Opinion | Canada must close loopholes and make sure the CRA has the resources to ensure

After the Panama Papers and Paradise Papers, a third global investigation into tax avoidance recently hit the media this fall: the Pandora Papers. It exposed shell games that large corporations and the ultra rich use to avoid paying taxes. It was released right after a federal election where the major parties all spoke about tax fairness.

Last week, Her Excellency the Right Honourable Mary Simon read her first speech from the throne laying out the government’s plans. Once again, the Honourable Diane Lebouthillier was appointed minister for national revenue. Given her experience in this portfolio, the public interest in this issue in the last campaign and the throne speech’s focus on economic resiliency, I expect Minister Lebouthillier will want to focus on tax fairness.

The Professional Institute of the Public Service of Canada (PIPSC) represents 12,000 auditors, forensic accountants, economists, actuaries and finance professionals at the Canada Revenue Agency (CRA). For years, our members have identified concerns about tax avoidance through aggressive transfer pricing or profit-shifting strategies, and the need for the CRA to bring home this missing revenue. I am heartened by the growing support we see from Canadians for tax fairness.

Shortly after my election as the institute’s president, then-prime minister Harper announced cuts to the CRA that would have eliminated 4,000 positions and nearly $1 billion from its budget. PIPSC members working on criminal investigations and on files related to offshore tax evasion saw their capacity reduced. Our members worried the cuts would hinder their ability to reclaim tax revenue.

In 2015, the new Trudeau government reversed some of the cuts, but many concerns remained about the lasting impact of those cuts and reduced capacity.

Since then, the Panama Papers and Paradise Papers brought a lot of attention to tax fairness. Those reports exposed billions of dollars routed through low-tax countries to avoid paying tax where it’s owed. The wealthiest companies and politicians scrambled to cover up the leaks. Canadians began to understand what was happening.

Then in 2020, COVID-19 turned our world upside down. Our government pulled out all the stops to keep Canadians afloat. The public service implemented major programs to keep the economy going. The way Canadians looked at our public services and spending changed. Canadians understood the price tag would be high, but that it was necessary.

Unprecedented spending on the Canada Recovery Benefit (CRB) and the Canada Recovery Sickness and Caregiving Benefits kept our economy from crumbling. Canadians could keep spending. Big corporations reaped the rewards and reported both soaring stock prices and record profits. Yet many are not contributing to the system that has given them such roaring success.

At this point, everybody knows that huge corporations and the ultra rich are gaming the system to protect their pocketbooks at the public’s expense. In this year’s federal election, every major political party spoke about tax fairness and how to tackle the problem. And it’s no surprise — this issue is a winner. In a recent poll by Abacus Data for PIPSC and the Broadbent Institute, 92 per cent of respondents supported taking action to crack down on tax avoidance. This is a major shift in the conversation around tax fairness.

As the COVID-19 vaccines bring us some relief, how we pay for this pandemic is on everyone’s mind.

Canadians already paid for this pandemic with their jobs, their health and their relationships. The government started cuts to programs like the CRB and the Canada Recovery Sickness and Caregiving Benefits. We’re worried about further cuts.

Meanwhile, big corporations and the ultra rich continue to bend taxation rules at the expense of everyone else. The Pandora Papers tell us exactly where the revenue to pay for this pandemic lies. Now that we have some political will to go after them, it’s time the biggest corporations and the ultra rich pay their fair share.

In particular, we’re calling on the government to close tax loopholes, and make sure the CRA has what it needs to do the job. This means a global minimum tax rate of at least 21 per cent (which would match the U.S. proposal), a fair formula to ensure taxes owed are assessed where economic activity happens rather than where taxes are the lowest, significant investment in the CRA (approximately $1 billion), and requirements for corporations to publicly report their revenue, profits and taxes paid.

I am eager to see Minister Lebouthillier’s new mandate letter from the prime minister, and her plans to work with tax fairness experts like PIPSC members.

In that same spirit, I look forward to passing the torch on tax fairness to our new PIPSC president who will take over this role in January. So much progress has been made on this issue over the course of my mandate. I know our members will continue to lead forward.