Canadians have long suspected that the country’s tax system disproportionately benefits the wealthy, but now they have some credible voices backing that argument: Canada Revenue Agency’s own professionals.
In a new survey, nine in 10 CRA professionals agreed that “it is easier for corporations and wealthy individuals to evade and/or avoid tax responsibilities than it is for average Canadians.”
That makes CRA experts more likely than the average Canadian to feel this way. In a separate poll, 79 per cent of Canadians agreed that corporations and wealthy people have an easier time avoiding taxes.
Both polls were carried out for the Professional Institute of the Public Service of Canada (PIPSC), a union that represents some 55,000 public service professionals across Canada, including more than 11,000 auditors, forensic accountants, managers and others at the CRA.
“These findings highlight the difficulties our members face to ensure Canada’s tax system remains fair in the face of offshore tax havens and other tax avoidance schemes,” PIPSC President Debi Daviau said in a statement.
After years of resisting calls to do so, Canada Revenue Agency earlier this year started calculating the country’s “tax gap” — the amount government loses every year to tax avoidance.
It found Canada loses some $3 billion annually from uncollected taxes from individuals alone, and estimated Canadians have squirreled away as much as $240 billion in offshore tax havens.
Those numbers don’t include corporations. A 2016 study from Canadians for Tax Fairness estimated Canada’s corporations have sheltered some $270 billion from taxes offshore.
The 2016 leak of the so-called Panama Papers exposed numerous Canadian links to offshore tax avoidance schemes, leading to the CRA launching dozens of investigations over potential tax violations.
The following year, the release of the Paradise Papers exposed a number of wealthy Canadians’ offshore holdings, including those of three former Canadian prime ministers and the past and current chief fundraisers for the federal Liberal Party.
But tax avoidance isn’t the entire issue. A 2016 study from the Canadian Centre for Policy Alternatives found that Canada’s vast web of tax breaks disproportionately benefits the rich. Of the 64 income tax deductions available in Canada, 59 of them put more money in the pockets of the top half of earners than they do in the pockets of the bottom half, the CCPA estimated.
In 2011, the study found, Canada spent $113 billion on its social safety net, including Employment Insurance and Old Age Security, while foregoing another $103 billion from tax cuts that largely went to higher earners, the CCPA estimated.
“Never before has the concept of tax fairness been so prominent in the Canadian public’s consciousness,” PIPSC said in a report this week.
CRA hobbled by budget cuts?
The union argues CRA has been limited in its ability to chase after tax cheats. Despite an increase to its budget under the federal Liberals, CRA’s funding is still $500 million below 2012 levels, when the previous Conservative government cut its budget, PIPSC said.
The extent to which those cuts have harmed CRA is a matter of disagreement among the agency’s professionals. A little more than a third (37 per cent) agreed that restructuring at the CRA following the budget cuts has resulted in “average Canadians, charities and small businesses being targeted more relatively to wealthy Canadians and corporations.”
And less than half (45 per cent) agreed with the notion that CRA’s ability to carry out its job has been compromised by political interference.
The survey of CRA professionals was mailed 11,599 members of the Audit, Financial and Scientific Group at CRA, of whom 2,170 respondents completed the survey. The survey of the general public that PIPSC commissioned was carried out by Environics, and has a margin of error of plus/minus 3.2 per cent, 19 times out of 20.