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The Hon. Jim  Munson Senator Jim Munson, a well-respected Canadian journalist, was appointed to the Senate by the Rt. Honourable Jean Chretien on December 10, 2003.

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Feds bring in cutbacks while overseas tax cheats get off the hook

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Published by Senator Percy Downe on 02 April 2012

When this Government has searched the tax havens of the world, recovered the taxes owed, and punished those who illegally hid their money there, then we can talk about cutbacks.

 

The Conservative Government has plunged our public finances into a deficit, which Stephen Harper now plans to solve by reducing retirement benefits for seniors, cutting services to Canadians, and laying off public servants.

And yet, there are billions of dollars in taxable assets illegally hidden by wealthy Canadians in overseas tax havens, and this government’s efforts to recover the tax on this money – thereby lessening the burden on those law-abiding Canadians who already pay their fair share – is simply unacceptable.

Four years ago, the Canadian Government was given the names of 106 Canadians with secret bank accounts in Liechtenstein by the Government of Germany. The information they were handed showed that the amounts in Canadian-held Liechtenstein bank accounts totalled over $100 million, ranging from a minimum of $500,000 -- to one account with over $12 million.

Not one account contained less than half a million dollars. These are very rich Canadians.

Last year the Canada Revenue Agency (CRA) claimed to have recovered only $6 million in back taxes, interest and penalties on the money hidden by these Canadians in Liechtenstein.

And amid the talk of interest and penalties, another fact becomes clear: not one penny has been assessed in fines. That is because not one charge has been laid. In the four years since this information has come to light, not one of these Canadians who have hidden their money abroad to avoid paying taxes in Canada has stood before a judge, in Canada or overseas.

Any ordinary resident of Canada who is found to not be declaring their income would be hounded by the CRA. Why the double standard for very rich Canadians with foreign bank accounts hidden in well-known tax havens? Where is CRA Minister Gail Shea? Why is she allowing this to happen?

In fact, these tax cheats appear to have received special treatment from the CRA once it was discovered they were stashing money in Liechtenstein.

In response to a Written Question I tabled in the Senate, CRA revealed that as of June 2010, 20 residents of Canada who have accounts in Liechtenstein had availed themselves of the CRA’s Voluntary Disclosure Program (VDP).

For a disclosure under the VDP to be valid, it must be voluntary. CRA’s own definition of “voluntary” disqualifies disclosures where “the taxpayer was aware of, or had knowledge of an audit, investigation or other enforcement action set to be conducted by the CRA . . .” (CRA Income Tax Information Circular IC00-1R2, Voluntary Disclosures Program, October 2007)

Since CRA publically revealed that all 106 Canadians with accounts in Liechtenstein were subject to some level of compliance action, none of them should have been eligible for the Voluntary Disclosure Program.

In fact, CRA had previously stated that “as compliance action has been commenced on all of the listed taxpayers, they are no longer eligible for consideration under the VDP” (Response to Written Question tabled in Parliament).

The CRA then changed their policy position. Put simply, at least 20 rich Canadians have avoided prosecution because they have been given special treatment. Why? It is unacceptable that after receiving a tax holiday, this government gave these wealthy tax dodgers a vacation from prosecution.

Tax fairness, like justice, must be seen to be done. Honest, law-abiding, taxpaying Canadians should not have to feel let down by a federal government unable or unwilling to make a serious effort to recoup monies from Canadians who try to avoid paying their fair share.

Since Liechtenstein, the Government of Canada has been handed the names of Canadians with secret accounts in a bank in another tax haven, Switzerland. As an example of the size of the problem facing the federal government, these two banks had accounts for over 1,800 Canadians. Imagine how many other accounts exist throughout the world?

The Harper Government must do the right thing. In addition to charging these individuals with tax evasion, the Federal Government should make the names of Canadians with overseas bank accounts public. These wealthy tax cheats benefit from taxpayer-funded services, such as Canada’s healthcare system, when they or a family member get sick, but they refuse to fund their fair share of the system. These people must be judged by Canadians in the court of public opinion.

The Government has announced that 60,000 Canadians will receive the Queen’s Diamond Jubilee Medal. I am certain that no Canadian would want that medal to be awarded to an overseas tax cheat, but if the names are not made public, how will we know?

It is unconscionable that this Government would introduce cutbacks while allowing overseas tax cheats off the hook; when this Government has searched the tax havens of the world, recovered the taxes owed, and punished those who illegally hid their money there, then we can talk about cutbacks.

 

Percy Downe is a Senator from Charlottetown, Prince Edward Island.

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