Federal crackdown on tax evaders falling short, critics say
Published Thursday, May 2, 2013 8:48AM EDT
The federal government released a report this week outlining steps to close loopholes and crack down on Canadians who hide money in offshore accounts -- but fair taxation advocates and opposition parties say the measures fall short of what is necessary.
The report, titled Tax Evasion and the Use of Tax Havens, was delivered Wednesday by the House of Commons finance committee. It made 11 recommendations to clamp down on tax evaders.
Following are some of the key points from the report:
- Ottawa should pursue "tax information exchange agreements" with countries typically used to shelter money.
- The federal government should follow through with the plan outlined in the 2012 federal budget to set up a whistleblower program where Canadians can receive financial rewards for information about tax cheats.
- The names of those convicted of tax evasion or failure to file a tax return remain publicly visible on the Canada Revenue Agency website for a year, as opposed to the current six months.
- The minister of national revenue should be given more power to obtain information about businesses, such as who owns it, its legal operating name, business activities and contact details.
In a statement Wednesday, National Revenue Minister Gail Shea said the government "is committed to cracking down on individuals who avoid paying their fair share of taxes" and noted that "international tax evasion is a serious problem."
Dennis Howlett, executive director of Canadians for Tax Fairness, said the recommendations don't go far enough to clamp down on tax havens and the government should have taken stronger action.
"I was disappointed that the committee report didn't have more recommendations and stronger calls for action," Howlett told CTV's Canada AM.
"We were encouraged the government made this a key theme in their federal budget recently (and) the report is actually very good it describes how big and growing a problem this is but the recommendations fall short of what is needed to really tackle this problem."
Although the report recommended the government seek "information exchange agreements," with other countries, Howlett said he would have liked to see an indication the government will purse automatic tax exchange agreements with countries known to be used as tax havens.
Currently, he said, Canada has bilateral agreements with some known tax havens but the agreements require CRA officials to already have extensive information about suspected tax cheats before they request more information. Under an automatic information exchange agreement, that wouldn't be necessary.
"We need the automatic exchange of information so it's easier to see who is trying to hide their money in tax havens and not report it in tax returns," he said.
The NDP has also pushed for this kind of automatic sharing of information with countries known to be favourite tax havens, though critics have said such a system could be problematic and rife with security concerns.
Howlett said he had also hoped to see recommendations for greater power for the CRA to actually go after those using tax havens to hide income.
"They're really under-resourced. They're not able to deal with people using tax havens and that's another area that needs some boosting of efforts," he said.