Are You Paying Your Taxes?
An issue has cropped up on the Canadian economic horizon, and it’s one that often goes unnoticed, or at least, isn’t talked about all that often. It’s tax evasion. And it’s costing the Canadian economy “tens of billions” in revenue. That’s a major concern, as Canada is currently in trouble when it comes to the deficit that’s creeping towards $26 billion, and the national public debt. The Conservatives have announced that they want to get the budget back into balance within two years. And those billions of missing tax revenues could really help.
The Harper government is now being forced to deal with the issue, after Canada’s auditor general released a report on domestic tax evasion; that is, evasion that is happening right here at home. The Canada Revenue Agency (CRA) has identified two major problems concerning domestic tax evasion. The first is commercial activity such as home renovations, hospitality, and automotive repairs wherein the money paid is never reported to the government. The second biggest risk for tax evasion are those individuals that are self-employed – a growing group in Canada, and one that sometimes don’t report all of their earnings when it comes tax time.
However, it’s not just those at home that are keeping billions of dollars from the Canadian government – there are millions of dollars being kept off-shore, too. The CRA reports that in 2006 there was about $4.6 billion in off-shore tax evasion. They have not said how much of that money has been recovered, or if that total equals even more now. Nor have they stated how much of that money is being hidden domestically, although the CRA did admit in 2010 that there’s a “criminal economy” that “may represent billions of dollars in untaxed revenues.”
“People that don’t pay their fair share of the taxes means the rest of us have to pay more,” says Liberal Senator Percy Downe. “It’s a tremendous revenue loss to the country.”
Finance Minister Jim Flaherty was not available to report on the matter, but he did say in Ottawa last week that he’s hoping Ottawa will find a way to invest more money into the CRA, in order to stop tax evasion and find better ways to deal with it.
“Everybody should pay their fair share of taxes and people shouldn’t be hiding their money from the government of Canada. Some people do that offshore,” he said.
The Conservative government has also admitted that up until now, the CRA hasn’t had adequate ways to assess and track those who are evading their taxes due to limited resources and oversight and enforcement practices that just aren’t enough to deal with the problem.
The issue is one that’s going to be discussed at the G8 summit that’s to be held in Northern Ireland this June; and it’s one that the Conservative government says they’re going to be prepared to deal with.
The Tax Justice Network, a global organization that continues to fight for fairer taxation and wants to crackdown on evasion, says that Canada’s missing tax revenue could be anywhere between $21 trillion and $32 trillion in unreported financial wealth.
For those that are currently evading their taxes, a crackdown could mean big trouble. The penalties for not paying taxes can include anything from fines equaling 50 per cent to 200 per cent, to even up to two years in jail time.