Tax cheats expected to be a target in federal budget
Published Wednesday, March 20, 2013 8:15PM EDT
Last Updated Wednesday, March 20, 2013 11:45PM EDT
While Finance Minister Jim Flaherty will cut spending by about $3 billion in his latest, and perhaps last, budget, he is also expected to boost federal coffers by closing some tax loopholes and going after Canadians who hide money from the tax man in offshore bank accounts.
The document is expected to include measures to boost manufacturing, match skilled workers to jobs and maintain infrastructure funding to Canada’s cities.
But in addition to trying to spur job growth, Flaherty intends to raise cash for these initiatives by going after tax cheats.
Dennis Howlett of Canadians for Tax Fairness said offshore bank accounts not only hide Canadians’ money from the Canada Revenue Agency, but can also conceal their identities, making it harder for authorities to track them down.
“It’s a very big problem,” Howlett told CTV News. “It’s a global problem but Canada is affected, as well. It’s hard to know exactly how much money Canada is losing. We estimate that it’s in the tens of billions of dollars.”
According to Howlett, Canada is lagging behind other countries in efforts to go after tax cheats, and said he expects to see more funding for the CRA’s international tax enforcement division in Thursday’s budget.
But to really go after tax cheats, Howlett said, Canada and other nations must work on initiatives such as automatic information exchange agreements, through which countries will automatically report to each other when their citizens open accounts.
Flaherty is also expected to close some corporate tax loopholes, though those details remain largely under wraps. Howlett said there are a lot of corporate tax credits that cost hundreds of millions of dollars a year. Case in point, he said, when companies claim an entertainment tax deduction for corporate boxes at arenas and stadiums “when in fact no business” gets done at sporting events.
Closing that loophole alone, Howlett said, would save $500 million.
In his latest budget, Flaherty will be weighing the need to rein in spending to meet a pledge of a balanced budget by 2015 with the need to boost economic growth, which is projected to remain at around a low of two per cent.
During his traditional pre-budget shopping trip for a new pair of shoes Wednesday, Flaherty said the document keeps in mind that “we need to take some steps to encourage growth and make sure we continue that modest growth, (and) hopefully a little better than that.”
Flaherty said specific measures have been included “particularly to help manufacturing enterprises in Canada.”
There will also be measures to help get younger Canadians into skilled trade jobs. Statistics Canada estimates there are about 240,000 job openings across Canada, many for high-demand trades workers like sheet metal workers.
Former deputy finance minister Don Drummond chaired an advisory panel four years ago that looked at how to better link the labour pool with the job market. Drummond said Wednesday that he believes claims of a shortage of skilled workers is “somewhat exaggerated.”
However, he also said there is a considerable information gap about the exact number and type of unfulfilled jobs in Canada, and which regions of the country are most affected. He said the issue is also that there are segments of the population, including women and aboriginals, that are not adequately represented in the job market.
“We could reduce the unemployment rate easily one or two percentage points, take it from seven to six to five,” Drummond told CTV’s Power Play.
“In the Bank of Canada survey they’re always asking, ‘Is a difficulty finding workers holding you back from meeting the demand?’ And the number changed when we got hit with the recession, but prior to the recession companies were always saying, between 30 and 50 per cent said they were held back, they’ve got a demand, they can’t produce it.”
With a report from CTV’s Ottawa Bureau Chief Robert Fife