Is this addressed to me?
Evidence of meeting #57 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was clients.
A recording is available from Parliament.
Evidence of meeting #57 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was clients.
A recording is available from Parliament.
10:05 a.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
Perhaps you could give a quick response; I have only a few minutes.
10:05 a.m.
Shareholder, Spiegel Sohmer Inc., As an Individual
I think you have to make a distinction between hoodlums and the elderly. Hoodlums will always find a way to beat the system. It's becoming more difficult with--
10:05 a.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
No, maybe you misunderstood the question.
What are the conditions in our world today...or what is the principal reason why people seek offshore accounts for tax evasion purposes?
10:05 a.m.
Shareholder, Spiegel Sohmer Inc., As an Individual
Oh, there are a number of reasons, obviously.
10:05 a.m.
Shareholder, Spiegel Sohmer Inc., As an Individual
Not to pay taxes; security; if you--
10:05 a.m.
A voice
Greed.
10:05 a.m.
Voices
Oh, oh!
10:05 a.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
No, it's okay. Sorry. I won't put you on the spot.
One of the approaches that has had actually a very significant return, in terms of proactive efforts by governments, has been the route of forensic accounting.
Can you tell me if there are any jurisdictions out there who have promoted forensic accounting that would demonstrate that people seem to be living lifestyles that are way beyond the income levels they report?
10:10 a.m.
Shareholder, Spiegel Sohmer Inc., As an Individual
We have a program in Canada, the CRA has, for doing what's called a net worth audit. You take a look at the net worth at the beginning of a period, the net worth at the end of the period, calculate what living expenses are, and see what you've declared. It's a fairly effective program.
But as long as people can spend cash.... I think the biggest deterrent would be to deter the ability to spend cash.
And transporting cash across borders is becoming difficult. Using ATMs is becoming difficult.
10:10 a.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
Okay. I'll go on to my last question.
There seems to be reluctance on the panel's part of taking what some would call draconian measures. There's a fear, I think, that if you go after people, there will be less incentive for them to come out. But they already have the voluntary disclosure program anyway. How much more generous could you possibly be?
So if you've already given them the best you can pretty well give them anyway, why wouldn't you try some more draconian measures? The U.S. has a whistle-blower type of arrangement. I don't think Canada really has anything like that.
The public education thing is not to just say, well, everybody should pay their taxes, because that's what we do to pay for our health care, etc. It's to educate them: if you decide to take care of yourself first, there are consequences.
Is that the kind of education we should have?
10:10 a.m.
Shareholder, Spiegel Sohmer Inc., As an Individual
I'm not sure it's a matter of education. I think firstly we have to realize that Canada has limited ability to take unilateral action. If we tell the Swiss that unless they force their banks to disclose information, we're going to prohibit Swiss from investing in Canada or lending to Canada, we're simply shooting ourselves in the foot. The Americans can do it because investing in U.S. securities is a vital component of an investment strategy. Buying shares of Bombardier or BCE is not.
We have limited capabilities. Our voluntary disclosure program would be very effective if it's implemented the way the CRA is currently implementing it. I think we have to realize that you can't have enforcement without information, and getting the information internationally is something that is difficult to get and requires an international—
10:10 a.m.
Liberal
10:10 a.m.
President, Caplin & Drysdale
I've always thought that tax enforcement pays for itself and then some. Obviously, the government has many budgetary needs. What happened in the United States 20 years ago or so is the IRS became a punching bag politically and took some unfair criticism. And the IRS retrenched its enforcement activity, and that encouraged people to cheat. There are some people who believe that the mass-marketed tax shelters of the late nineties and so forth were a result of a perception that the IRS didn't have any enforcement mechanisms and was not going to be aggressive.
Tax enforcement is a pendulum, and when it swings toward more activity, I believe it promotes more compliance.
February 8th, 2011 / 10:10 a.m.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
Thank you very much, Mr. Chair.
I would like to thank each of our witnesses for being here today.
I just want to comment on the information that was provided to us, certainly from you, Mr. Sohmer, and you, Mr. Michel, on the work that you've done, on your expertise, and certainly on the extensive lecturing that you've done in many countries, which I think supports what I've come to understand: that this is a challenging issue and one that is a huge issue around the world, and that there is a will to address this issue.
Mr. Sohmer, earlier you made a reference to Canada's inability or lack of muscle to address the issue to the degree that a country like the United States can. But we know that Canada is one of 95 jurisdictions that have agreed to the international standard for exchange of information, including providing access to bank information, as well as having an extensive network of tax treaties, one of the largest in the world, with 87 tax treaties in force. Also, budget 2007 announced measures that would encourage TIEAs. I'm just wondering if you would be willing to comment on Canada's actions to date in terms of addressing this challenging issue.
I would open that up to any of you.
10:15 a.m.
Shareholder, Spiegel Sohmer Inc., As an Individual
I think Canada has done a marvellous job in the international arena. Again, its powers are limited. It would have liked to have seen an automatic exchange-of-information provision provided for in the treaties, but the G-20 turned that down, and the TIEAs and the protocol to the Canada-Swiss tax treaty and the international standard have limits now. The requesting country must provide the name of the person and the name of the bank, and fishing expeditions are prohibited.
Canada has signed, but not ratified, an international treaty on mutual assistance and collection, but Canada has played a significant role in the studies on high-net-worth individuals. I think what has to be borne in mind is that this is a project that will ultimately bear fruit in five or ten years, but we have an opportunity now, where people are willing to come forward. We have this massive group of elderly who are willing to come forward and to write cheques, provided the amount is not perceived as being confiscatory.
In five or ten years' time, I think on the international forum we will have effective enforcement.
10:15 a.m.
President, Caplin & Drysdale
I agree with Mr. Sohmer. I think from my seat across the border, Canada seems to have been quite active and effective in promoting multilateral efforts on exchange of information and tax enforcement.
10:15 a.m.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
Just on that note, you made an observation about the demographics and that we have the opportunity with individuals who are retiring.
In your opening remarks, Mr. Michel, you referenced the adoption of a settlement initiative that took place in 2008. You referenced that more than 15,000 Americans came forward. But I noted as well that you said, “The IRS announced such a program on March 23, 2009, made some changes while it was in effect, provided limited guidance on more complex issues, and closed it nearly seven months later.”
Why did it not continue if you had the kind of results that you did?
