At the forefront of the fight against tax evasion

On May 6, 2021, PIPSC President Debi Daviau and Economist Ryan Campbell testified before the House of Commons Standing Committee on Finance (FINA) about the Canada Revenue’s Agency’s (CRA) efforts to fight tax evasion.

The rules must apply to everyone, but unfortunately many wealthy individuals and corporations use their superior resources to look for a shelter or haven where the tax rules don’t apply. While these privileged few get a reduced tax bill, governments lose revenue for public services, resulting in either service cuts or tax hikes for everybody else.

In 2012, sweeping budget cuts were introduced to the CRA. Even with more recent government reinvestments, CRA still doesn’t have all the tools, training and staff it needs to get the job done. 

We need to fix this now. More than ever, Canada needs the tens of billions of dollars in tax revenue, if not more, that are sitting in off-shore tax havens. We need to:

  • better enforce existing tax laws
  • prevent political interference at the CRA
  • better protect whistleblowers
  • hire more technical advisors and invest in technology and training
  • enhance the capacity of the CRA’s regional offices

A number of policy reforms also need to be undertaken.

Budget 2021 announced initiatives that, when implemented, will take tangible steps in the direction of tax fairness. These include a digital service tax for companies like Netflix and Amazon and the creation of a publicly accessible beneficial ownership registry.

These are both important initiatives long championed by PIPSC members and our allies in civil society. 

But while these changes are welcomed, we still have work to do. The Parliamentary Budget Officer has estimated as much as $25 billion of corporate tax revenue is lost to tax havens every year. We must do more to end the transfer pricing and profit shifting that facilitates this destructive practice. As of now, some incremental steps are being taken, but there are a variety of additional actions that can be put in place. The end result would be a new, simplified view of the global commercial landscape – one in which corporations can be prevented from pitting countries against each other and are taxed fairly everywhere.

Overall, our CRA professionals must receive the training, tools and resources they need to do their jobs. The CRA must receive appropriate funding to ensure tax laws are enforced equitably and that wealthy individuals and powerful corporations are just as accountable as any other Canadian. And there needs to be international cooperation and updates to legislation, so those who try the hardest to avoid taxes end up paying their fair share.