Canadians for Tax Fairness Study Suggests Changes Needed at Canada Revenue Agency

A study from Canadians for Tax Fairness suggests that the effectiveness of the Canada Revenue Agency (CRA) is being undermined by a lack of resources and by political interference.

According to the study, politicians and lobbyists are able to influence the CRA. That includes lobbying CRA not to prosecute corporations for tax evasion. At the same time, $700 million in funding cuts between 2011 and 2015 reduced the ability of the CRA to deal with large-scale tax avoidance schemes. 

Offshore tax schemes estimated to cost federal and provincial governments $10 billion a year

Among the consequences of staff and funding cuts outlined in the report is that the CRA is not able to deal with the abuse of tax havens by large businesses or wealthy individuals. Most reports suggest that there is $199 billion of Canadian money in tax havens. Canadians for Tax Fairness has estimated that failing to deal with tax avoidance involving tax havens means Canadian governments are losing $10 billion a year in tax revenue.

We can’t afford not to have quality public services

In the 1930s and 1940s, our parents and grandparents learned the hard way that investing in quality public services was necessary to support and encourage growth.

Now we are having to learn that there are no shortcuts. As a recent article in the Winnipeg Free Press made clear, when governments cut corners problems follow.

Underfunding of public services is only part of the problem. As the author makes clear, when outsourcing is proposed as a solution to underfunded public services, the situation can become far worse. In many cases, privatization schemes that were meant to save money have required expensive bailouts.

What does protect the public are measures like Manitoba’s Public-Private Partnerships Transparency and Accountability Act. Under this legislation, governments have to demonstrate that privatizing public infrastructure will save money and improve service. 

Federal transfer payments should make us “equal as citizens”

A new book by Nova Scotia author Richard Starr points to the gap between what federal transfer payments are meant to do and the current reality.

Federal transfer payments were meant to ensure Canadians in all parts of the country had equal access to public services – something Canadians overwhelmingly support. But the portrayal of those payments as a means for poorer provinces to “leech” off better off ones has made it possible to undermine federal equalization programs.

A Tyee article on the book points out that federal equalization payments are not seen as an exciting topic. But, with the role federal funding plays in public services like health care, lack of attention has dangerous consequences.