Ottawa to study gap in uncollected taxes in light of Panama Papers

A senator who has crusaded against tax evasion has released recent correspondence from the revenue minister revealing the government's plan to determine how much money Canada loses to tax dodgers.

OTTAWA — A senator who has crusaded against tax evasion has released recent correspondence from the revenue minister revealing the government’s plan to determine how much money Canada loses to tax dodgers.

National Revenue Minister Diane Lebouthillier says in a Jan. 20 letter to Sen. Percy Downe that her department will try to estimate the value of Canada’s so-called “tax gap,” the difference between what is owed in taxes and what is actually collected.

The Charlottetown senator was responding to the leak of 11.5 million records from Panamanian law firm Mossack Fonseca, the authenticity of which the firm has confirmed. The firm denies any wrongdoing and says most of the individuals named in the leaked documents were not its direct clients, but accounts set up by intermediaries.

Lebouthillier’s letter says Canada will work with the Organization for Economic Co-operation and Development, which uses the tax gap measure to help develop policies that target tax evaders.

Downe said in a statement that the Canada Revenue Agency has resisted his attempts to get it to measure the tax gap since 2012. But he said the government needs the information so it can assess the level of overseas tax evasion and fight it.

“The time has come for the CRA and Canada to join countries like the United States, the United Kingdom, Denmark and Mexico and measure the tax gap,” said Downe.

Lebouthillier’s letter says that’s about to change.

“I have instructed my officials to commence work on a plan aimed at enhancing public understanding of non-compliance with Canada’s tax laws and to identify the financial resources that would be required to move forward on the plan,” the minister writes.

“As a first step, the CRA will undertake a comprehensive study of tax gap estimation.”

Lebouthillier’s spokeswoman Chloe Luciani-Girouard had no comment on the letter Downe released, but said she was not disputing its contents.

Downe said he will also table a bill in the Senate next week that would require the government to measure the tax gap.

The International Consortium of Investigative Journalists worked with hundreds of journalists, including some from the CBC and the Toronto Star, to analyze the leaked documents

The records reportedly show major banks helped clients create companies in offshore havens like Panama.

The two Canadian media outlets reported that the Royal Bank of Canada and its subsidiaries set up about 370 of these types of corporations.

The Royal Bank said Monday it operates within the law and has policies to prevent tax evasion after reports said it used the Panamanian law firm whose leaked documents are said to reveal the use of offshore tax havens.

“RBC works within the legal and regulatory framework of every country in which we operate,” the Royal Bank said in a statement. “Tax evasion is illegal and we have established controls, policies and procedures in place to detect it and prevent it occurring through RBC.”

The bank said there are legitimate reasons to set up a holding company, but if it believes a client intends to commit a criminal offence by evading taxes, it would report that and not serve the client.

The leaked documents reportedly show the offshore dealings of more than 100 politicians and public figures from multiple countries, including Iceland, Ukraine, Pakistan and Russia.

Luciani-Girouard said in an interview that the Canada Revenue Agency already had much of the Canadian-related information contained in the Panama Papers investigation.

Since 2015, the department has been monitoring all money transfers exceeding $10,000, including from Panama, she said.

“They’re currently assessing the high-risk taxpayers and auditing them randomly,” Luciani-Girouard said.

“It’s a global issue and it’s ever-so complicated. That’s why CRA is quite satisfied they now have the means to attack this head-on with what was given in the last budget.”

Last month’s federal budget provided $440 million to the CRA over five years “to combat tax evasion and aggressive tax avoidance, including offshore,” she said.

Luciani-Girouard said if the department uncovers any evidence of illegal transfers, it will be referred to the Public Prosecution Services of Canada.

Pierre-Luc Dusseault, the NDP national revenue critic, urged the government to move quickly with its promises to fight tax evasion.

“If the government doesn’t take action, the wealthy and powerful will continue to benefit from our malleable tax laws,” he said in a statement.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer Public Schools says that in the absence of additional funds from the provincial government, there was no consideration of using alternate classroom sites in the district. (AP Photo/Gregory Bull)
Red Deer Public Schools launches online engagement process

Red Deer Public schools is seeking community input to help ensure a… Continue reading

Students walk into Hunting Hills High School, which is one of the Red Deer Public Schools with solar panels on its roof. (Photo by SEAN MCINTOSH/Advocate staff)
Red Deer high school was placed in lockdown following potential threat

Hunting Hills High School was placed in a lockdown Friday after Red… Continue reading

Red Deer Mayor Tara Veer says some details of the provincial government’s 2021-22 budget need to be ‘sorted out’ when it comes to the hospital expansion funding. (File photo by Advocate staff)
More detail needed regarding hospital funding, says Red Deer mayor

Red Deer Mayor Tara Veer says some information is unclear regarding the… Continue reading

Alberta Health reported two new COVID-19 deaths in Red Deer Friday. (Image courtesy CDC)
Two more deaths linked to Olymel outbreak in Red Deer

Province reported 356 additional COVID-19 cases Friday

Nicole Buchanan, chair of Red Deer Public Schools board, says it’s too soon to say how the provincial government’s 2021-22 will impact the district. (Contributed file photo)
Red Deer school boards react to provincial budget

It’s still too soon to say how the latest provincial budget will… Continue reading

An arrest by Red Deer RCMP is facing online scrutiny. No charges have been laid and the incident is still under investigation. (Screenshot of YouTube video)
Red Deer RCMP investigating violent arrest caught on video

Police say officer ‘acted within the scope of his duties’

Angela James stands on centre ice in front of the Toronto Maple Leafs team after being inducted into the Hockey Hall of Fame before Toronto Maple Leafs and Buffalo Sabres NHL hockey action in Toronto on Saturday November 6, 2010. THE CANADIAN PRESS/Chris Young
Hall of Famers James, Lowe, Hay named to Order of Hockey in Canada

Hall of Famers James, Lowe, Hay named to Order of Hockey in Canada

Toronto Raptors head coach Nick Nurse talks to center Aron Baynes (46) and guard Norman Powell (24) during the second half of an NBA basketball game against the Philadelphia 76ers Sunday, Feb. 21, 2021, in Tampa, Fla. THE CANADIAN PRESS/AP-Chris O'Meara
Nurse, five Raptors assistants sidelined to due COVID-19 health and safety protocols

Nurse, five Raptors assistants sidelined to due COVID-19 health and safety protocols

Team Ontario skip Rachel Homan, centre, makes a shot against Team Wild Card 1 as second Sarah Wilkes, left, and lead Joanne Courtney sweep at the Scotties Tournament of Hearts in Calgary, Alta., Friday, Feb. 26, 2021. Ontario's Rachel Homan kicked off play in the championship pool Friday with a 7-6 victory over Chelsea Carey of Team Wild Card One at the Canadian women's curling playdowns. THE CANADIAN PRESS/Jeff McIntosh
Homan and Einarson improve to 8-1 at Canadian women’s curling championship

Homan and Einarson improve to 8-1 at Canadian women’s curling championship

Prime Minister Justin Trudeau rises during question period in the House of Commons on Parliament Hill in Ottawa on Wednesday, Feb. 24, 2021. THE CANADIAN PRESS/Sean Kilpatrick
New vaccine brings optimism amid rising threat of variants, high case counts

New vaccine brings optimism amid rising threat of variants, high case counts

A nurse prepares to give the first COVID-19 vaccine to be distributed in Edmonton on Tuesday, Dec. 15, 2020. THE CANADIAN PRESS/Jason Franson
Doctors urge Alberta to hold off on easing COVID-19 restrictions next week

Doctors urge Alberta to hold off on easing COVID-19 restrictions next week

Minister of Health Tyler Shandro speaks during a press conference in Calgary on Oct. 7, 2020. The Alberta government and its 11,000 physicians have taken a first step toward resolving an ugly, fractious year-long dispute over fees and working conditions. THE CANADIAN PRESS/Jeff McIntosh
Alberta and its physicians move to end ugly feud over fees with new tentative deal

Alberta and its physicians move to end ugly feud over fees with new tentative deal

A worker carrying a disinfectant sprayer walks past a WestJet Airlines Boeing 737-800 aircraft, after cleaning another plane at Vancouver International Airport, in Richmond, B.C., on Thursday, January 21, 2021. THE CANADIAN PRESS/Darryl Dyck
WestJet to lay off undisclosed number of pilots amid labour negotiations

WestJet to lay off undisclosed number of pilots amid labour negotiations

The Site C Dam location is seen along the Peace River in Fort St. John, B.C., Tuesday, April 18, 2017. THE CANADIAN PRESS/Jonathan Hayward
British Columbia’s Site C dam to cost $16 billion, delayed until 2025

British Columbia’s Site C dam to cost $16 billion, delayed until 2025

Most Read