Private Members' Business ·
Canada Revenue Agency Act
“The Canada Revenue Agency is already doing what this bill asks for. We already publish lists of people convicted of tax evasion, including offshore evasion. We also already calculate and publish reports on unpaid taxes, and our work has cut that unpaid amount by billions of dollars.”
“Mr. Speaker, I am thankful for the opportunity to speak about Bill S-217, an act to amend the Canada Revenue Agency Act, regarding reporting on unpaid income tax. Maintaining the integrity and fairness of the Canadian tax system is a priority for the Government of Canada. It goes without saying that we are fighting on all fronts against tax evasion and tax avoidance, both nationally and internationally. I want to emphasize that the tax gap estimate provides valuable information to the Government of Canada. The tax gap is the difference between the amount of taxes that taxpayers would have paid if they had fully met their tax obligations and the amount of taxes they actually reported and paid. By estimating the tax gap, we can get a clearer picture of tax non-compliance and a better understanding of the overall health of the Canadian tax system. It also plays a role in delivering on the government’s commitment to transparency. Understanding how and why taxpayers are non-compliant is critical to preserving the integrity of the tax system. It is vital to protecting Canada’s revenue base, which supports programs and benefits that improve the quality of life for all Canadians. That being said, we are here today to discuss Bill S-217, which proposes to amend the Canada Revenue Agency Act. Specifically, it would require the CRA to list all convictions for tax evasion, including international tax evasion, in the annual report submitted to the Minister of National Revenue. It also proposes that the CRA, once every three years, include statistics on the tax gap in the annual report. In addition, it further proposes that the minister provide data on the tax gap to the Parliamentary Budget Officer without delay. I would like to take this opportunity to welcome the appointment of Ms. Annette Ryan as Canada’s new Parliamentary Budget Officer. I should note at the outset that the CRA takes a firm stance on non-compliance, such as posting all convictions on Canada.ca, including convictions related to offshore tax evasion. The CRA also remains committed to supporting the PBO in carrying out her mandate, while at the same time protecting Canadians’ confidential tax information in accordance with the law. I recall that since 2016, the CRA has undertaken extensive work to study and report on the tax gap. Back in April 2016, the Government of Canada committed to estimating the federal tax gap. Consequently, the CRA established a dedicated unit to examine and publish a series of reports analyzing different aspects of the tax gap. In June 2022, the CRA published Canada’s first “Overall federal tax gap report”. This report brought together all of the agency’s previously published tax gap components, as well as updated estimates and key findings up to the 2018 tax year. Most recently, in late March, the CRA published the second “Overall federal tax gap report”. This edition presented the overall federal tax gap with updated estimates based on the latest available data for tax years from 2014 to 2022. This second overall report includes tax gap estimates for all major tax components: personal income tax, corporate income tax, goods and services tax, harmonized tax, sales tax and excise revenue. It also includes two new subcomponents, the payroll payment gap and cannabis excise gap, as well as the impact of the COVID-19 pandemic on the federal tax gap. All of the data in this report is also available through the Open Government portal for easy access. In addition to publishing the report, the CRA published its approach to addressing the tax gap, which focuses on strengthening compliance efforts by encouraging voluntary compliance, identifying compliance gaps and addressing non-compliance. Publishing this approach supports the Government of Canada’s commitment to transparency and fairness. Let us take a closer look at some of the results related to the estimation of the tax gap in Canada. From 2014 to 2022, the tax gap has remained stable at approximately 9% of the federal tax revenue. In the 2022 tax year, the gross tax gap stood at 16% of the federal tax revenue, or $59.5 billion. However, after accounting for the CRA’s compliance and collection activities, the total net tax gap was estimated at 9.3% of the federal revenue, or $34.7 billion. This means that the CRA’s compliance and collection activities continue to play a key role, potentially resulting in a 42% reduction, or $24.8 billion, in the overall gross tax gap. A detailed analysis shows that these compliance and collection activities represent a decrease of $10.8 billion of the gross personal income tax gap, $9.3 billion of the gross corporate income tax gap, $4.5 billion of the gross GST and HST gap, and $0.2 billion of the gross excise tax gap. It is important to note that Canada is among the few countries leading in such vast work on studying the tax gap. To do so, the CRA collaborated with experts, other government departments and international partners to develop methodologies that work within the Canadian context for the different components of the tax gap. Canada is part of a select group of countries that estimates tax gaps and publishes its analysis. The CRA is a member of the tax gap community of interest of the Organisation for Economic Co-operation and Development, the OECD. The CRA has clearly demonstrated its commitment since 2016 to better study and report on the tax gap. Our knowledge of this issue comes from a wide variety of factors, including tax evasion, honest mistakes and bankruptcies resulting in unpayable tax debt. Since there are many factors outside of the control of the tax administration, there is an international consensus that the tax gap is unlikely to ever reach zero. In addition, the tax gap is a historical estimate of theoretical non-compliance and estimates can evolve over time as new data are obtained. Therefore, it is not a performance target for the CRA, but rather an important piece of information to monitor what is happening in the tax system. That being said, its measurement encourages an open and transparent discussion on tax non-compliance. In addition, a more insightful understanding of the tax gap can help the CRA better target its compliance and collection activities. With enhanced data sources, the CRA is well positioned to target those who push, or exceed, the limits of acceptable tax planning to evade or avoid taxes. This, of course, includes wealthy individuals and businesses. As such, the CRA takes a comprehensive approach to monitor and address tax non-compliance. Those who wilfully choose not to fulfill their tax obligations can face serious consequences, including criminal charges, prosecution, court-imposed fines, jail time and a criminal record. The CRA continues to use the tools at its disposal to detect and deter the most serious instances of non-compliance. In fact, through the CRA’s enhanced risk assessment, business intelligence, advanced data analysis, use of legal tools and international collaboration, it is much more difficult for any taxpayer to evade or avoid paying the taxes they owe. The CRA will continue its work to better understand Canada’s tax gap. It remains dedicated to playing a central role in maintaining tax fairness by administering tax laws and regulations impartially, conducting audits and taking—”
Mr. Speaker, I am thankful for the opportunity to speak about Bill S-217, an act to amend the Canada Revenue Agency Act, regarding reporting on unpaid income tax. Maintaining the integrity and fairness of the Canadian tax system is a priority for the Government of Canada. It goes without saying that we are fighting on all fronts against tax evasion and tax avoidance, both nationally and internationally. I want to emphasize that the tax gap estimate provides valuable information to the Government of Canada. The tax gap is the difference between the amount of taxes that taxpayers would have paid if they had fully met their tax obligations and the amount of taxes they actually reported and paid. By estimating the tax gap, we can get a clearer picture of tax non-compliance and a better understanding of the overall health of the Canadian tax system. It also plays a role in delivering on the government’s commitment to transparency. Understanding how and why taxpayers are non-compliant is critical to preserving the integrity of the tax system. It is vital to protecting Canada’s revenue base, which supports programs and benefits that improve the quality of life for all Canadians. That being said, we are here today to discuss Bill S-217, which proposes to amend the Canada Revenue Agency Act. Specifically, it would require the CRA to list all convictions for tax evasion, including international tax evasion, in the annual report submitted to the Minister of National Revenue. It also proposes that the CRA, once every three years, include statistics on the tax gap in the annual report. In addition, it further proposes that the minister provide data on the tax gap to the Parliamentary Budget Officer without delay. I would like to take this opportunity to welcome the appointment of Ms. Annette Ryan as Canada’s new Parliamentary Budget Officer. I should note at the outset that the CRA takes a firm stance on non-compliance, such as posting all convictions on Canada.ca, including convictions related to offshore tax evasion. The CRA also remains committed to supporting the PBO in carrying out her mandate, while at the same time protecting Canadians’ confidential tax information in accordance with the law. I recall that since 2016, the CRA has undertaken extensive work to study and report on the tax gap. Back in April 2016, the Government of Canada committed to estimating the federal tax gap. Consequently, the CRA established a dedicated unit to examine and publish a series of reports analyzing different aspects of the tax gap. In June 2022, the CRA published Canada’s first “Overall federal tax gap report”. This report brought together all of the agency’s previously published tax gap components, as well as updated estimates and key findings up to the 2018 tax year. Most recently, in late March, the CRA published the second “Overall federal tax gap report”. This edition presented the overall federal tax gap with updated estimates based on the latest available data for tax years from 2014 to 2022. This second overall report includes tax gap estimates for all major tax components: personal income tax, corporate income tax, goods and services tax, harmonized tax, sales tax and excise revenue. It also includes two new subcomponents, the payroll payment gap and cannabis excise gap, as well as the impact of the COVID-19 pandemic on the federal tax gap. All of the data in this report is also available through the Open Government portal for easy access. In addition to publishing the report, the CRA published its approach to addressing the tax gap, which focuses on strengthening compliance efforts by encouraging voluntary compliance, identifying compliance gaps and addressing non-compliance. Publishing this approach supports the Government of Canada’s commitment to transparency and fairness. Let us take a closer look at some of the results related to the estimation of the tax gap in Canada. From 2014 to 2022, the tax gap has remained stable at approximately 9% of the federal tax revenue. In the 2022 tax year, the gross tax gap stood at 16% of the federal tax revenue, or $59.5 billion. However, after accounting for the CRA’s compliance and collection activities, the total net tax gap was estimated at 9.3% of the federal revenue, or $34.7 billion. This means that the CRA’s compliance and collection activities continue to play a key role, potentially resulting in a 42% reduction, or $24.8 billion, in the overall gross tax gap. A detailed analysis shows that these compliance and collection activities represent a decrease of $10.8 billion of the gross personal income tax gap, $9.3 billion of the gross corporate income tax gap, $4.5 billion of the gross GST and HST gap, and $0.2 billion of the gross excise tax gap. It is important to note that Canada is among the few countries leading in such vast work on studying the tax gap. To do so, the CRA collaborated with experts, other government departments and international partners to develop methodologies that work within the Canadian context for the different components of the tax gap. Canada is part of a select group of countries that estimates tax gaps and publishes its analysis. The CRA is a member of the tax gap community of interest of the Organisation for Economic Co-operation and Development, the OECD. The CRA has clearly demonstrated its commitment since 2016 to better study and report on the tax gap. Our knowledge of this issue comes from a wide variety of factors, including tax evasion, honest mistakes and bankruptcies resulting in unpayable tax debt. Since there are many factors outside of the control of the tax administration, there is an international consensus that the tax gap is unlikely to ever reach zero. In addition, the tax gap is a historical estimate of theoretical non-compliance and estimates can evolve over time as new data are obtained. Therefore, it is not a performance target for the CRA, but rather an important piece of information to monitor what is happening in the tax system. That being said, its measurement encourages an open and transparent discussion on tax non-compliance. In addition, a more insightful understanding of the tax gap can help the CRA better target its compliance and collection activities. With enhanced data sources, the CRA is well positioned to target those who push, or exceed, the limits of acceptable tax planning to evade or avoid taxes. This, of course, includes wealthy individuals and businesses. As such, the CRA takes a comprehensive approach to monitor and address tax non-compliance. Those who wilfully choose not to fulfill their tax obligations can face serious consequences, including criminal charges, prosecution, court-imposed fines, jail time and a criminal record. The CRA continues to use the tools at its disposal to detect and deter the most serious instances of non-compliance. In fact, through the CRA’s enhanced risk assessment, business intelligence, advanced data analysis, use of legal tools and international collaboration, it is much more difficult for any taxpayer to evade or avoid paying the taxes they owe. The CRA will continue its work to better understand Canada’s tax gap. It remains dedicated to playing a central role in maintaining tax fairness by administering tax laws and regulations impartially, conducting audits and taking—