Finance Committee on May 6th, 2021

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome to meeting number 40 of the House of Commons Standing Committee on Finance.

Pursuant to Standing Order 108(2) and the committee's motion adopted Tuesday, April 27, 2021, the committee is meeting to study Canada Revenue Agency's efforts to combat tax avoidance and tax evasion. Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021, and therefore members are attending in person in the room and remotely by using the Zoom application.

The proceedings will be made available on the House of Commons website. For the information of witnesses—MPs certainly know this—the only person who will be visible to the public on the screens will be the person who is speaking, and we ask you not to take pictures of the screen.

I have one other comment before I go to Mr. Julian's point of order. There was a complaint about my putting committee business in the last half hour of this meeting. It is there because we have to farm out sections of the Budget Implementation Act to other committees. If we're going to give them the time to decide how they're going to handle their work, we have no choice but to meet on that today. There just aren't any other options. Zoom time is very tight for capacity, but we have managed to extend the meeting by half an hour. It will give us two hours for the Canada Revenue Agency's efforts to combat tax avoidance and tax evasion, as we were committed to, and then we'll go to half an hour for business, just so that's clear.

Mr. Julian, you have a point of order.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you, Mr. Chair, and thank you for obtaining the extra time.

I still think that the witnesses we're bringing forward today are important witnesses. This is is a study that we have waited five years to undertake at the finance committee. With respect, this is a very complicated motion that Mr. Fraser is putting forward. We haven't had notice of motion. Next week on Monday we were looking to schedule the steering committee meeting. We have a committee meeting on Tuesday as well. I think that is the time to go in with the appropriate notice to the very lengthy motion we received just shortly before this meeting.

I appreciate your efforts to get some additional time. I feel very strongly that we should consider Mr. Fraser's motion fully, but we have already set up meetings for Monday and Tuesday.

That was my point of order.

[The Chair, Liberal, Wayne Easter]

The problem is that as of yet we don't have a time on Monday, due to the Zoom capacity. I believe my reading of the Budget Implementation Act situation is the same as in Mr. Fraser's motion. It looks at farming out the workload to 12 different committees. If we leave it any longer, it means we'll have to deal with our own problems, but I really don't feel right imposing on other committees and making it nearly impossible for them to do their job. I don't think there's any choice but to meet on this today, but it's the committee's decision.

Mr. Kelly, you have a point of order.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

I'm speaking very briefly on the point of order. I agree with Mr. Julian and I would prefer that we go forthwith into the witness testimony. I haven't even seen this motion, so I don't know if it was put on notice, or if there was draft or something circulated, and I'm not prepared to debate it.

[Ed Fast, Conservative, Abbotsford, BC]

I have a similar comment, Mr. Chair. The study we're undertaking now involves complex issues of tax evasion, tax avoidance and very concerning, troubling cases of Canadians who have suffered as a result. Why would we undermine the ability of the witnesses whom we've already brought to the table to have the full time available to them to provide the testimony they need and for us to ask those questions? We've set aside time to discuss some procedural issues, some committee issues; let us do it within those time frames. These committee meetings already are often truncated by votes, and we don't get a chance to ask the questions that we had really expected to.

Again I'm hoping you, Mr. Chair, will allow us to proceed with the committee as we originally scheduled.

[The Chair, Liberal, Wayne Easter]

That's what I'm trying to do. We have two full hours on tax evasion, as was planned. We have set a half-hour following that for committee business.

Mr. Ste-Marie is next, as we're taking more time away from our witnesses.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I would like to quickly say that I agree with the last three speakers.

Thank you.

[The Chair, Liberal, Wayne Easter]

We will move to committee witnesses. We'll have that discussion once the two hours is up.

Thank you to all the witnesses for coming today.

We will start with the Honourable Percy Downe.

Certainly, as you know, Senator Downe, we ask you to please try to keep your opening remarks to about five minutes, as that will leave more time for questions later.

Go ahead, Senator Downe. The floor is yours.

[Percy E. Downe (Senator, Prince Edward Island, CSG]

Thank you for the invitation to appear before this committee.

In the short time available, I would like to discuss problems I've identified at the Canada Revenue Agency regarding overseas tax evasion.

As the Parliamentary Budget Officer stated, there are hundreds of millions of dollars in taxes, if not billions, that go undeclared and unreported and that escape Canadian tax authorities.

At the conclusion of my remarks, I will propose some suggestions for the committee to consider to correct these problems .

My attention was first drawn to the problem of overseas tax evasion in 2008 when one bank disclosure in Liechtenstein showed that 106 Canadians had over $100 million just in that one bank.

A couple of years later, another disclosure from a bank in Switzerland showed that bank had 1,785 accounts held by Canadians. The minimum amount to open a bank account in that bank was $500,000.

Then we had the leaks of the Panama papers and the Paradise papers, showing thousands of accounts involving thousands of Canadians. Among many glaring examples of inaction by Canada’s revenue agency are the Panama papers, disclosed over five years ago and listing 900 Canadians with accounts in that one law firm in Panama.

Since then, other countries around the world with citizens identified in the Panama papers have collected over $1.36 billion in taxes that were owing to them. Australia has recovered over $172 million, Ecuador $105 million, and Spain $209 million. Even Iceland, a country of 370,000 people, has recovered $32 million. In the case of Canada, five years later, no one has been charged and no one has been convicted for tax evasion as a result of the Panama papers, and there have been no charges or convictions related to Liechtenstein or Switzerland.

Meanwhile, the Canadian government doesn’t even know the size of the overseas tax evasion problem. The Parliamentary Budget Officer has been trying to estimate the tax gap since 2012, but the CRA won’t co-operate.

For a comparison of what action a country can undertake, look at what Australia has done about overseas tax evasion. They established Project Wickenby in 2006, when eight government agencies came together to, in their words, “protect the integrity of Australia’s financial and regulatory systems” by cracking down on use of illegal tax havens. In that time period, the Australians collected over $750 million. A number of people were charged and a number were convicted. They concluded Project Wickenby by establishing the Serious Financial Crime Taskforce.

In Canada, in the case of Liechtenstein, the CRA, in their words, “waived referrals for potential criminal investigation to gather information”. In other words, the agency promised not to charge the people involved in that tax scheme in exchange for them explaining to the CRA how it actually worked. However, any lessons learned from the Liechtenstein affair in 2008 have obviously not been very effective, since no one has ever been charged or convicted, for all the additional leaks over the last 12 years.

Because the CRA has been so incompetent on overseas tax evasion, a number of things have happened: One, we don’t have the money to fund our priorities; two, the rest of us have to make up the shortfall by paying more taxes; and, three, Canadians are wondering why we have a two-tiered justice system for tax evasion. Try to cheat on your domestic taxes and the CRA will likely find you, charge you, convict you and force your repayment. Check their website and you'll see their results. Hide your money overseas and you likely will never be charged or convicted. Again, check their website and you'll see the results.

Canadians might want to ask why people are being treated differently depending upon whether they’re evading their taxes at home or overseas.

Colleagues, I would suggest the following measures for the committee to consider.

One, measure the tax gap.

Two, change the law so that it becomes an automatic criminal offence to have an undeclared account overseas and those who don’t declare their overseas accounts will automatically serve jail time.

Three, introduce beneficial ownership legislation so we know who actually benefits from financial transactions.

Finally, change the salary structure at the Canada Revenue Agency to retain experienced and specialized employees. Too many of them are being recruited by the other side for substantial salary increases.

Thank you, Chair.

[The Chair, Liberal, Wayne Easter]

Thanks very much, Senator Downe.

We're going to Janet Watson, who is appearing as an individual.

Ms. Watson, welcome. The floor is yours. Go ahead.

[Janet Watson, As an Individual]

Good afternoon.

Thank you very much for allowing me to appear before the committee this afternoon.

I am here to represent the thousands of victims of various frauds that were uncovered back in 2005. I am referring to Mount Real, Norshield and Cinar. The loss in the Mount Real case alone was approximately $120 million, and there were 1,600 victims. I was one of them.

I believe that I was invited to address this committee to give my perspective on what it is like to be a victim of this type of crime. Believe me, it is not a victimless crime. One of the Mount Real victims whom I got to know over the years was an Italian immigrant who came to Canada with very little money. He worked very hard, established a good business and raised a family. He lost approximately $2.5 million. His family told me he died a broken man. He never saw justice for his loss.

There are hundreds of other stories of people forced to delay their retirements and others forced to go back to work in their seventies. There have been marital breakdowns, stress-related illnesses and at least one suicide that I know of.

I was one of the lucky ones. I lost the $68,000 that was in my RRSP at the time. Fortunately, I was still able to retire. I retired when I was 60. I am now 74 and I've been working on this case for a long time. I became the unofficial spokesperson for many of the victims over the years.

During the trial of Lino Matteo, who was the head of Mount Real, I listened to statements given by some of the victims. It was heartbreaking to watch men in their seventies break down and cry because they had lost what they thought would be a legacy for their children. The stigma of being this kind of victim is real, and many victims have still not told their families about their loss.

Where did all the money go? We were told by the RCMP that they were unable to investigate these massive frauds because they did not have the resources to trace the money once it had left the country. The trustee of Mount Real was Raymond Chabot Grant Thornton. They were only able to recover about $5 million of the $120 million that was lost, and the costs incurred in recovering these funds, in lawyers' fees and trustees' fees, was approximately $3.5 million, which left very little to be distributed to the victims.

I am very appreciative of the work done by the investigative journalists at The Fifth Estate and Enquête, who may have shed some light on where some of this money ended up.

I am grateful to the finance committee for allowing me to testify today, and I hope that the inquiry, which was started in 2016, will be reopened into specific offshore tax havens.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Watson, and thank you also for your courage for sticking with this for 14 years.

Turning to KPMG, we have Ms. Iacovelli, Canadian managing partner on the tax end.

Lucia, we did get your note that you sent to committee in both official languages, so all members should have that.

Go ahead. The floor is yours.

[Lucia Iacovelli, Canadian Managing Partner, Tax, KPMG]

Thank you for the invitation to appear before this committee.

I am KPMG's Canadian managing partner for tax.

Before I commence with my remarks, I'd like to extend my sincere sympathy to Ms. Watson and all of the other victims of the Cinar fraud. We know that you've been seeking answers for a long time, and I wish we could help you. We simply do not have any connection to Cinar. We were not their auditor or their tax adviser. We did not help any of the people who carried out the fraud to take your money or hide your money.

At KPMG we ensure that our clients are able to work within the tax system, achieve their goals and pay the tax they are required to pay. That is the lawful tax planning work that we do for our clients across Canada every day, and in accordance with KPMG's policies, practices and culture, we ensure the highest standards of integrity, compliance and professionalism.

Like most professionals, as CPAs we are required to protect the confidentiality of information regarding our clients and former clients. We take that obligation seriously, but when we receive a legal order requiring us to disclose client information, we comply with it. In February 2017, for example, in accordance with the CRA requirement, we provided the CRA with all the names and all of our files related to the OCS implementations in the Isle of Man.

I would also like to address recent reporting by the CBC, which is focused on four corporations, referred to as the “sword” companies, which were established in the Isle of Man in the early 2000s. It's alleged that these companies were used to facilitate the Cinar fraud. I don't know whether that's true. I do know that any implication that KPMG had anything to do with the Cinar fraud is false. Any implication that KPMG was in any way involved with the “sword” companies is also false.

We can state this with confidence because we undertook the comprehensive and detailed due diligence of our files, records and personnel. We combed through millions of pages of documents. We reviewed our time and billing systems. We examined our client file databases, and we interviewed people. We took the added step of reviewing publicly available corporate documents from the Isle of Man. Through all of this, we found nothing that suggested that KPMG had any association with the “sword” companies.

We provided this information to the CBC, making it clear that they were mistaken, but they persisted in publishing irresponsible and misleading stories. As a result, our lawyers served a notice of libel on the CBC last week. The CBC's allegations mistakenly rely on emails, written 15 years after the fact, by a woman named Sandra Georgeson, and on similarities between the “sword” companies and KPMG client companies.

Let me address these mistakes one by one. KPMG, like other firms, commonly uses the support of corporate service providers to set up and help administer companies. There are a lot of these firms that do this work around the world. Ms. Georgeson worked for one such firm in the Isle of Man. In the early 2000s, KPMG in Canada offered a legal tax plan, known as the OCS. The OCS required the incorporation of companies in the Isle of Man, and Ms. Georgeson's firm was retained to do so. Fifteen years later she was asked by her new employer to prepare a list of these companies. Her recollection in 2015 was that the “sword” companies were examples of KPMG OCS implementations. They were not.

In its reporting, the CBC pointed to similarities in the sequential registration numbers, named directors, signatories and filing addresses between the OCS and the “sword” companies as evidence that KPMG set up these companies. The CBC is simply wrong in drawing this inference.

The similarities exist because whoever registered the “sword” companies used the same corporate service provider as KPMG, but our diligence shows that the “sword” companies do not belong to, or are in any way connected to, KPMG.

I wish we could help reunite the victims of this fraud with their money and bring the perpetrators to justice, but we can't. KPMG simply does not possess any information that could assist with the Cinar investigation.

Putting the CBC's unfounded theories about Cinar aside, the broader issue that is before the committee today is how Canada could combat aggressive tax avoidance and tax evasion.

We applaud the committee's review of this important issue. We share the committee's desire and we welcome the opportunity to contribute to the discussion today.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Lucia.

Turning to the Professional Institute of the Public Service of Canada, we have Ms. Daviau, president, and Mr. Campbell, economist.

I guess we're going to you, Ms. Daviau.

[Debi Daviau, President, Professional Institute of the Public Service of Canada]

Thanks for having us.

My name is Debi Daviau, and I'm the president of the Professional Institute of the Public Service of Canada, or PIPSC. It's the national union that represents some 12,000 auditors and other tax professionals at the CRA across the country. Our members are skilled professionals and knowledgeable tax experts who ensure that powerful corporations and wealthy individuals remain just as accountable as the rest of us.

With me today is Mr. Ryan Campbell, our union economist and my technical adviser today.

We'd like to thank you for the opportunity to present our views on this critical issue. Together we'd be happy to answer any and all questions you may have after our presentation.

We've researched this issue from the point of view of tax professionals at the Canada Revenue Agency and produced three reports on tax avoidance and evasion. You can find them on our website at PIPSC.ca. I'd be happy to forward copies to the committee members as a follow-up to this meeting.

Few Canadians enjoy paying taxes, but they understand that it's important to do it. Taxes fund the public services that make us healthier and safer, protect the environment and nurture a stable economy in which businesses can thrive and compete.

A healthy tax system is defined by fairness and integrity. The rules must apply to everyone. Unfortunately, many wealthy individuals and corporations use their superior resources to look for a shelter or haven where the tax rules don't apply. While these privileged few get a reduced tax bill, governments lose revenue for public services, resulting in either service cuts or tax hikes for everybody else.

In February 2018, we conducted a survey of professional staff at the CRA, including auditors, managers, forensic accountants, economists, statisticians and actuaries. Their responses were eye-opening.

Much of the criticism levelled at Canada's tax system is that while it is designed to be fair, it's easier for some to get around the rules than it is for others. In our survey, nine out of 10 tax professionals at the Canada Revenue Agency agreed that it's easier for corporations and wealthy individuals to evade and/or avoid tax responsibilities than it is for average Canadians. Environics Research put that same question to the general public and found that eight out of 10 respondents felt the same way.

You should find it troubling that CRA professionals with special knowledge of the inner workings of the tax system were more likely to agree than an average Canadian. Over eight out of 10 also agreed that tax credits, tax exemptions and tax loopholes disproportionately benefit corporations and wealthy Canadians compared to average Canadians.

When asked if multinational corporations shift profits to low-tax regions, even when there is little or no corresponding economic activity taking place in that jurisdiction, three out of four respondents agreed. When asked if the CRA has adequate audit coverage capacity to ensure tax laws are being applied fairly across the country, only 16% of respondents agreed. When asked if training and technology advancements within CRA have not kept pace with the complexity of tax avoidance schemes, 79% of the respondents agreed.

All of these survey results confirm one basic fact: Canadians deserve a rigorous examination of the tax system.

Our CRA professionals are among the best in the world at what they do, but they face great challenges. Their job is to go after individuals and entities that in effect have unlimited resources and can aggressively exploit legal and international grey areas for their own gain. The CRA employees, by comparison, often feel outdone by those trying hardest to avoid taxes.

In 2012, sweeping budget cuts were introduced to the agency. Even with the more recent government reinvestments, it still doesn't have all the tools and staff it needs to get this job done

Does this make any sense when the Parliamentary Budget Officer's own numbers show a $5 return for every dollar invested in combatting international tax evasion and aggressive tax avoidance? Does this make sense at a time when government spending has skyrocketed to deal with the social and economic impact of the pandemic?

We need to fix this now. More than ever, Canadians need the tens of billions of dollars in tax revenue, if not more, that are sitting in offshore tax havens.

We believe that a number of steps can be taken to correct the situation.

First, we need better enforcement of existing tax laws. One of the simplest ways to make the system fairer is to ensure that the same rules apply to everyone.

Second, we need to prevent political interference at the CRA. This was particularly visible during the previous decade when the CRA was accused of shifting its focus away from big tax cheats to individuals, charities and small businesses.

Third, because CRA officials are frequently put in precarious situations in which they are asked to hold powerful players to account in a high-stakes setting, whistle-blower protection is crucial to ensuring that professional integrity is paramount during the tax assessment process.

Fourth, while government investments in the CRA have increased in recent federal budgets, Canada's population continues to grow, and so do the amount of commerce and the complexity of tax evasion schemes. The CRA needs to hire more technical advisers and to invest in technology and training to deal with these factors.

Fifth, the CRA must enhance the capacity of its regional offices. The Auditor General has found that taxpayers receive different treatment from the CRA depending on where they live and who they are. Its regional offices need the appropriate resources to ensure that laws are applied fairly from coast to coast.

Finally, a number of policy reforms need to be undertaken. Budget 2021 announced initiatives that when implemented will take tangible steps in the direction of tax fairness. These include a digital service tax for companies like Netflix and Amazon and the creation of a publicly accessible beneficial ownership registry. These are both important initiatives long championed by PIPSC members and our allies in civil society.

While these changes are welcomed, we still have work to do. The Parliamentary Budget Officer has estimated that as much as $25 billion of corporate tax revenue is lost to tax havens every year. We must do more to end the transfer pricing and profit shifting that facilitate this destructive practice.

As of now, some incremental steps are being taken, but there are a variety of additional actions that could be put in place. The end result would be a new, simplified view of the global commercial landscape, one in which corporations can be prevented from pitting countries against each other and are taxed fairly everywhere.

In conclusion, CRA professionals must receive the training, tools and resources they need to do their jobs. The CRA must receive appropriate funding to ensure that tax laws are enforced equitably and that wealthy individuals and powerful corporations are just as accountable as any other Canadian.

Additionally, there needs to be international co-operation and updates to legislation so that those who try the hardest to avoid taxes end up paying their fair share anyway.

Thank you for your time. Mr. Campbell and I would be pleased to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Daviau. You've been here before, and I still got your name wrong.

The lineup for the first round of questions will be Mr. Kelly, Mr. Fraser, Mr. Ste-Marie and Mr. Julian. It'll be a six-minute round.

To close off our witnesses, we have, from Transparency International Canada, Mr. Cohen, executive director.

The floor is yours, sir.

[James Cohen, Executive Director, Transparency International Canada]

Mr. Chairman and members of the committee, thank you for inviting me back to speak to you today. My name is James Cohen, and I am the executive director of Transparency International Canada. TI Canada is a registered charity and is the Canadian chapter of Transparency International, the world's leading anti-corruption movement.

The release of the Panama papers in 2016 was an explosive look into how the world's secrecy jurisdictions and an army of enablers hide illicit funds from crimes like tax evasion, corruption and fraud. One revelation that came out of the trove of leaked documents is that Canada was being happily marketed as a secrecy jurisdiction by Mossack Fonseca, the firm at the heart of the Panama Papers.

The Toronto Star and CBC journalists found that Mossack Fonseca was marketing Canada to clients as a desirable place to store dirty cash, based on our generally positive reputation but also, importantly, on our weak disclosure laws and enforcement. The correspondences the media published showing this advice were from 2012. TI Canada is currently re-examining this phenomenon of overseas incorporation agencies marketing Canada's opacity, and we are finding that nothing has changed. The term that came out of the Panama papers for money laundering and tax dodging in Canada, “snow washing”, is alive and well.

However, as of April 19, Canada is in a better position. TI Canada and our civil society partners enthusiastically applaud the government's proposal to establish a publicly accessible registry of beneficial ownership in the 2021 budget. Canada has been slammed by international organizations, civil society and peers for years, and now we have taken a large step out of that shadow.

Of course, the federal government cannot establish corporate beneficial ownership transparency on its own and expect the problem to be resolved. The provinces and territories must come on board with this initiative. Thankfully there is already momentum, as we see Quebec on the cusp of making corporate beneficial ownership information public via Bill 78, and the British Columbia Land Ownership Transparency Registry went online last week. We hope this will be followed by a public corporate beneficial ownership registry too.

The world is shrinking as a place for tax dodgers, kleptocrats and fraudsters to hide. In 2016 the United Kingdom was the first country to have a public beneficial ownership registry. The U.K.'s overseas territories and Crown dependencies, which include some of the best-known secrecy jurisdictions, such as the Isle of Man, have also agreed to establish publicly accessible registries of beneficial ownership. In a joint statement, the crown dependencies cited their need to co-operate by 2023 with European Union anti-money laundering directive 5, which requires all EU members to establish a public beneficial ownership registry.

From this trend we see that after years of being regarded as a laggard, Canada has the chance to move up to the head of the class on beneficial ownership transparency. While I would never say that any tool is a silver bullet for solving tax evasion and money laundering, a publicly accessible registry will be a powerful tool. It needs to be set up correctly, though. We can learn a lot from our peers in the U.K. and the EU and make sure that our registry has verified data and harsh consequences for those trying to falsify information. Canada's registrar should also have a staff that can conduct proactive investigations and a tip line for people to provide information on suspected tax evaders so proper investigations can be conducted.

This will be a big year for international forums to address beneficial ownership transparency, corruption, money laundering and tax evasion. There will be the G7 hosted by the U.K., the UN General Assembly special session on corruption, the open government partnership summit in South Korea and eventually the Summit of Democracies hosted by U.S. President Biden. This year the Financial Action Task Force, the global standard-setting body on anti-money laundering, will also review recommendations on beneficial ownership transparency, possibly making public registries a new standard. Canada now has a foot to stand on in these forums for calling for greater transparency from others to continue to close the space for tax evaders, kleptocrats and crooks to hide in.

Thank you, and I am happy to take any questions from the committee.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Cohen.

The public registry was one of the key recommendations from this committee in our study on money laundering, which was, I think, one of the best studies we've ever done, so we're glad to see that out there too.

I forgot to mention, Ms. Daviau, that yes, we would like you to please send that information in those reports that you mentioned to the clerk. It will be helpful to the committee.

[Debi Daviau]

I was going to mention to you, Mr. Easter, that it doesn't matter what you call me as long as you don't call me late for committee.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Wayne Easter]

Okay. I'm awful at names, and everybody knows it.

We'll start with six-minute rounds and Mr. Kelly.

The floor is yours.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you.

Thank you to all the witnesses. There were great opening statements.

I would like to start with Senator Downe and start by thanking you, Senator, for your leadership on trying to shed some light on the obvious ongoing problems we have here in Canada with tax evasion and the lack of data, good data, that could help inform policy-makers about that.

You had a private member's bill or a Senate bill that I was very proud and pleased to sponsor in the House of Commons. It was defeated. It would have compelled better disclosure and better measurement of this problem.

Could you comment on the lack of good public information about the scope and scale of tax evasion and how that limits policy-makers?

[Percy E. Downe]

What happened, of course, was that other countries around the world were assessing their tax gaps. As you know, that's the difference between what your national revenue agency collects and what they should be collecting, and hence the gap.

The second thing the tax gap analysis does is indicate how effective and efficient your revenue agency is—in other words, how good a job they're doing. The United Kingdom, Turkey, Switzerland—a whole host of countries—the United States, even the State of California, measure their tax gaps. They all find it a useful tool. I asked the Parliamentary Budget Officer some years ago to do it. I didn't want the CRA doing it, for a host of reasons that I'd be pleased to expand on if you're interested. I wanted an independent analysis done by the PBO. The Parliamentary Budget Officer could not get the co-operation of the revenue agency, notwithstanding the legal opinion that entitled them to the information on a confidential basis. They're not interested in individual taxpayers; they're interested in the overall numbers. That has not happened. We don't have an independent analysis.

Under much public pressure, the Canada Revenue Agency started to do one-off tax gap analyses. For example, they did one on corporate dues. They did one on excise customs. They've done six in total, and by the Canadian Revenue Agency analysis, the tax gap is between $20 billion and $24 billion. There are a whole bunch of other tax-gap analyses that have to be done, and the PBO should be doing them so that we have that overarching view.

The other thing to remember on the tax gap is that it's sort of like political polls: The numbers aren't as important as the trend line. How much of this money is the CRA collecting, and is the gap getting greater or is it being reduced?

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

That's a great point, and thank you for that.

To what do you attribute the absolute, complete failure to prosecute—and you pointed out the Panama papers and the Paradise papers—compared with other countries?

[Percy E. Downe]

That's the question. There have been a number of analyses on why that has not happened, but it reflects very badly in Canada. Five years later, where's the money?

The CRA, when you're dealing with them, are very careful to talk about how much money they have identified and how many audits they're conducting, but when you ask them about how much money they've raised, have collected, the answers get extremely vague. In fact, there are no answers.

Nine hundred Canadians and no money is the bottom line. If they had a lot of money collected instead of just identified, they'd be singing it from the rooftops, so there's a serious problem at the CRA. This is not a reflection of the employees of the CRA because, as I said in my opening comments, they do an outstanding job on domestic tax evasion, but there's a lack of leadership, and after these years of looking at the Revenue Agency, I've drawn the conclusion that we have to have the Department of Finance overseeing them and giving instructions.