Evidence of meeting #33 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was information.
A video is available from Parliament.
Executive Director, Canadians for Tax Fairness
We have individual donors and organizational donors.
Executive Director, Canadians for Tax Fairness
Yes, trade unions, non-governmental organizations, churches, quite a wide range of groups support us.
Conservative
Mark Adler Conservative York Centre, ON
I'm not trying to...I'm just saying, I'm not a tax expert either. My expertise comes from paying taxes, too, so I'm not trying to denigrate anything that you're saying. I just want to be clear here. You kind of give the impression that you're a tax specialist or expert, but you're not really, are you?
Executive Director, Canadians for Tax Fairness
I have learned a lot about taxes over the years. You don't learn just in school. In fact, sometimes experiential learning—
Conservative
Mark Adler Conservative York Centre, ON
So for example, when you talked about the tax gap no one's been able to.... We had an OECD representative right here at this finance committee just recently, who said it's absolutely impossible to calculate, yet you were somehow able to calculate it. How were you—
Executive Director, Canadians for Tax Fairness
The OECD does actually recommend to their members that a tax gap estimate can be a very useful tool. If you look at the literature from the OECD—
Conservative
Mark Adler Conservative York Centre, ON
But they haven't been able to come up with a number yet, but you have.
Executive Director, Canadians for Tax Fairness
It may be difficult to pinpoint the exact amount, but the point of doing it is not to embarrass the government. It's to help the government identify—
Conservative
Executive Director, Canadians for Tax Fairness
—areas where their efforts should be focused. So it is a tool that can be helpful to improve the government's performance and know where to put the resources most effectively—
Conservative
The Chair Conservative James Rajotte
Okay, thank you. We'll end on that agreement, then.
We'll move to Mr. Rankin for seven minutes, please.
NDP
Murray Rankin NDP Victoria, BC
Thank you, Mr. Chair.
Thank you to all the witnesses.
I'd like to continue with Mr. Howlett of the Canadians For Tax Fairness. I want to also drill down on some of the work that Mr. Dubourg initially started, particularly on the resourcing issue. I have your brief before us and I understand that the Conservatives have cut the CRA budget by $250 million, and 2,500 full-time equivalent people are no longer there. I'd like you to comment, if you would, on what your organization has concluded in terms of the resourcing available to deal with the tax haven problem.
Executive Director, Canadians for Tax Fairness
This committee is probably aware that just this week the Auditor General released a report on aggressive tax planning, and found that there are some problems with Canada Revenue Agency's capacity to go after tax cheats. Just this week I met a senior CRA staff person who confirms that there continues to be a serious lack of staff capacity in the international audit division to combat tax haven related tax evasion. Most importantly, he warned that this situation is likely to be compounded by a large number of auditors who will be retiring in the next few years. Unless staffing levels are boosted and good training programs put in place, which was one of the areas of particular concern in the Auditor General's report, the situation could get much worse than it is now. It's a false economy to try to save money by cutting staff in this area when we will lose much more in uncollected revenue as a result.
Murray Rankin NDP Victoria, BC
In the budget that was tabled in February, they say the measures regarding tax avoidance will allow the government to recuperate $44 million in 2014-15. I guess you've indicated in your brief that the size of the problem is $5 billion to $8 billion, or something in that range, that could be collected. Obviously, there's a great disparity between that figure and the $44 million the government seems to believe it's going to collect through these measures.
Executive Director, Canadians for Tax Fairness
I do think that the offshore tax informant program is a worthwhile measure, and that's probably the one that is most significant in terms of potential new revenue. But if you look at the U.S. experience, which I think is quite relevant here, with much longer history and much more staff resources available, they collected only $367 million last year. So 10% of that is certainly less than $40 million. They found it takes five to seven years before cases can be completed. So the actual $40 million will not be realized—it's probably optimistic—for another four or five years down the road at least. It is worthwhile, but probably it won't amount to that large a figure.
NDP
Murray Rankin NDP Victoria, BC
In your report you point out, or at least Statistics Canada points out, the fact that there's a 10% increase in direct foreign investment abroad and that the increase in tax havens is by $15 billion, to a total of something like $170 billion. Do I have those figures correct?
Executive Director, Canadians for Tax Fairness
That's correct.
The point here is that it's a growing problem. Despite some initial efforts by the G-8 and the OECD to begin to address this issue, we're a long way from getting a handle on it.
NDP
Murray Rankin NDP Victoria, BC
In your report, you mentioned the OECD just now, and the G-8 tax haven action plan is referred to and is endorsing the OECD's base erosion and profit shifting process to reform international corporate rules. Yet, you comment about Canada’s not taking a very active role. Could you speak to that? You are part of the Tax Justice Network, right?
Executive Director, Canadians for Tax Fairness
Yes. I did consult my colleagues in Europe, part of the Tax Justice Network, who are monitoring the OECD process very closely. They reported that Canada is not taking a very active role, which I suppose may be a good thing, at least there are no reports of Canada actively resisting it. But I would urge the government to step up and make a stronger effort to push through significant reforms, especially to the international corporate taxation rules.
NDP
Murray Rankin NDP Victoria, BC
What other countries measure the tax gap? You talked about that in your conversation with Mr. Adler.
Executive Director, Canadians for Tax Fairness
Roughly half of the OECD countries do tax gap measures. A couple of years ago, the OECD put out a very good report, assessing the different efforts. The Canadian Parliamentary Budget Office did make use of the best-case efforts, looking at other countries, and have done some work on a tax gap report, but couldn't complete their study because of certain CRA information they would still need.
It wouldn't take much for the government to provide that information. We could have a report that could be very helpful in helping CRA to know where to focus their efforts.
NDP
Murray Rankin NDP Victoria, BC
Speaking of lack of information, it was in the Auditor General's report last week that the finance department is failing to provide information on dealing with aggressive tax planning. That was reported by the Auditor General. It’s another example of the government not providing information to independent watch dogs.