Finance committee  Probably, but that's a question for tax specialists themselves. We looked at numbers, and our conclusion is that the numbers speak to a high proportion of transactions that are done purely for financial planning and tax purposes. There's no tangible economic activity that supports all of these numbers.

Finance committee  We're looking at the transactions between Canada and a certain country: the flows reported to CRA and the flows with respect to electronic fund transfers with the real economic activity as measured by the GDP. We didn't look at two-way trade, but we could have looked at that. There's no commensurate link or proportionality between....

Finance committee  Yes.

Finance committee  You're right that passive management would be cheaper. The conundrum we faced was that for the funds that manage, in the case of the CPPIB, hundreds of billions of dollars, how much cheaper would it be? Even if they were to go to a purely passive investment strategy, I don't think there are currently instruments that would fit the CPPIB's volume.

Finance committee  —for the CPPIB to mimic what you were referring to, such as ETFs, for example. I don't think there are ETFs on the market that would be big enough to absorb such a high volume.

Finance committee  There would still be a need for people to actively be involved and to make transactions on an almost daily basis to ensure that they do properly track the indexes they would decide to follow under a passive strategy. There would be reductions in management fees, for sure, but to what extent?

Finance committee  I won't comment on the level or the appropriateness.... I'll let the CRA officials determine whether they have sufficient resources to pursue all the audits they should be pursuing. It's certainly the case that audits are a very important way of addressing the tax gap and narrowing it to the extent possible, because audits, first of all, uncover tax evasion.

Finance committee  Not at all.

Finance committee  Yes, I'm fine. We looked at operating expenses. Deciding to reduce the operating expenses under a passive strategy would have required us to make assumptions as to by how much the operating expenses would need to go down. They would not be brought down to zero because of the magnitude of funds that are managed.

Finance committee  Yes, it could be.

Finance committee  There would certainly be tremendous benefits to taxpayers from simplifying the tax code, the Income Tax Act, and—

Finance committee  I haven't looked at specific areas, but taxpayers frequently mention deductions for medical expenses, for example, when talking about personal income tax, moving expenses deductions, and the sheer number of credits and deductions. Those are confusing to people. That's why a significant portion of individuals need the assistance of tax professionals to file their income tax.

Finance committee  It would be the loss of receipts or supporting documents when, for example, people's homes are flooded or burned to the ground. It happens; it's not a regular occurrence, but it happens, unfortunately. That would be one example.

Finance committee  It's difficult to answer that question, because relatively few countries do a comprehensive analysis of their tax gap. I don't imagine we rank worse than most countries, because of the relative strength of our institutions. It's all relative. It depends on how you measure the tax gap.

Finance committee  The report alluded to the fact that putting a price on pollution, a price that is widespread and that's paid by most if not the totality of economic actors, has a cost, but it allows sectors to make the necessary trade-offs among themselves so that for those actors for whom it is the easiest to reduce emissions, they will do so.