Senator calls on budget watchdog to take CRA to court to reveal tax gap information

A Liberal senator is renewing his calls for the government’s budget watchdog to flex his legislative muscles and take the Canada Revenue Agency to court to reveal how much money is lost to tax avoidance.

Parliamentary Budget Office has been fighting for 5 years to get information

Canada's budget watchdog is considering whether to use a five-year battle to get information from the Canada Revenue Agency to test the limits of the new legislation outlining his office's powers. (Chris Wattie/Reuters)

A Liberal senator is asking the government's budget watchdog to flex his legislative muscles and take the Canada Revenue Agency (CRA) to court to reveal how much money is lost to tax avoidance.

The Parliamentary Budget Office (PBO) has been fighting with the CRA for five years for information to evaluate Canada's "tax gap," the difference between taxes that should be received and the amount that actually end up being collected.

The PBO says the revenue agency has been refusing its repeated requests for income data, arguing that sharing the information would break confidentiality laws. The PBO has argued it is only after numbers, not personal information.

"Allowing the Parliamentary Budget Officer to provide an independent estimate of the tax gap is long overdue, and if the Canada Revenue Agency will not provide the necessary data, it must be compelled to do so," said Sen. Percy Downe in a statement Monday.

"By refusing to supply the information the PBO has repeatedly requested, the Canada Revenue Agency is in violation of both the spirit and the letter of the law."

Parliamentary Budget Officer Jean-Denis Frechette has already mused about whether to use his office's spat with the CRA to test the limits of new laws outlining his office's powers.

"I call it a saga, a long saga," Frechette told CBC's The House back in November.

That legislation, which came into effect this year, is supposed to ensure that the office has expanded access to data, among other things.

"I never give up, never, never," said Frechette.

Spotlight on tax havens

The CRA has promised action after an international investigation known as the Paradise Papers pulled back the curtain on more than 3,000 Canadian companies, trusts, foundations and individuals who use offshore accounts as tax havens.

In an email to CBC News, a spokesman for the revenue minister said the CRA has "a dedicated team" studying the tax gap and has released three reports on it since 2016.

"The CRA is examining the international component of the tax gap and has committed to publishing a study in 2018," John Power said in an email.

But Downe said that isn't good enough.

​"The reason an independent analysis is required, entirely separate from any report prepared by the CRA, is quite simple: given their recent track record, Canadians cannot trust the Canada Revenue Agency," the P.E.I. senator said.

Canadians deserve to know how much money the CRA should be collecting, he said.

The CRA does an 'absolutely terrible job' on overseas tax evasion convictions, says P.E.I. Sen. Percy Downe, and should concentrate its efforts there. (CBC)

Tracking the 'tax gap'

The U.S. has been tracking and publicly reporting its tax gap for more than 50 years. And now, so do more than a dozen other Western countries, including the U.K., France, Germany, Australia, Sweden, Portugal, Mexico, Norway and Denmark.

Under the Parliament of Canada Act, the CRA is required to provide "any financial or economic data in the possession of the department that are required for the performance of [the PBO's] mandate."

Downe also introduced a bill in the Senate that would force the CRA to report on all convictions for tax evasion, including international tax evasion. The bill would also force the department to report the tax gap in the annual report it submits to the minister of national revenue.