Overseas Tax Evasion
Honourable senators, I would like to say a few words about Senator Downe’s inquiry dealing with overseas tax evasion. I thank our colleague Senator Downe for recognizing the serious problem of overseas tax evasion and for working so hard to see that it gets addressed. For years, the senator has been gathering information about this crime and has been relentless in pushing for stronger appropriate action by the Canada Revenue Agency. The evidence and arguments raised in his inquiry make it clear that something is askew in our tax system; and it is time for the CRA to set it right.
When one lines up the facts about overseas tax evasion by Canadians, as Senator Downe did when he addressed the house last month, it is impossible to avoid being frustrated and not to wonder why the Canada Revenue Agency seems so unconcerned about this crime. More than once in the past five years, other countries have handed the agency information on secret accounts held by Canadians in banks overseas. How has the CRA responded? In the four years since being notified of 106 such accounts in a bank in Liechtenstein, the CRA has recovered only $6 million in back taxes, interest and penalties. It has not imposed any fines or laid a single charge.
Meanwhile, other countries that were also notified of their citizens’ hidden accounts have taken real action. There have been hearings, raids and criminal charges; so why not Canada?
The secret account Senator Downe has highlighted involved only two banks, one in Liechtenstein, as I mentioned, and one in Switzerland. The nearly 1,800 Swiss accounts held by Canadians each require a minimum deposit of half a million dollars. We are talking about extremely wealthy Canadians. There are certainly many other banks with secret accounts in many other countries. We are talking about huge amounts of money owed to Canada and to us, the people of Canada.
Personal and corporate income tax is a major source of tax revenue in this country. I believe that in 2010 the taxes added up to more than $143 billion. That amount would be higher, of course, if all Canadians simply paid their taxes.
Tax evasion reduces revenues. It deprives this country of necessary services, and it erodes the trust on which our system is based. The integrity of this system requires taxpayers to report and pay taxes on domestic and foreign income, with the Canada Revenue Agency there to ensure compliance.
I am pleased that Senator Downe’s good work has prompted this media interest. Just last week on CTV, there was a story, including an interview with the Minister of National Revenue. Her statements were all about defending the agency’s track record, saying that the current government is dealing with this crime so much more effectively than previous governments. There you go.
I doubt most of us watching her were particularly moved by her use of camera time to take a few political jabs. Are we not all just looking for assurances that fairness in our tax system is a priority and that the Government of Canada will get tough on overseas tax evasion?
Senator Downe has talked about the importance of a tax system that appears to be, and is, in fact, fair. How can there be any semblance of fairness when very rich Canadians are avoiding paying their share of taxes? This year, next year and the year after, many of them will continue to do so, confident that the Canada Revenue Agency will never come knocking on their doors.
Meanwhile, how do we explain the unfairness of our tax system — the appearance of a double standard — to all of the law-abiding people of this country, people who must maintain their financial obligations even though their wages have been frozen, people like the hard-working moms and dads keeping a careful tally of their weekly grocery expenses, or people like those new entrants to the workforce watching the rise and fall of gas prices as though their lives depended on it? We see that every day. I would be interested to know how many people just like these will receive audit notices from the Canada Revenue Agency this spring and how many investigations of suspected overseas tax evasion the agency will conduct.
The cost to Canadians of overseas tax evasion is about money, billions of dollars. It is also about whether or not we can respect and trust our tax system. There is life; there is death, and there are taxes. This should be true for all Canadians, no exclusions. Not even the rich can get out of this alive.
Once again, my thanks go to Senator Downe for bringing to light a serious problem with serious implications for all of us. Taxes are an unsavoury topic, particularly at this time of the year, and even more so in the wake of a new federal budget. I am grateful for the senator’s determination and for his telling Canadians what they have a right to hear about overseas tax evasion. I hope this initiative will give the Canada Revenue Agency a much-needed push to investigate and treat Canadians who hide their money in overseas accounts like the criminals they are.