The Canada Revenue Agency’s projected spending and staffing levels, as outlined in newly released documents, seem to challenge the Conservative government’s pledge that ongoing CRA cuts are only to internal operations and will not erode its ability to crack down on tax cheats.
However, officials from the office of Revenue Minister Gail Shea maintained Monday the budget reductions will not reduce the CRA’s ability to fight international tax evasion.
Shea was unavailable for an interview.
Two broader CRA compliance programs, which include efforts on fighting domestic and international tax evasion, are both facing funding and staffing cuts over the next three years, according to the agency’s report on plans and priorities.
The CRA’s “reporting compliance” program — which verifies the information taxpayers report and ensures all required information is accurately disclosed — is facing a funding cut of nearly $120 million (about 11 per cent) between 2012-13 and 2015-16.
The number of full-time employees in the program will be cut by more than 300 between the current budget year and 2015-16, down to slightly more than 10,000, according to the CRA’s planning report.
Another program on “accounts receivable and returns compliance,” which helps collect tax debt and enforces compliance with Canada’s tax laws, is facing a budget cut of $68 million (14 per cent) between 2012-13 and 2015-16, according to the document.
A couple of other program areas — “taxpayer and business assistance,” and “assessment of returns and payment processing” — are also facing cuts.
For the 2012-13 budget year, the government had 425 full-time employees in field offices for the international audit program, 464 full-time workers in the aggressive tax planning program, and 821 employees in enforcement and disclosures.
The CRA won’t release its budget or staffing estimates for the specific international audit, aggressive tax planning and enforcement programs for the current 2013-14 budget year and the next few years.
All told, the Conservative government is planning to cut more than $250 million and nearly 3,000 jobs from the CRA over the next three years.
The 2013 federal budget released last month announced $61 million in additional annual cuts by 2015-16, but federal officials insist the cuts will only be to internal operations and won’t reduce the CRA’s international audit capacity.
“The savings identified in (budget) 2013 apply only to internal operations. There will be no impact on CRA’s services or CRA’s audit and enforcement capabilities,” Shea said Monday in a statement.
The Harper government is facing mounting pressure to do more to curb tax evasion, following recent audits and investigations. Also, a massive leak of financial information last week highlighted more than 100,000 people around the world with accounts in offshore tax havens, including what’s believed to be more than 400 Canadians.
Holding an offshore account is not illegal and doesn’t necessarily indicate wrongdoing as long as the related income is reported, but the CRA has called on the investigative journalism group that obtained the information to release it to the federal government so the revenue agency can investigate.
There has been a steady decline in recent years in the number of CRA full-time employees in the international audit and aggressive tax planning programs — before the more than $250 million in cuts are implemented. However, the number of employees in each program is still significantly more than when the Harper government first came to office in 2006.
In 2011-12, there were 422 full-time employees in the international audit program, down from 459 full-time employees in 2008-09. For the aggressive tax planning program, the number of full-time employees fell to 468 in 2011-12 from 501 full-time workers in 2008-09. The decreases were due to shifting resources to higher-paying positions focusing on high-risk files, according to officials.
NDP national revenue critic Murray Rankin said it’s “ludicrous” to think the massive cuts to the CRA won’t erode its ability to chase tax cheats.
He also questions whether the measures announced in the budget to fight offshore tax evasion will steal already limited resources to combat tax scofflaws in Canada.
Rankin said he’ll hold a news conference Tuesday to announce parliamentary measures — including the use of a House of Commons committee — to fight the criminal use of tax havens.
“They haven’t put their money — the workers — where their mouth is,” Rankin said.
“They’re scrambling to look like they’re really doing something. But the reality is they don’t have the workers.”
Canadians for Tax Fairness, a domestic advocacy group, estimates international tax havens alone are costing Canada at least $7.8 billion annually, but the number could be much higher.
In an effort to reduce tax evasion, the government announced in the budget that the CRA will pay rewards to whistleblowers, of up to 15 per cent of the federal tax collected, for information leading to tax assessments exceeding $100,000.
Other budget measures include improving the process for the CRA to obtain information on unnamed persons from third parties such as banks. Also, the government has dedicated $15 million over five years to have banks and other institutions report international electronic fund transfers of $10,000 or more.
At home, the federal auditor general warned last year the CRA was unable to adequately assess and track tax cheats across the country due to limited resources and weak oversight and enforcement practices. The agency has accepted the auditor’s recommendations for improvement.
The auditor general will release a report this month on how well the CRA is collecting tax debts and another this fall on offshore bank accounts.
Original Article
Source: canada.com
Author: Jason Fekete
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