Wednesday, November 14, 2012

Canada's tax evasion problem in need of resources & leadership

Senator Percy Downe has issued a call to the Harper government to put some money and some effort into curbing Canadians hiding their assets overseas to escape taxation:
Sen. Percy Downe said the vacancy [at the head of the CRA] gives Prime Minister Stephen Harper the opportunity to elevate the job to the “importance it deserves” — to provide the resources to crack down on Canadians who stash money in havens to avoid paying taxes. 
...“It’s either a resource problem or a leadership problem and this is an opportunity for the prime minister to identify it as a problem and correct it,” said Downe. “I don’t want to see someone parked there to manage the status quo …. It’s time to shake up the status quo.” 
Former CRA commissioner Michel Dorais said it's a question of resources:
“CRA is a big collection machine and the money collected is directly proportional to the money invested. The determination of where to put the effort is a combination of ministerial direction, priorities of its clients, direction from the board of management and management decisions of the CEO/commissioner. If one of those three components is weak, the whole thing can breakdown rapidly.”
But the Senator says it is a question of will, not resources, becuase more resources put in will yield more revenues out.  The story quotes a "former CRA executive" who said “wherever you look you’ll find money.” Info on offshore accounts not being fully pursued by the CRA is a case in point:
In 2007, the government was given a list of 106 Canadians with secret accounts worth more than $100 million in a bank in Liechtenstein. They were among a longer list of clients taken from the bank by a former employee and later acquired by the German government, which shared the information with countries whose citizens were on the list. 
By April, Downe said CRA had assessed only $16.5 million owing in back taxes, interest and penalties on the money hidden in Liechtenstein. Of that, they collected only about $5 million and “not one penny has been assessed in fines.” 
“By its own admission, since CRA received this information five and a half years ago, not one of these Canadians who have hidden their money abroad to avoid paying taxes in Canada has stood before a judge,” said Downe.
More at the link.


  1. The word on the street is their is a lot of overlap between the individuals with offshore accounts and individuals involved in the Montreal construction/corruption industry. The problem that many including Downe seem to be forgetting is if you go back to the early days of the Montreal construction scandals one of the first groups of public officials that were suspected of being compromised by Construction bosses were several senior staff members of the CRA's Montreal office. Unfortionately when you have employees of the tax administration service receiving free meals, free hockey tickets and all the other things public officials get from construction bosses it has hard to adminster the tax system properly. Luckily for Canada I think the problem is when centered on Montreal more than other parts of the country.

  2. New links found between tax auditors and Montreal's construction industry

    The RCMP has found a series of new and disturbing links between auditors at the Canada Revenue Agency and officials in Montreal’s construction industry, including a series of joint visits to the city’s casino, a golf trip, home renovations and a stalled audit, court records show.

    A recent search warrant, obtained by Radio-Canada and The Globe and Mail, alleges nine CRA officials attended a Montreal Canadiens home game in late 2005 with the principals in B.T. Céramique, a company that had recently benefited from a lax audit by the federal agency, according to the RCMP.

    Internal CRA documents obtained by the RCMP allege that an auditor who was not at the hockey game received an order at one point from one of her managers, Madan Kehar, to stop auditing B.T. Céramique because “she had done enough” on the file.

    No charges have been laid as part of the ongoing RCMP investigation into allegations of corruption in the CRA’s Montreal office and none of the allegations in the search warrant has been proven in court. The CRA has suspended or fired a number of its employees in Montreal as part of its own internal investigation into alleged wrongdoing and corruption.

  3. And the web gets bigger and bigger. I'm, unfortunately, not shocked. But it is a governance crisis. Cleaning it up will be tough.

  4. It looks some criminal charges did come down today. From the Montreal Gazette:

    Reza Tehrani, owner of the Aviron Technical Institute in Town of Mount Royal, is among the latest to face criminal charges as part of a probe into federal income-tax evasion “involving former corrupt Canada Revenue Agency (CRA) officials,” the RCMP announced Thursday.

    The force said Tehrani, 55, faces a total of 13 counts.

    Liora Suissa, 49, apparently a former CRA official, faces five charges.

    “They are charged with conspiracy, fraud, breach of trust by a public officer, as well as bribery of public officers,” the Mounties added in a morning news release.

  5. thanks for this. Encouraging news.