to do so. Therefore, adding a legislative requirement to collect, compile, analyze and abstract statistics on the tax gap in the CRA's annual departmental results report is unnecessary.

The CRA already has a dedicated team in place to study the tax gap. Through the work of this team, the CRA has published four reports pertaining to the tax gap. Unlike the allegations of the member for Rimouski-Neigette—Témiscouata—Les Basques in his speech, the government took immediate action. In June 2016, the CRA published a conceptual study on tax gap estimation. At the same time, it published the tax gap estimates for the goods and services harmonized sales tax. In June 2017, the CRA published tax gap estimates on domestic reporting and payment non-compliance by individuals. In June 2018, it published a report on tax gap estimates on offshore non-compliance by individuals on the international scale. In June 2019, the CRA will release its fifth report on the tax gap, which will provide information about corporate income tax non-compliance.

These reports are published on the Canada.ca website. They describe the methodology the CRA used to estimate the tax gap. They also provide information on the CRA's compliance efforts to reduce these gaps. Collectively, these reports provide the basis for a more comprehensive tax gap estimate.

Therefore, yes, we agree that the tax gap is important to measure. That is why it is already being done.

I would now like to bring to members' attention the requirement in the bill for the CRA to provide the PBO with the data collected and compiled on the tax gap as well as any additional data the PBO considers relevant to conducting a further analysis of the tax gap.

Members may know that the CRA already provides the PBO with information on this tax gap, and it is in a format that does not compromise taxpayer confidentiality. This bill simply does not amend the appropriate act. In fact, these proposed changes run the risk of creating confusion about the PBO's existing legislated access to information. Indeed, amending a departmental statute such as the Canada Revenue Agency Act would not broaden access to taxpayer data or information. This bill should require significant and consequential amendments to legislation directly related to providing taxpayer data, such as section 241 of the Income Tax Act or section 295 of the Excise Tax Act to make such a change, but it does not.

What this would not change, however, is the CRA's commitment to continue to work closely with the PBO, the Privacy Commissioner and Statistics Canada to determine how best to share the relevant information necessary for the work of the PBO while also protecting the confidentiality of taxpayers' information.

Last, I would like to touch on the stipulation in Bill S-243 that would require the CRA to provide in its departmental results report a detailed list of all convictions for tax evasion, including a separate list for overseas tax evasion. Similar to the commitment to reporting the tax gap, the CRA has already been providing this information at Canada.ca since 2017. The available information identifies individuals, corporations and trusts convicted in the courts for tax evasion or for failing to file income tax returns. It includes convictions that have links to money and assets located offshore.

The CRA's departmental performance report already includes information about convictions. The CRA also offers a service that notifies subscribers about enforcement activities. Given these efforts, it is clear that the CRA already provides significant information about its enforcement activities, just like what is being requested in Bill S-243.

Once again, I thank the member from the other place who initiated this bill for his commitment to ensuring that Canadians have greater access to information about non-compliance. Our government will continue to report on the tax gap to ensure that taxpayer information is and stays confidential and will continue to remain transparent in our fight against tax evasion. That is what we have been doing for the past three and a half years and that is what we will continue to do.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

May 16th, 2019 / 5:55 p.m.
See context

Conservative

Matt Jeneroux Conservative Edmonton Riverbend, AB

Mr. Speaker, I am thankful to be able to stand and speak on behalf the hon. member for Calgary Rocky Ridge. He is a dear friend, and I believe that this is a very important piece of legislation that he is bringing forward here in the House. It is an honour to speak on it.

I would also like to thank Senator Percy Downe for introducing this bill in the Senate. It is a shame that the government plans to oppose it, but I hope government members will listen to all of the reasons that this bill makes sense for the government and for Canadians.

It is timely to be speaking about Bill S-243 now, as the majority of Canadians just finished filing their taxes with the Canada Revenue Agency. We also just found out that the Canada Revenue Agency wrote off $133 million owed by a single taxpayer.

CRA employees discussed the large writeoff in an internal memo in September of 2018, and the media reported on this memo in April. However, we do not know who the taxpayer is or whether it is a person or a corporation. We also do not know whether this writeoff is related to government subsidies, which is something Canadians should know.

The aim of this bill is to keep the CRA accountable for tax collection efforts. It would also require the CRA to report on the tax gap, which is the difference between taxes owing and taxes actually collected. The bill would also require the CRA to publish information on convictions for domestic and offshore tax evasion. Data shows that the offshore tax gap for the 2014 tax year was between $0.8 billion and $3 billion.

The CRA has published information about the tax gap related to the goods and services tax. In 2014, here the offshore tax gap was estimated to be about $4.9 billion. The CRA has also shared the domestic personal income tax gap for that same year, 2014, at $8.7 billion. In that one year, the money owed for the tax gap, which could have been as high as $16 billion, could have funded many programs or eased the tax burden for many Canadians.

Conservatives believe in making life more affordable for Canadians and in keeping taxes as low as possible to stimulate the economy. When the government loses a significant amount of money because of a tax gap, it means that taxes could be raised for the rest of us. This penalizes law-abiding Canadians.

I support Senator Downe's bill, which is sponsored by the member for Calgary Rocky Ridge here in the House, because it makes sense and makes the CRA and those Canadians not living up to their responsibility to pay taxes more accountable.

Some Canadians are concerned that reporting on the tax gap could threaten their privacy, but this bill balances the privacy of individuals with transparency and accountability for the CRA. The information would be reported to the Parliamentary Budget Officer, so its intent is not to name and shame average Canadians.

The United States, the United Kingdom, Sweden and Australia all report on their tax gaps. These governments all indicate that they report this information because it helps their revenue departments understand how and why non-compliance occurs. This information is helpful to policy-makers, who can then make better-informed decisions about tax policy and also help the government better manage its resource allocation.

Canada should have this system. Mandating measurement of the tax gap ensures that future governments and parliaments have all of the information necessary to take action on the tax gap.

Many of us are aware that offshore tax evasion is a problem in Canada. Almost 1,000 Canadian taxpayers, including individuals, corporations and trusts, were named in the Panama papers three years ago.

The CRA told media last month that it had identified 894 taxpayers and had finished reviewing 525 of these cases, resulting in $14.9 million in federal taxes and penalties. This number will rise as audits continue.

Although the CRA told the media the amount of taxes assessed, it did not say how much of that money has actually been collected. Senator Downe's bill, if passed, would require the CRA to report that type of information to Canadians. As I mentioned before, this type of information would be incredibly helpful to our policy-makers. Many other countries use this information, and Canadians would be better served if our policy-makers also had this kind of information.

Most Canadians work hard all year and diligently file their taxes. These are honest people who would never attempt to cheat the government. However, we see wealthy Canadian individuals and corporations attempt to cheat the tax system all the time.

Tax money is used to fund services we enjoy, such as health care, transit and roads. The CRA should be able to say how much money it has collected as a result of the Panama papers. This is in the Canadian public interest.

Similarly, it should be allowed and able to tell us why $133 million was written off for a single taxpayer. That money could provide significant funding for public services, and Canadians deserve to know why this taxpayer or corporation received special treatment while the rest of us diligently work to pay our fair share.

I have had many constituents complain about dealings with the CRA, including poor levels of service or the agency repeatedly requesting documentation that has already been provided to a different branch. The Office of the Taxpayers' Ombudsman, which operates at arm's length from the CRA, has experienced an increase in complaints over the last few years. In 2017, the taxpayers' ombudsman said the biggest complaints were: first, the struggle to even get through to the CRA call centre, which can be a huge headache, especially around tax time. Other complaints included receiving inconsistent and incorrect information from the call centre agent and the lack of information sharing between different branches of the CRA. Many Canadians have been asked to produce the same information or documents more than once, because the person's file was not properly shared between departments.

The taxpayers' ombudsman called these problems “systemic” and said there are other deeply rooted problems. The CRA acknowledges that it needs to do more to better serve Canadians, and representatives from the agency will be travelling across Canada over the next month to conduct in-person consultations on how the CRA can improve its services. I have no doubt they will receive plenty of feedback. I am hopeful that the CRA will take this feedback and then implement it to create a better-run system, which Canadians deserve.

I know it is not just the CRA that has these problems. A recent Auditor General report found that other government departments, including immigration, employment insurance and the Canada pension plan, did not answer their phones for the millions of Canadians who called them in 2017 and 2018. It is obvious the government needs to make huge improvements to give Canadians the accessible service they require and deserve.

I hope these consultations by the CRA are fruitful and we will see a service improvement in the near future. I know how seriously Canadians take the CRA, except for wealthy Canadians who keep their money in offshore accounts without thinking of the consequences. For many Canadians, getting a letter from the CRA is anxiety-inducing, and dealing with audits and investigations can cause high levels of stress.

When Canadians owe the CRA money, most work to pay that money back, whether it is through installments or a lump sum payment. Most people would not dream of running out on the bill, so to speak, so they should not be unfairly penalized when corporations and wealthy Canadians run out on their tax obligations.

If this bill passes, it means increased accountability for the CRA, which is in the best interests of taxpayers. The changes proposed in this bill require the CRA to report on all convictions for tax evasion in addition to reporting the tax gap, as I mentioned earlier. This data would be reported to the Minister of National Revenue in the CRA's annual report, which is tabled in Parliament. The Minister of National Revenue is also required to provide the Parliamentary Budget Officer with data to calculate the tax gap.

These amendments, which would be inexpensive to implement, would increase transparency, which the government allegedly values. Publicly available reports on the gap between income taxes owed and taxes collected will provide a metric for judging the efficacy of measures to combat income tax evasion. This is important information for Canadians to have access to. Many other western nations publicly post this information. Canada is already behind standard practice in this regard. Conservatives support any measures to enhance the effectiveness and accountability of the public service.

Bill S-243 is a common-sense amendment to the Canada Revenue Agency Act, and I support the amendments.

I thank Senator Downe for his work on this bill, and the member for Calgary Rocky Ridge for helping to get the bill through the House of Commons. I appreciate the opportunity to speak to this bill today.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

May 16th, 2019 / 5:45 p.m.
See context

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Mr. Speaker, I am pleased to rise in the House to speak to Bill S-243. Although the bill was introduced here, in the House, it is actually a Senate initiative sponsored by Senator Percy Downe, for whom I have a great deal of respect. Back when I was the NDP finance critic, I had the pleasure of working with him on tax evasion issues. I know this issue is really important to him.

In the previous Parliament, the Standing Committee on Finance studied the tax gap, which is the difference between what the government does collect and what it should collect. That is money the government misses out on because of tax evasion, aggressive tax avoidance, the use of tax havens and so on.

I remember when the committee was debating it, we had witnesses from all over the world, including the United States, Great Britain and various European OECD countries, as well as Canadian experts. We heard from experts on taxation, banking and various organizations.

It became apparent that we needed to measure the tax gap. However, at the time, the Conservative government and the Conservative members of the committee had no interest in moving forward. They told us that it was impossible, that it would require too much work, and that any data we might gain from the whole exercise would not justify the resources required to see it through. I do not think that was true, and the Liberals who were on the committee at the time agreed.

However, as soon as they took office, the Liberals became reluctant to get the Canada Revenue Agency to be transparent and to start measuring the tax gap. Yes, they ended up doing it. Yes, the CRA is now doing some hasty calculations to try to tell us how much tax revenue is likely being lost.

However, most stakeholders do not believe the amount is accurate. As part of a review of all tax measures, the CRA claimed that the government is currently losing about $7 billion or $8 billion in tax revenue. Most tax fairness organizations do not believe that. The Conference Board of Canada even conducted a study on measuring the tax gap, which found that it may actually be closer to $45 billion or $47 billion, if we rely mainly on how much tax revenue is currently being lost by the United States, which I would remind members has a lot more resources to deal with this issue than the CRA does.

The Parliamentary Budget Officer now has the authorization, power and desire to measure the tax gap. For two years, the Parliamentary Budget Officer and his office were asking for authorization to proceed with an accurate measurement of the tax gap. For two years, the Liberal government refused to give them the information they needed. For two years, the Parliamentary Budget Officer did not have the information needed to proceed with this important study, a matter on which the CRA has no credibility, and yet, the government claimed the whole time to support the office.

Here is why I believe the CRA has no credibility. During the entire time that I had to deal with the agency, all I saw was a lack of transparency. Not only did I find that they were unwilling to provide information, but I also observed that they were withholding it.

Not that long ago, at the beginning of this Parliament, I sat on the Standing Committee on Finance. Among other things, we studied the whole scheme involving KPMG and the Isle of Man. After a handful of committee meetings, we were no longer allowed to examine the processes that KPMG had been involved in.

When CRA representatives testified before the committee, they gave every possible excuse for not providing the information. They told us that it would breach confidentiality, that privacy could be at risk and that it could not give us information that KPMG deemed to be privileged. There was every reason to deny us the information, but none of them were valid.

We could have done what the U.S. usually does, which, in the case of KPMG, was to use the committee's authority to issue subpoenas requesting that KPMG officials testify and compelling them to do so.

Both the Canada Revenue Agency and its minister had a hand in that.

The minister does not have much credibility. Throughout this Parliament, she repeatedly told us that the government and the Canada Revenue Agency had taken steps, but that turns out not to be the case.

For example, the minister repeatedly said that the government invested $1 billion to fight tax evasion and had recovered $25 billion, but that turned out not to be true. The government did not recover $25 billion; it hoped to recover $25 billion. As it turns out, “hope to recover” is exactly right because the government is far from hitting that target at the moment. Then the minister said the government really had taken the necessary measures and that CRA had hired 1,300 new auditors. Well, we did the math, and so did the media, and we figured out that CRA hired 192 new auditors, not 1,300.

The Canada Revenue Agency told us that it answers 90% of all calls within two minutes. The Auditor General begged to differ. The truth is that 34% of all callers actually get someone on the line, and a third of all callers are given incorrect information.

It is very hard to believe everything coming out of the Canada Revenue Agency. It is very hard to lend them credibility. That is why we need an independent study. I do not believe the numbers that the Canada Revenue Agency came up with in the course of its study of the so-called tax gap. I would have more confidence in the numbers from the Parliamentary Budget Officer, if he has access to the data that should be made accessible to him through this bill.

Percy Downe, the senator who introduced the bill, has a great deal of credibility in the area. He made this his pet issue and did not make a big spectacle out of it. He just wants to get to the bottom of this. He realizes that here in Canada, the Canada Revenue Agency is a problem.

The CRA's approach to collecting tax revenue across the country is problematic. The senator recognizes, as we do, that the CRA is acting arbitrarily. It changes its approach to collecting personal income tax depending on the individual's level of wealth. I am not making that up. It was in the Auditor General's 2018 report, which notes a lack of consistency in the CRA's collection processes.

Two different taxpayers will be treated in two different ways. That is not professional. It is unfair and perpetuates the perception that the CRA and the Government of Canada treat taxpayers differently based on their wealth or status.

This is a major problem because it indicates that this is a two-tiered system. In this system, the government will try to reach an out-of-court settlement with people who have the means to defend themselves. That is actually what we have seen. The government tries to resolve the situation by closing the file, because it will be too expensive to recover money from people who have the means to defend themselves. However, in the case of those who cannot defend themselves, the government takes quick action to recover the money.

We must standardize the way the agency does things and, above all, take away the Canada Revenue Agency's authority to assess the gap, because it will likely not do a very credible job. We must routinely ask the government to do its job, to exercise due diligence and to provide on a regular and ongoing basis the information requested by the Parliamentary Budget Officer to evaluate the tax gap.

That is why I am proud to support this bill.

The House resumed from April 3 consideration of the motion that Bill S-243, An Act to amend the Canada Revenue Agency Act (reporting on unpaid income tax), be read the second time and referred to a committee.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

April 3rd, 2019 / 7 p.m.
See context

Winnipeg North Manitoba

Liberal

Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, it is always a pleasure to rise to speak to private members' business, especially when it comes to taxation.

Virtually from day one, this government has taken the taxation issue very seriously. I found the Conservative Party's approach to taxes interesting, and I would like to provide some thoughts on that.

I would like to first acknowledge Senator Percy Downe in the other place who brought this legislation forward. I had the opportunity many years ago to meet Senator Downe at a parliamentary conference. I have deep respect for him and I appreciate many of the fine things he has done over the years.

Let there be no doubt that Canadians are concerned about tax avoidance and tax evasion. Who could blame them? After all, we expect tax fairness, which is why the Prime Minister and our government have made it a high priority.

I would like members to think of what we have been able to accomplish in just over three years. Our very first bill dealt with taxation. The member for Waterloo often talks about Canada's middle class and the importance of the legislation that cut taxes for Canada's middle class.

We talked about a sense of fairness, and that is what the sponsor of the bill brought forward in his comments. At the same time we recognized that the wealthiest 1% of Canadians should pay a bit more. We argued that paying a bit more was their fair share. Our government has put that into place as standard policy, while we look at ways to change our tax laws to ensure a higher sense of tax fairness.

The government's first action was to increase the tax on Canada's wealthiest 1% and at the same time provide a tax decrease for Canada's middle class. This literally put hundreds of millions of dollars into the pocket of Canada's middle class. It affected millions of Canadians in every region of our country.

I will fast forward to budgets. We introduced a budget last week. It shows that our government is continuing its commitment to fight those individuals who are not prepared to pay their fair share.

A couple of years ago, the minister responsible for CRA introduced, through a budget measure, about $450 million. That is a guesstimate. Last budget year, we again brought in well over $400 million. If we combine those two budget allotments, we are getting close to $1 billion, which is a great deal of money. The purpose of that was to ensure that CRA would have additional resources to go after individuals who were trying to avoid paying taxes.

Our government recognizes the importance of tax fairness and has taken specific action to address the issue.

I am pleased to say that it does not stop there. We hear about international taxes and about addressing that issue. In the last three years our government has taken an aggressive approach toward tax treaties.

By having tax treaties, whether it is with Madagascar or other countries, we are better able to address the types of issues that we are talking about tonight.

To me, that signals a very strong message to individuals, whether here in Canada or outside Canada, that there is an expectation that people will pay their fair share of taxes. I would like to think that people following this debate would recognize or at least be aware that this government is committed to ensuring that they will do that.

When we were talking about Bill S-243 and I had the opportunity to ask a question of the member, I made reference to a number of issues and put them on the table. The Conservative Party has voted against many of them. That is somewhat interesting. Conservatives are bringing forward legislation to say that Canadians need to pay their fair share, but when it came time to actually vote on initiatives affecting Canadians today, they voted no. I think that speaks volumes.

A question was posed when we were talking about this specific piece of legislation. It was not I who posed the question, but one of my colleagues from the New Democratic Party, and the question was related to Stephen Harper's tenure as Prime Minister for 10 years. It asked why he did not bring in the type of legislation the Conservative member is bringing in through the Senate today. Ultimately, the member indicated that the fault was not necessarily in him, but in a previous administration.

It is important to take a look at the Conservative Party's record. Canadians will see that the Conservative Party has been consistent. It has been consistent in not dealing with the whole issue of tax fairness. I saw that when I sat in opposition. I saw many initiatives coming from the Stephen Harper regime, but I did not get any sense that they were looking at ways to ensure more tax equity in government policy, nor did I ever see a government back then that was prepared to go after those who try to avoid paying their fair share.

When I posed the question, the Conservatives stood up and said that we have not had many prosecutions. We have had more prosecutions under the Liberal government than under the Conservatives, and it has only been the last couple of years that the government has invested the resources that are necessary. I would suggest that by doing that, the Liberal government is getting more and more people to pay their fair share, which could actually be a good thing. If a prosecution can be avoided when there is an agreement for monies to be paid and there is a fairer sense of taxation, that is ultimately a good thing.

Having said all of that, I think there is some merit for the legislation. I look forward to hearing more debate on this very important issue. I believe it is very important.

One of the things the Prime Minister often talks about is that he wants members of Parliament to listen to what their constituents are saying in their ridings, back home in their communities, and to bring those ideas and thoughts back to the chamber and to the respective caucuses.

This is an important issue to Canadians and, therefore, it is an important issue for this government. Maybe I will get an opportunity at a later time to be able to speak to this very important issue of tax evasion.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

April 3rd, 2019 / 6:50 p.m.
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Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Mr. Speaker, I am glad to be joining this debate in this late evening on a Wednesday. At the outset, I am going to share a few observations about the debate so far on this Senate proposal as well as some observations about things that were said in the House.

First of all, this is a tax matter. We all remember that it was Motion No. 43, a duty of care motion, that was also put forward by the seconder of the bill in the House, the member for Calgary Rocky Ridge. At the time I spoke to it, the Canada Revenue Agency's customer service and the way it treats Canadians who are filing taxes continued to be deplorable, in my opinion. I thank the member for Calgary Rocky Ridge for having sponsored another move toward getting fair treatment for Canadians. I think this is part of it. Understanding the tax gap between what is expected to be collected and what is actually being collected is a very important matter.

Second, it was Senator Percy Downe, from Prince Edward Island, who moved this proposal in the other place. Let it be said that when Conservatives find honest Liberals, we will work with them. We will support their ideas. In fact, it is a Conservative member of Parliament who has brought this Senate proposal to the floor of this House for, I expect and I hope, swift passage.

It is interesting that it is a Senate Liberal, also someone who was kicked out of the Liberal caucus, who is pushing for greater tax fairness and more tax knowledge for fellow Canadians. Perhaps it is something to do with people who speak the truth and are interested in the truth being kicked out of that caucus.

Bill S-243 is about reporting on unpaid income taxes. The bill is quite short, but it provides an opportunity to define the tax gap. I note that at least on one other occasion, members were wondering what we are asking the CRA to do. We are asking it to disclose more information about taxes that remain unpaid. Every single year there is a discrepancy between what the government expects to collect and is able to collect and taxes that remain outstanding. That discrepancy between the two accumulates over time. I know that many Canadians are interested in knowing more about why it is accumulating and who these people are who are not paying these taxes.

I especially like the definition of the tax gap being put forward in proposed subsection 88.1(1), which is an amendment to the Canada Revenue Agency Act, because it is a simple amendment. It is very clear what type of information will be provided to the Parliamentary Budget Officer.

I have been a big believer in legislating more rules for civil servants, the bureaucracy, on how they do their work and report their work, both to Parliament and to the public. We spend far too much time in this House legislating what Canadians can do on an everyday basis, whether it is their hobbies or air travel. In general, we create a lot of rules that businesses, corporations and everyday people have to live up to. There is an expectation that they need to know what the rules are. We spend too little time legislating what the civil service does and the type of work it does on behalf of Canadians.

There is a Yiddish proverb that says, “Prayers go up and blessings come down”. It has been a prayer and a hope of mine that we will see more such private members' bills and more government bills, in fact, that would look after legislating what the civil service does and how it does its work, both in the collection of information and in the disclosure of information.

We see in this particular proposal the following:

The Minister shall provide the Parliamentary Budget Officer with the data on the tax gap collected and compiled under subsection (2) and any additional data that the Parliamentary Budget Officer considers relevant to conducting a further analysis of the tax gap.

That has been an issue in the past for the PBO. Finance Canada and other departments have been unwilling to disclose information to the PBO. I am going to allow the work they do, because often I will send emails to them, sometimes late at night, asking specific questions about budget line items. We saw that when the member for Edmonton West added up different sections of the budget tables, they did not, in fact, add up.

It is thanks to the PBO that parliamentarians such as us are able to do that work. If we have a question and we want to double-check whether our math is correct or whether we understand a concept being advocated by or pushed forward by the government, we can check with the PBO whether it is true. If it is not true, they can then double-check with the departmental officials they have connections with.

When department officials refuse to disclose information being requested from the PBO, it is a great matter of concern to parliamentarians. We rely on the PBO in a lot of ways to provide us technical information and to ensure our calculations are in fact correct. Perhaps if Finance Canada had taken advantage of the PBO's expertise, it would not have had to table a new set of fiscal tables, updating a great deal of them in the past budget document.

However, this is about the tax gap. This would provide Canadians with an ability to understand what it is over time. It is of great interest. The member for Sherbrooke mentioned in his speech that three times there had been major scandals and there had been great interest from everyday Canadians and members of the public. Different transparency and anti-corruption organizations have mentioned that such information would be of value for the public to have.

There is already a lot of information that the government makes public. This particular one, though, is something I have not seen made available on an easy-to-understand basis. The way it is being laid out in the definition of the tax gap, proposed subsection 88.1(1), offers that opportunity for Canadians both to understand what is being calculated and how it is being calculated. From then on, it would be up to parliamentarians to decide what to do with that information. More information from the civil service is always a good thing. At the end of the day, we are all hoping for greater transparency from the CRA, both on what it expects to collect and what it is actually able to collect.

That brings me back to the finance committee, the committee of the House on which I sit. It is looking at Bill S-6, a Madagascar tax treaty. I asked a question of the officials there whether they had any ability in calculating and telling us which corporations in Canada would be affected by that tax treaty and whether an analysis had been done. It was not clear to me from the answers at the time whether it was done.

Prior to Bill S-6 being proposed, a tax gap would have existed, at least in my mind it would have existed, between potential tax planning by certain corporations and individuals who would do business in Madagascar and what would happen after the ratification of Bill S-6. I was told that this information may be collected at some point by the CRA or it may not. That, again, is the tax gap between what may happen if a tax treaty is introduced or not. Aggressive tax planning does happen. It is illegal to do so in jurisdictions that do business with Canada.

Canadians will benefit greatly from the tax gap. It is perfectly reasonable to ask the Canada Revenue Agency to make the calculation. Part of the benefit will be that if it gets into the practice of collecting information and providing it to both parliamentarians and members of the public, it will also force it to start actually collecting that information after the fact. That is of great interest and great benefit. It would allow Canadians and parliamentarians to make access to information requests, to better understand the methods it is using to calculate it and to see the email transmissions among different government officials on the tax gap. It would also help us understand the conviction rate, who is being chased, whether a systemic abuse of the system is going on and whether particular tax treaties with Canada are being abused, which we should perhaps look at again.

All of this publicly available information that we do not have right now should be available right now. I am a parliamentarian who makes a lot of access to information requests and has a lot of Order Paper questions. Therefore, the disclosure of information is important, the calculation in the first place. Too often in this place, the government comes back with a response saying that it does not collect information in that particular way and therefore it cannot answer the question. This Senate proposal, from a Liberal senator, Senator Percy Downe from Prince Edward Island, will do what I have been, like I said before in the Yiddish proverb, praying for, which is more rules on civil servants and bureaucrats, less rules on everyday Canadians and a greater disclosure of information to Canadians and parliamentarians. It is a blessing that is coming down to earth.

I ask all members to heartily support the bill. It is a great proposal and it would provide greater transparency of tax information.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

April 3rd, 2019 / 6:40 p.m.
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NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Mr. Speaker, I am pleased to join this debate.

First off, I want to thank the senator who tabled this bill in the other place for getting it to the House of Commons. I commend him for his hard work and his initiative. I really respect everything he has done over the past few years to fight tax evasion. Measuring the tax gap, the issue at the heart of this bill, is also one of his primary concerns.

As I mentioned earlier in my question, the bill would require data to be provided to the Parliamentary Budget Officer so that he can independently analyze and calculate the tax gap. The tax gap is a measure of the government's annual tax losses relative to the Canadian economy and the global economy. Tax gap estimation is quite complex. The tax gap provides a gauge of how much money the Government of Canada is losing because of its unfair tax system.

Canada's unfair tax system also makes it possible for some taxpayers, especially rich taxpayers, to avoid paying taxes in Canada. These people can afford to hire tax lawyers who charge $500 an hour and who know how to work the system so their clients do not have to contribute to public services and infrastructure in our society. Calculating the tax gap is extremely important, because it tells us whether our efforts are paying off. This government is not calculating the tax gap because it does not mind missing out on several billion dollars every year.

We in the NDP understand the immeasurable losses caused by national and international tax evasion and aggressive tax avoidance. Aggressive tax avoidance also seeks to circumvent our laws, which is another part of the problem. Each transaction in isolation is legal, but when put together, the transactions amount to immoral acts. Tax lawyers are not always the most ethical individuals.

The ultimate goal of calculating the tax gap is to check whether our efforts are paying off. If we were to calculate the tax gap for 2019, for example, and if the government had a plan to address tax evasion, we should be able to see whether any progress has been made in five or ten years.

The biggest problem for the Liberal government is that they do not have any results to show Canadians when it comes to fighting tax evasion. For three years the Minister of National Revenue has been saying over and over again that the Liberal government invested $1 billion in the Canada Revenue Agency to fight tax evasion and that it hired 1,300 auditors.

When people hear that they say that the government is committing a lot of financial and human resources to fighting tax evasion. They also say that such considerable efforts should lead to results, but that is not the case. The government has nothing to show Canadians.

Just this week the Minister of National Revenue announced that searches were conducted in Vancouver last week. That seemed to be the best thing she could announce to Canadians on the tax evasion file. There were three tax scandals in recent years, the Panama papers, the paradise papers, and the Bahamas leaks, but the minister was very proud to announce those searches. She seemed pleased to see that progress was being made on this file even though we are far from seeing charges and even farther from securing convictions.

The government's four-year mandate is coming to an end, and it is still at the search warrant stage, when we should be seeing results. The government may have invested $1 billion and hired 1,300 auditors, but it still has nothing to show Canadians.

To make matters worse, the Liberals will try to make people believe that they have obtained results, as the Minister of National Revenue has already done on several occasions. When we asked her what the results were, she talked on various occasions about 78 convictions. The number varied. Sometimes it was higher and sometimes lower.

When we pressed further and asked her about the convictions in question, we realized that they all had to do with domestic tax evasion. However, there is a rather big difference between domestic and international tax evasion.

When my NDP colleagues and I asked questions about international tax evasion, we were told that there had been convictions. Saying that amounts to misleading Canadians. In fact, the minister was forced to acknowledge that. Her officials had to acknowledge that in committee. When we asked them how many convictions there had been for international tax evasion, they had to admit that there had not been any. There have been no convictions for international tax evasion. That is the Liberal government's track record. That is the reality.

The Liberals may say that they are working on it and moving mountains to tighten the net, but the net is still wide open. The basic problem here is that the tax laws are still too lax, too flexible, too elastic. Taxpayers who can afford to hire tax lawyers are able to avoid paying their fair share and to get off scott-free when they are caught. When CRA investigators are faced with that situation, they can only say to themselves that the tax laws are so lax that they can do nothing about it. That is the crux of the problem. The government does not want to acknowledge it. That is the reason for the lack of results.

If they do not address the root of the problem, hiring 1,300 people and investing $1 billion will not make a difference, because the laws are too lax. They do not want to acknowledge that either. They do not want to deal with tax flexibility, which is the root of the problem.

This is why Bill S-243 is so important. If we can measure the tax gap and monitor any progress, we may finally have some way to see whether the government is making progress on combatting tax evasion. This would also give us a clear picture of international and domestic convictions for tax evasion in a report that would be presented by the agency. The two types could be separated in the agency's public reports. The real problem here is that the minister does not distinguish between the two. That may be because she does not know the difference. We would have to ask her.

The Liberal government is showing a serious lack of transparency, which is why the senator introduced this bill and shepherded it this far. He can see it, as can all of us on this side of the House. Even the Conservatives have woken up, even though they were the ones who fought the former parliamentary budget officer to avoid giving him information. They have woken up and joined us in demanding results and demanding meaningful action on tax evasion.

I will be happy to support this initiative. I hope that my colleagues will join me so that we can shed some light on the Canada Revenue Agency and finally see results over time. This will help us understand whether our efforts are working and change course if we find that our efforts are inadequate. So far, the government's efforts have not been working.

I hope that the government will support this initiative, which would be in line with its claims of wanting transparency and openness. It now has an opportunity to demonstrate transparency and openness at the Canada Revenue Agency.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

April 3rd, 2019 / 6:35 p.m.
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Liberal

Brenda Shanahan Liberal Châteauguay—Lacolle, QC

Mr. Speaker, I rise today to speak to the Senate public bill, Bill S-243.

Before I begin, I would like to thank Senator Downe for his work in both highlighting the importance of better understanding Canada's tax gap and the fight against tax evasion and aggressive tax avoidance. Rest assured, the government shares the senator's concerns and understands the importance of both issues.

Early in her mandate in April 2016, the Minister of National Revenue publicly committed to releasing a series of reports that would provide detailed information about Canada's tax gap for the first time ever. In fact, from an overall tax gap perspective, few countries produce and publish tax gaps for all of their major tax categories. The OECD has stated that, as of 2015, only eight countries measured and published the major components of their tax gaps. Canada was proud to join this group of eight starting in 2016. With this information, the government is able to report on the difference between the taxes that would be paid if all obligations were met and taxes that are actually paid and collected. It is important for Canadians to have an awareness of Canada's tax gap and an appreciation of how evading taxes cheats us all.

Canada is now one of the leaders in the tax gap estimation among OECD countries. For example, the CRA was the first tax administration to use underground economy statistics to estimate the personal income tax gap and the first to publish an estimate of the OECD concept of tax assured. As the minister indicated, this tax gap information serves as an important tool that helps build the confidence of Canadians about the fairness of the tax system.

Having an understanding of the tax gap helps CRA identify areas of higher risk for non-compliance. In turn, the CRA can allocate resources where the risks are highest. Generally speaking, tax gap information can provide tax administrations with insights into the overall health of the tax system and indicate the levels of non-compliance with tax laws.

The agency has adopted a progressive approach to estimating Canada's tax gap. Its approach involves taking the time to develop appropriate, well-founded research methods that work in the Canadian context. The method varies depending on the type of tax. Sometimes, a single tax may require the use of more than one assessment method, as I am sure members understand.

I am pleased to announce that the agency's work has resulted in the release of four reports on tax gaps in Canada. A fifth report on the incorporated business tax gap will be published later this year.

The CRA released the first report in June 2016. It was a conceptual study that defined the tax gap. The study presented the challenges involved in estimating the tax gap and it provided details about how tax gap estimates can be used in administering taxes. The study also described tax gap estimations in other countries.

A second report, published in June 2016, provided an estimate for the goods and services tax and harmonized sales tax gap. With support from the Department of Finance, this report estimated the tax gap to be $4.9 billion in 2014, with the federal component accounting for $2.9 billion.

The third report, published in June 2017, estimated the domestic personal income tax gap to be about $8.7 billion in 2014. This amount included both the tax gap related to the underground economy, $6.5 billion, and payment of taxes, $2.2 billion.

Most recently, the fourth report, which was released in June 2018, focused on the international tax gap and compliance results for the federal personal income tax system. It estimated the international personal income tax gap to be between $800 million and $3 billion in 2014.

I will take a moment to highlight in greater detail some of the information that was brought to light as a result of the release of the fourth report on the international personal income tax gap.

In the fourth report, the CRA worked to define how it measures the international tax gap. Essentially, the report sets out to help Canadians understand our international tax obligations. The report explains Canada's reporting obligations and voluntary compliance, as well as reports on audit activities related to international non-compliance. It also estimates the tax gap related to offshore investment income, in addition to describing the end results of the CRA's compliance tools, activities and results.

Defining the issue was crucial to helping Canadians understand the international tax gap. Without a doubt, this is a complex issue, and it can be extremely difficult to measure non-compliance internationally given the sophisticated methods some individuals use to hide their income and assets.

It is also important to note that Canada was recognized as the first of the G7 countries to publish its study of the international tax gap using a new method. The method was developed using a collaborative approach that included offshore financial and banking data to estimate tax loss due to unreported investments hidden offshore.

Moreover, the CRA works closely with experts and international partners from the United Kingdom, United States, Denmark and Australia to develop robust methodologies to assess the different components of the tax gap. As I mentioned, international tax schemes are more sophisticated and more complex than ever. I cannot overemphasize the importance of strong international relations and partnerships to tackle tax evasion and aggressive tax avoidance on a global scale.

Canada is well regarded for our contributions internationally. We take the opportunity to share expertise and learn from the experience of other countries to understand the global intricacies of tax evasion and aggressive tax avoidance. In fact, Canada is one of more than 65 nations that send out and receive country-by-country reports. Shared automatically, these reports provide countries with access to information about multinational corporations' activities in every country in which they operate. Once analyzed, this information provides great insight into the operations of large companies.

The common reporting standard is another tool used to gain access to information on Canadians' overseas bank accounts. With this system, Canada and close to 100 other countries exchange financial account information. This information helps identify instances where Canadians hide money in offshore accounts to avoid paying taxes, which is a key concern shared by Senator Downe, the government and indeed all Canadians.

I want Senator Downe and all parliamentarians to know that the government is working hard to study and release information on Canada's tax gap. This is a key part of the CRA's commitment to a fair tax system that meets the needs of all Canadians.

Information collected to assess Canada's tax gap allows the CRA to skilfully target our compliance activities and ultimately improve the integrity of the tax system.

Fairness for All Canadian Taxpayers ActPrivate Members' Business

April 3rd, 2019 / 6:15 p.m.
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Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

moved that Bill S-243, An Act to amend the Canada Revenue Agency Act (reporting on unpaid income tax), be read the second time and referred to a committee.

Mr. Speaker, right now, Canadians are busy collecting tax slips and preparing to file their annual income tax returns. Despite the fact that no Canadian loves to pay income tax or particularly enjoys the act of complying with an increasingly onerous tax system, we can take comfort and pride in knowing that we live in a country where most taxpayers honestly report their income.

Respect for the rule of law is a foundational Canadian value. However, the biggest threat to a culture of compliance is the notion that other people or businesses do not comply, so tax evasion threatens the legitimacy of the entire tax collection system. If Canadians see that some Canadians succeed in evading taxes, other Canadians will resent that they are paying and complying, because they know they will have to pay even more as a result.

This past fall, the Auditor General tabled a report that pointed out the challenges that the Canada Revenue Agency has faced with collecting taxes from those who have offshore transactions. The Auditor General found that people or businesses with offshore transactions were given months or even years to comply with requests for information from the Canada Revenue Agency, and sometimes had their cases dropped with zero taxes collected or assessed. This is while regular Canadians are automatically reassessed and penalized after 90 days if they fail to respond.

The report from the Auditor General confirmed what many Canadians have suspected, and that is that there is a serious problem with offshore tax compliance and that some wealthy people have advantages that normal Canadians do not when it comes to avoiding taxes.

While compliance is the norm in Canada, some will under-report their income and others will not file returns at all. The underground economy of unreported cash transactions and the use of overseas tax havens are assumed to create a multi-billion dollar gap between what the law requires Canadians to pay and the amount that the Canada Revenue Agency actually collects. I say “assumed” because there is no real estimate of this gap. Bill S-243 seeks to measure, report on and hold the CRA accountable for its efforts to eliminate this tax gap.

As the opposition shadow minister for national revenue, I am pleased to join a multi-party effort to address the tax gap by sponsoring Bill S-243 in the House of Commons. The bill was introduced in the other place by Senator Percy Downe of Prince Edward Island, was amended at the Standing Senate Committee on National Finance and was passed with all-party support. I hope colleagues from all parties will support and swiftly pass the bill in the House of Commons as well.

In my remarks today, I am going to address what the bill would do, what it would not do and why it would be important for Canadians.

Bill S-243 would do three things. It would require the Canada Revenue Agency to publish distinct lists for convictions for both domestic and overseas tax evasion; to calculate and report on the income tax gap; and to give the Parliamentary Budget Officer information needed to calculate the tax gap for an independent assessment.

The bill starts by instructing the Canada Revenue Agency to publish distinct and detailed lists of convictions for tax evasion within Canada and overseas. As the Panama and paradise papers demonstrated, overseas tax evasion is a significant problem for Canada.

Canadians might be shocked to know that years after the revelations contained in those date leaks, no charges have been laid. They might also be shocked to know that according to the Canada Revenue Agency's own information, there have been less than a dozen successful prosecutions for tax fraud and evasion in the past year, and that is in a country with some 30 million annual tax filings.

Law-abiding taxpayers deserve to know what the government is doing to enforce the law equally and to crack down on Canadians who illegally hide money overseas as well as those who refuse to report their income at home.

Presently, it is difficult to find such information and details are not provided. Publishing two separate lists would help Canadians understand the extent of overseas tax evasion and would spur efforts by the Canada Revenue Agency to bring cases to trial in a timely manner. Canadians should never feel that the wealthy and well-connected can evade income tax without consequences.

Bill S-243 would also require the Minister of National Revenue to calculate and report on the income tax gap every three years. This would allow the CRA three years in which to gather all applicable data, analyze it and release a reasonable estimate of the difference between taxes owing under the Income Tax Act and those that it actually collects.

Analyzing and calculating the tax gap is an involved process which will take time. Therefore, a three-year reporting cycle would ensure that measurement and reporting would not consume a disproportionate amount of the CRA's resources. The three-year cycle would also allow time for increased efforts to combat tax evasion to take effect and for a long-term trend line to be plotted.

Finally, the bill would instruct the minister to collect, compile, analyze and abstract statistics on the income tax gap and provide that data to the Parliamentary Budget Officer. As such, he could verify the CRA's work and offer an independent opinion on the tax gap. Combined with CRA's reporting, this should allow a reasonably accurate estimate of the tax gap to be charted.

Bill S-243 would mandate that the minister consider certain factors in calculating the gap, such as the value of reassessments as a result of audits on individual, corporate and trust returns and the rate of incorrect returns that were not detected until being audited. However, it would not limit consideration to only these factors. It explicitly states that the calculation of the tax gap would be based on such factors, but with flexibility to consider other things as well.

The bill does not address tax avoidance schemes that are legal under the Income Tax Act or instruct the CRA to calculate potential revenue from amendments to the Income Tax Act. This bill would not mandate particular tax compliance efforts or targeting of any classes of taxpayer for greater scrutiny. It only aims to gather the evidence on which to base tax collection decisions, and it would leave those decisions to the government of the day.

The bill would not infringe on the privacy of Canadians. Likewise, material that the CRA must share with the Parliamentary Budget Officer would be subject to privacy protections that would prevent identification of individual taxpayers. This bill would not create new taxes, modify existing taxes nor change tax treatment. The bill is an effort to identify the extent of tax evasion to ensure that existing laws are being equally enforced.

I would like to address some of the observations raised by witnesses at the Standing Senate Committee on National Finance and by stakeholders with whom I have consulted.

Witnesses pointed out that Bill S-243 could make Canada a world leader in legislating measurement and reporting on the tax gap. Other countries are experimenting with measurement methodology, but none have written the reporting requirements into law. Canada has an opportunity to be a world leader in understanding the scope of its tax evasion problem and be better equipped to address it.

This is a problem that faces countries throughout the world. It is not unique to Canada, but Canada can and should take a leading role in addressing this problem.

Despite the fact that such reporting is new, I am confident that Canada's public servants are up to the challenge of developing a practical methodology over the next three years.

A further suggestion made at committee involved giving the Parliamentary Budget Officer access to anonymized underlying tax data instead of just the CRA's own analysis of tax data. This would allow the PBO to generate a more precise independent opinion, but it would require amending the Income Tax Act to address privacy protections. While I agree that greater precision from the PBO is desirable, such an amendment is beyond the scope of the bill.

Some witnesses thought Bill S-243 did not go far enough. They thought it should be expanded to include measuring tax avoidance in general rather than just tax evasion and that it should address evasion of other taxes like the goods and services tax and excise on liquor and tobacco. The bill targets only the gap between income taxes legally owed under the Income Tax Act as written and income tax revenue collected. Measuring tax avoidance would be more complex than the measures contained in this bill and would have to be left to other legislation in the future.

Witnesses also told the committee that participants in the underground economy often evaded multiple taxes at once. A business that neither collects nor remits GST, for example, almost certainly fails to report the income it receives.

I agree that other forms of evasion involving GST or excise duties such as contraband tobacco should be measured and reported as well for an accurate picture of the overall general tax gap. However, income tax is a reasonable place to start to measure the tax gap. Right now none of this is measured at all, so at least this bill we can begin to measure the tax gap by starting with income tax.

Personal and corporate income taxes account for two-thirds of the total tax revenue, so this is a good place for us to start. There is certainly nothing in the bill stopping a future Parliament or a future government from expanding the measurement and reporting system to include other taxes and duties at a later date.

Some stakeholders raised concerns that moves to measure and report on the tax gap would spur efforts by the agency to target law-abiding taxpayers, particularly small businesses, with sterner enforcement measures. I understand this concern and in general I share it, but I think that it is misplaced in the case of the bill.

The issue of overzealous tax collection measures is a separate issue and it is one that this Parliament could have dealt with by establishing a legislated duty of care between the agency and taxpayers. However, the House chose not to do so when Motion No. 43 was voted on in September 2016.

The bill seeks to improve Canada's ability to measure how effective our revenue collection and law enforcement systems are. It seeks to promote better governance through better information. The issue of the CRA's treatment of law-abiding taxpayers is a separate unrelated issue.

The proposed bill does not mandate any particular enforcement actions. It does not single out any class of taxpayers for further attention. It does not amend income tax policy to close perceived loopholes or to raise anyone's tax burden. It is simply a measure to uphold the rule of law. It aims to gather the information needed to ensure that all Canadians comply with the law, that no one can evade it due to wealth or overseas connections and so increase the burden on those who comply.

By requiring the CRA to post distinct lists of both foreign and domestic tax evasion convictions, it will likely focus greater compliance attention on overseas tax haven use. That is good news for honest Canadian businesses.

Bill S-243 would improve Canadian governance through better information. It would allow Canadians to see how effective tax collection and law enforcement efforts are and to demand better. It would provide successive governments the information they need to address domestic and overseas tax evasion more effectively and to provide the impetus to give offshore tax havens the enforcement attention they need. It would provide the evidence for evidence-based policy making. It would demonstrate Parliament's commitment to the rule of law and to treating Canadians equally and permitting none to cheat, thus increasing Canadians' overall confidence in our institutions. It would increase accountability from the Canada Revenue Agency through independent reviews by the Parliamentary Budget Officer.

This is important for small businesses, which often feel like they are the lowest hanging fruit for tax compliance scrutiny. They have watched as the Auditor General has pointed out how those with overseas transactions are sometimes given months or years to comply and maybe have the case thrown out, while a small business person with only domestic business has only 90 days. It is important for law-abiding taxpayers of more modest means to see that the wealthy and well-connected using tax havens are brought to justice. This is important for large companies and wealthy individuals to know that Canada upholds the rule of law.

No one likes paying taxes, but Canadians like cheaters even less. The bill would show Canadians that parliamentarians of all parties take such cheating seriously. It would show them that Parliament takes steps to understand the scope of the problem to better address it.

Therefore, I encourage colleagues from all parties to support the bill, grant it swift passage through the House and ensure that we maintain our culture of compliance and a culture where people believe in their institutions, have confidence in their institutions and are willing to comply with the tax laws that currently exist.

February 7th, 2019 / 12:55 p.m.
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Ms. Linda Lapointe (Rivière-des-Mille-Îles, Lib.)

The Chair

There are two bills in the chart of items added to the order of precedence: Bill S-243, from Pat Kelly, and Bill S-248, from the Honourable Hedy Fry.

Have you had an opportunity to read them over?

Canada Revenue Agency ActRoutine Proceedings

December 13th, 2018 / 10:05 a.m.
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Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

moved for leave to introduce Bill S-243, An Act to amend the Canada Revenue Agency Act (reporting on unpaid income tax).

Mr. Speaker, it is indeed my pleasure to introduce the fairness for all Canadian taxpayers act, measuring the tax gap to fight international tax evasion.

This bill is a common-sense measure that will help ensure accountability to parliamentarians as we fight tax evasion, in particular international tax evasion, something that I am sure is very important to all Canadians. Indeed, I hope I will have the support of all parties in this matter, because I am sure that most parliamentarians would take very seriously the issue of tax evasion and would like to see increased measures to ensure accountability for the agency as it combats international tax evasion and avoidance.

(Motion agreed to and bill read the first time)

Message from the SenateGovernment Orders

November 27th, 2018 / 5 p.m.
See context

NDP

The Assistant Deputy Speaker NDP Carol Hughes

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following bills, to which the concurrence of the House is desired: Bill S-243, An Act to amend the Canada Revenue Agency Act (reporting on unpaid income tax) and Bill S-248, An Act respecting National Physicians’ Day.