Bill S-217

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)

This enactment amends the Canada Revenue Agency Act to require the Canada Revenue Agency to list all convictions for tax evasion — including international tax evasion — in the annual report it submits to the Minister of National Revenue. It also requires the Agency, once every three years, to include statistics on the tax gap in the annual report. In addition, this enactment specifies that the Minister is to provide the Parliamentary Budget Officer with data on the tax gap.

Canada Revenue Agency Act

[The Deputy Speaker, Tom Kmiec]

Resuming debate, the hon. member for Mirabel.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mr. Speaker, I would like to thank the senator who introduced this bill. Much of the work has therefore already been done in the other place.

I would also like to thank my colleague who is sponsoring Bill S-217, of course. This is a bill about accountability and transparency. The Bloc Québécois will be supporting it, so there is no suspense there.

Essentially, the bill seeks to have the Canada Revenue Agency disclose all convictions for offshore tax evasion and to have the agency release an annual report presenting statistics on the tax gap, which represents the taxes that should have been collected but were not and that Canadians and Quebeckers ultimately make up for through their own taxes. After all, there are some people who do pay their taxes.

The government member told us that Canada was part of a select group of countries that published this information. He told us that the Canada Revenue Agency had done so twice, successfully, and congratulated the government. My Liberal colleague is not wrong, because the federal government made that commitment in April 2016. It committed to estimating the tax gap, including data on fraud, bankruptcies and honest mistakes. However, the most recent data are from 2022. It is now 2026, almost 2027, and there has not been any update. It is true that the Canada Revenue Agency released a report in 2026, but the data covered only the period from 2016 to 2022.

The government supports the principle of the bill. However, it also serves as a reminder that binding legislation is needed for the Canada Revenue Agency to carry out this work. As taxpayers and parliamentarians, we have a right to know the size of the tax gap.

Earlier, my colleague told us that the tax gap will never be reduced to zero. There is nothing in the bill that calls for the tax gap to be eliminated. The bill does, however, require that the tax gap be measured and publicly reported so that it can be quantified. Moreover, this is only a first step, since the bill deals solely with offshore tax evasion. For example, a Canadian taxpayer may hold assets or real estate abroad, decide to sell those assets and fail to report the resulting capital gains in Canada. It is possible to develop estimates of those amounts. As taxpayers, we are entitled to that information.

I understand that this may seem like an original idea, but there are many other countries that do this. I think it is a transparency measure. I would like to point out that two other bills contained essentially the same measures, but they were defeated in the House: Bill S‑258, in the 44th Parliament, and Bill S‑243, in the 42nd Parliament.

What is interesting about Bill S‑243 is that the Liberals voted against it. The Liberals had a majority. Mr. Trudeau's government came in with all the best intentions in the world, which it kept up for one, two or three years and, ultimately, those intentions did not translate into results. When we demanded results, they voted against the bill that called on them to honour their own commitments. That is why we need legislation.

I said that this was not a partisan issue. The Parliamentary Budget Officer has come out in favour of the principle of the bill and the bill itself. It is also the role of the Parliamentary Budget Officer to prepare revenue projections for the government. What we heard from the Parliamentary Budget Officer is that a greater ability to access data on the tax gap would help her in her work. The last I heard, the Parliamentary Budget Officer is not the Bloc Québécois, it is not the Conservative Party and it is not the New Democratic Party.

In my opinion, there is a consensus in Quebec society, in Canadian society, among experts, those who do research and analyze the performance of our tax agencies, and among parliamentarians. I am certain that there are members on the other side of the House who would like to see improvements at the CRA.

The first person who should want that is the Minister of Finance and National Revenue, who is also responsible for the Canada Revenue Agency. If the goal is to improve, that needs to be quantified and done right.

Again, it is important to put a name to things. Back when the Liberal government rejected a similar bill, it told us that it was because the bill would violate the right to privacy, personal information and so on. Many cases of fraud and wrongdoing are made public when there are convictions. When it comes to tax evasion—not tax avoidance, which is legal even if it is not desirable—someone who is caught abroad creates a tax gap. I do not see the issue with making that information public.

This also brings us to the broader issue of the Canadian government's ability or lack thereof to collect tax revenues from taxpayers. As I said at the outset, a taxpayer who does not pay their fair share of taxes is a taxpayer who puts the burden of paying down the debt, servicing the debt, and paying for the armed forces, the public service and family benefits on the shoulders of another taxpayer. Those who do not pay their taxes are people who think that another taxpayer is going to pay them. At some point, some of our most vulnerable citizens might be in a position where they do not receive certain services because the Canadian government does not have the full fiscal capacity to pay for them. My Liberal colleague said earlier in his speech that this gap could be as much as 10% of federal government revenues. Do they realize what 10% means? Even if the government does not bring it down to zero, it is huge.

The bill addresses international tax evasion. However, it is important to document where the tax gap comes from. Are there bankruptcies involved? Are there people who are unable to pay their taxes, as we saw during the pandemic? How much of the gap is due to those situations? If the goal is to take action in the right place, it is important to know that information and put a name to those things. More broadly, the government will also have to take the issue of tax avoidance more seriously. For a number of years, certain corporations and the wealthiest individuals, those who should be contributing more, have been resorting to increasingly aggressive tax avoidance strategies. That is perfectly legal because, in many ways, Canada's tax laws are like sieves. As is known and documented, the Canada Revenue Agency has one of the lowest tax recovery rates among all the tax agencies in developed countries.

I remember that soon after the government came to power there was the KPMG scandal. KPMG is one of the companies known as “the big four”. One of those four firms went under. The big four are large firms with very large clients. They advised these clients on schemes to pay less tax, such as through transfer pricing, the shifting of intellectual property abroad and other similar mechanisms. So aggressive were these schemes that criminal charges were laid in the United States against KPMG for promoting them to clients. At the time, we asked the then minister of national revenue Ms. Lebouthillier why she was not using her authority to investigate what had happened at KPMG in Canada. While federal criminal charges had been brought in the United States, here the minister told us that her government could not do anything because the agency was at arm's length and that she was there merely to sit in the minister's chair. She made sure it stayed warm and did nothing else, even though the law allowed the minister to launch an investigation. While the law did not empower the minister to meddle in individual taxpayers' files, it did empower her to launch an investigation. What happened next? A backroom deal was made with KPMG. No charges were ever laid. We do not know what kind of accountability resulted from the agreement. We do not know what impact it had on the tax gap, namely the revenues that the government failed to collect. It has damaged Canada's reputation as a supposedly advanced tax jurisdiction. Perhaps had this law been passed, we would now have a clearer picture of what occurred in the KPMG case in Canada. I will conclude on this point: Because of the delay in disclosure, the report that would have resulted from the application of this legislation would have shed light on what happened in the KPMG scandal in Canada. We know what happened in the U.S.

It seems obvious to me that if the government wants to keep its word and its promise, it will have to vote in favour of this bill with the Bloc Québécois.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Mr. Speaker, it is always a pleasure to rise to participate in Private Members' Business, because what we are here for is to debate legislation. However, it is disappointing that tonight we are debating this particular bill, because it has passed the Senate not once, not twice, but three times, and it has been presented in this chamber now three times. This bill should have been passed into law quite some time ago.

I carried this bill into this chamber in 2019. It was supported by all opposition parties. It was supported by independent members. The only group of people in this chamber that opposed this bill in 2019 was the Liberals. I have some hope that maybe they have smartened up a bit and might support this bill tonight. I hope they will. That is not really the indication that I seemed to get from the last Liberal speaker. I got a lot of self-congratulations for what a wonderful job the Liberals think they have done with the CRA. However, we need this bill, and I am going to talk about it.

First, I want to thank the member for Simcoe North for his leadership with respect to tax accountability, for sponsoring this bill in the chamber in this Parliament and in the last Parliament, and for his other bill, Bill C-230, which is an important piece of accountability to ensure that Canadians know what taxes are not collected and what taxes are written off.

This bill would do three basic things. It would force the CRA to calculate the tax gap, to share the data on the tax gap with the Parliamentary Budget Officer and to publish a list of tax evaders, those who have been convicted of tax evasion. The Liberals say that the CRA does calculate the tax gap; they do not see what all the fuss is about, but there are several problems with what exists now. The CRA's reports are not up to date, and the Parliamentary Budget Officer is not able to verify its homework. It does not share the data with the Parliamentary Budget Officer, so we need more than what we are getting right now.

The Parliamentary Budget Officer is an important officer of Parliament who is there to help parliamentarians develop policy that is based on the budgetary information that her or she provides. Several parliamentary budget officers have asked for this tax information, and they do not get it. CRA officials have repeatedly said that they will not give the data to the Parliamentary Budget Officer even though they are required to do so by law. They refuse to do so, usually citing some type of privacy excuse for not providing anonymized data to the Parliamentary Budget Officer. Yes, this is anonymized data. The Parliamentary Budget Officer has not asked for the identity of any tax filer, nor information that can be identified and connected to any particular tax filer. What the Parliamentary Budget Officer needs in order to do the work of the office is the data so they can come up with their own measurement of the tax gap

This is important because there is a history of the CRA, when left to its own devices, underrating its own performance. The Auditor General has repeatedly found that the internal audits of the CRA are not up to snuff. We can think of the call centre at the CRA. The CRA's internal auditors have thought that it answers the phone reasonably and gives Canadians the information they need. The call centre has been running just fine, according to its internal audits.

Every Canadian who has ever called that call centre knows the reality. It hangs up on 70% of the people who call. It gives incorrect information to 30% of the people who actually get through. This is what the Auditor General has found. They found that the CRA's version of what was going on in the agency was not matched to reality. It is important that the Parliamentary Budget Officer be given the data so that they can make their own estimate on the tax gap and advise Parliament so that parliamentarians have the information to formulate policy and judge legislation.

They talk a lot over there about the work they do and about combatting tax evasion, but in reality, we have the Panama papers, in which 900 Canadians were identified. No charges have been laid. In other jurisdictions where citizens were identified, charges were laid and convictions were achieved, but not in Canada. This is important to Canadians, because when people evade their taxes, the rest of Canadians have to pay more. Canadians, by and large, correctly provide information, declare their income accurately and do their best to comply with all of the onerous rules and complicated tax laws of this country. They do their best; they declare their income and pay their taxes, but some do not. It undermines the system and discourages honesty when people get away with evasion.

The last thing the bill would do is compel the publication of a list of evaders. Members might know that in a country with over 40 million people and tens of millions of tax returns, corporate and individual returns, excise tax returns and GST returns, all the different types of taxes that are filed, sadly a number of people do not pay their taxes. However, I think many Canadians would be quite disturbed to realize how few people are charged with and convicted of evasion. It is a staggeringly low number. On average, it is about a dozen a year. In a country of 40 million people, does that sound like a government that is tough on evasion? That is within a whole year, with tens of millions of returns. I do not know what the number of false or evasive returns is. We do not have accurate information on that, but most would presume that it is, sadly, a bigger number, and 12 convictions in a year is pretty disappointing.

The time for the bill has come. It is time to pass it. Let us have transparency. All members of Parliament, regardless of party, regardless of whether they sit on the government benches or the opposition benches, on behalf of their constituents should surely wish to see a Canada Revenue Agency that does a better job of collecting taxes accurately. Part of being able to do that is to have accurate data and accurate information that can be independently verified and that allows us to transparently see who is evading taxes. Yes, a trial is public, but we cannot search and create a list of evaders from that. An evader is someone who has committed a criminal offence and has been convicted. They do not have the right to privacy and for it to not be known that they have been convicted of a crime.

The bill's time has come. It should have been passed many years ago. I hope that it will pass second reading tonight and move on to the next stage. I hope the Liberals will vote for it. It sounds like all the opposition parties are in favour of the bill. I hope that it passes this stage within the hour.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, we spend a lot of time in this place talking about how the government spends money. We debate appropriations, pore over spending reports from the Parliamentary Budget Officer and call out boondoggles like the arrive scam, PrescribeIT and the green slush fund. That is important work.

Bill S-217 has the potential to augment that work by helping Parliament pay the same attention to the revenue side of the ledger, because as we hold governments to account, we should also spend time checking that they do a good job of collecting what is owed and that they do so fairly. Parliament should be just as demanding about the government's ability to collect money as we are about its authority to spend it. We decide in this place what taxes may be imposed, and we authorize the expenditure of public funds. When revenue goes uncollected, it narrows our choices about borrowing, spending and taxes. We need reliable data to understand that.

Canada's tax system depends heavily on people complying voluntarily. Most businesses in my community are small. Their owners keep records and remit payroll deductions, and at tax time, many still bring a cardboard box of receipts to a bookkeeper or accountant. They pay their taxes even when they are struggling to pay their own bills. When the government does a good and fair job of collecting taxes owed, we have more choices about how to use that money, including reducing what we borrow, reducing the deficit and leaving Canadians with more money in their pockets. When the government does a bad job, more people evade their obligations and honest taxpayers end up carrying more of the burden. Tax evasion hurts us all, and Parliament should be able to get reliable data from the agency that administers the law in ways that will allow us to help ourselves.

The tax gap is the difference between the taxes Canadians and businesses legally owe and the amount the government actually collects. Not all of that is due to tax evasion. Taxpayer non-compliance can be intentional or unintentional, and in some cases can result from the inability to pay. It is one of the CRA's core jobs to minimize the tax gap.

Bill S-217 would give Parliament better information to judge how effectively the CRA is doing that and to tell whether we are giving CRA officials the training and tools they need in order to be successful. Bill S-217 would require the CRA's annual report to include a detailed list of tax evasion convictions, with international cases identified separately. Every three years, it would require tax gap statistics for individuals and corporations, broken down by size and trusts. It would also require the Minister of National Revenue to give the Parliamentary Budget Officer the tax gap data and other information needed for economists and others to do independent analysis. The bill would neither raise taxes, nor give the CRA new investigative powers. What it would ask the CRA to do is to provide data so that we can account for the government's performance.

The CRA already studies the tax gap and publishes some information about convictions. There is considerable expertise that lies behind that work, but the CRA's willingness to publish information is not the same as Parliament's right to receive it. Statutory reporting would provide a baseline and a consistent stream of data that we can use for analysis and improvement. It would survive changes in governments and changes in political priorities and would let us test the agency's assumption longitudinally instead of simply accepting its conclusions.

In March, the CRA published estimates for 2014 to 2022. For tax year 2022, its upper bound estimate of the gross federal tax gap was just under $60 billion. After projecting the effect of compliance and collection, the upper bound net gap was closer to $35 billion, or 9.3% of the federal tax revenue covered. These estimates include income tax, GST, HST and excise taxes.

That $35 billion is not a pile of cash waiting to be recovered, and it would be wrong to suggest that all of it reflects deliberate evasion. The gap includes unreported taxes and amounts assessed but unpaid, and the estimates depend on assumptions. Parliament still needs to understand where these shortfalls come from and what the CRA does about them. No matter how we look at it, it is big money at a time when we need all the help we can get.

Consider the CRA's 2024-25 departmental results report. It records $18.1 billion in what the agency calls “fiscal impact” from close to 85,000 completed compliance cases. Fiscal impact includes tax assessed, refunds reduced, interest, penalties and the present value of certain future tax assessments. The report expressly says it does not account for amounts reversed on appeal or left uncollected. That is a perfectly legitimate measure, if we understand what it measures. It is not the same thing as money collected.

A reassessment is not the final word on what a taxpayer owes. Reassessments can be challenged, and confirmed debts are sometimes uncollectible. It is valuable to know the difference between enforcement activity and recovered revenue. For the 2022 tax year, the CRA's upper-bound estimate of the corporate income tax reporting gap attributable to large corporations was $17.2 billion. That is an estimate, not a finding of deliberate evasion, but it gives Parliament a good reason to examine this part of the tax system carefully.

When former parliamentary budget officer Yves Giroux testified on an earlier version of this bill, he explained that section 241 of the Income Tax Act properly protects taxpayer information, yet the CRA sometimes aggregates data so heavily, to protect indirect identification, that it becomes difficult to analyze. Giroux said he needed useful data, not taxpayers' names. This is an example of the privacy balancing that needs to happen. This bill preserves existing confidentiality restrictions. We still need to test it at committee to know whether it solves the problem he identified. What he suggested was considering a carefully limited exception to section 241, and the committee should examine how to give the PBO useful evidence while protecting Canadians' private tax affairs.

The convictions list needs to be treated with similar care. Criminal prosecutions are appropriate for serious cases, but much tax enforcement takes place through civil reassessments. A higher conviction count does not necessarily mean better administration, because convictions do not always lead to collections. However, it is useful to know when and how well Canadian law has been followed, and whether the government is doing a good job of minimizing that tax gap.

The committee should also examine the definition of the tax gap in the bill, which is tied to the Income Tax Act even though the CRA's overall reporting includes GST, HST and excise. The new requirements should strengthen, not narrow, the reporting that is already available. Better reporting will not replace experienced investigators, and it will not make a complicated tax system easier to comply with. The former parliamentary budget officer testified that simplifying the rules could free CRA staff to concentrate on audits and collections. Instead of adding to the burden on taxpayers, we ought to be looking at where clearer laws and better targeted enforcement would actually improve results.

Collecting taxes already legally owed could relieve pressure to borrow or raise rates or create room to lower taxes for Canadians who are already paying their share. Instead of asking Canadians to contribute more at this difficult time, Bill S-217 would help us find out how effectively the government collects what Parliament has already required. That is why I support this bill and have made some suggestions on how the committee could make it a stronger instrument of parliamentary scrutiny.

Let us give the Parliamentary Budget Officer the best information she can use, with proper protections for people's privacy. We should get Parliament better information about what happens after taxes are assessed, and we should insist on an equally credible account of what the government has collected alongside what it spends.

[The Deputy Speaker, Tom Kmiec]

The hon. member for Simcoe North has the floor for his right of reply.

[Adam Chambers, Conservative, Simcoe North, ON]

Mr. Speaker, it was a pleasure indeed to hear the wonderful words of my colleagues from multiple parties in this chamber about the need for greater transparency at the CRA and, if I heard correctly, general support of the principles of Bill S-217.

I have to commend my hon. colleague from Calgary Crowfoot for his following of this issue, from sponsoring a bill similar to this in a previous Parliament to his work on the finance committee, which helped expose some of the challenges that this bill would help to address. As he has said, this is indeed the third time that this chamber has been given the opportunity to pass this bill into law, and I think the third time is the charm.

I also have to commend the principal proposer of this bill, Senator Downe, who is a tireless advocate for greater transparency, greater efficiency and a better-functioning CRA.

Many Canadians were dismayed and, frankly, shocked this weekend by what was reported by the CBC. Harvey Cashore has been doing a lot of work with his colleagues at the CBC, including Daniel Leblanc, on exposing some of the challenges of the large-scale frauds that are perpetrated on the public but that somehow escape even the most simple screening at the CRA. In one case, an individual was paid $40 million in tax refunds. This individual was a regular T4-ed employee living in northern Ontario. For fun, he submitted a fake tax return, and he got a $40-million refund as a result. Even he could not believe he was going to get that refund.

Bills like Bill S-217 would require greater transparency at the CRA, as has been discussed, to identify the tax gap and then, when there are bad actors or tax evasion, require that that information be made public to all Canadians. The least that Canadians should expect is greater transparency.

I want to thank Senator Percy Downe for his tireless advocacy and congratulate him on passing this bill for a third time. I hope we will be able to have a phone call tomorrow morning with the senator to tell him that this House duly passed this legislation this evening.

Of course, we should also thank the drafters and the parliamentary support personnel in the legal team here who support private members, both in the House and in the Senate, to bring forward common-sense pieces of legislation.

[The Deputy Speaker, Tom Kmiec]

The question is on the motion.

If a member participating in person wishes that the motion be carried or carried on division, or if a member of a recognized party participating in person wishes to request a recorded division, I would invite them to rise and indicate it to the Chair.

[Adam Chambers, Conservative, Simcoe North, ON]

Mr. Speaker, I request that it be carried.

[The Deputy Speaker, Tom Kmiec]

I declare the motion carried. Accordingly, the bill is referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I rise on a point of order. I suspect that if you were to canvass the House, you would find unanimous consent to call it 6:30 p.m. so we could move on to government business on Bill C-38.

[The Deputy Speaker, Tom Kmiec]

Is it agreed?

[Some hon. members]

Agreed.