OTTAWA—Banks and other financial institutions should have the power to find out who’s actually behind corporations that stash money in offshore tax havens, says a House of Commons committee.
In a report tabled in Parliament on Wednesday, the Commons finance committee also urges the Conservative government to close tax loopholes and develop laws that crack down on those who avoid paying their share.
The report recommends maintaining “taxpayer morale” by publicizing the government’s “ongoing efforts” to ensure fairness in Canada’s tax system.
The main opposition parties, saying the recommendations don’t go far enough, issued supplementary reports.
The NDP and Liberals want the government to calculate and publish the tax gap—the amount Canada is losing to tax evasion and shady havens.
Independent estimates indicate Canada could be losing up to $7.8 billion annually in tax revenue, the New Democrats say in their report, but the federal government has not made an effort to quantify the gap.
“Without such an estimate, it is impossible to determine the degree of tax base erosion or measure the adequacy of corrective measures,” the NDP says.
Committee chairman James Rajotte said Wednesday the big challenge is determining how to gauge the gap. “How do you measure something that is in fact being concealed?”
He suggested the emphasis should be on getting more information about those who aren’t paying their fair share of taxes before estimating the size of the problem.
The New Democrats say the Canada Revenue Agency should require Canadian corporations to declare all of the taxes they pay abroad, country by country, with the goal of greater transparency.
In addition, the NDP recommends the auditor general regularly evaluate the revenue agency’s efforts to prosecute and settle cases of tax evasion.
The committee heard from dozens of witnesses representing federal agencies, the provinces, banks, police, and other interested individuals.
A key recommendation of the committee majority would see the government require banks, trust companies, real estate agents, casinos and others who report under money laundering and terrorist financing laws to obtain information about the actual ownership of enterprises. Sometimes this information is shielded behind another name that has little to do with the company, making its activities difficult to trace.
The majority report also recommends the government continue to pursue tax information exchange agreements with other countries as a means of fighting evasion.
However, the NDP said such agreements are often ineffective because they lack a means of automatically exchanging tax information with Canada.
“I think people are looking for action,” said NDP revenue critic Murray Rankin. “The report’s main recommendations aren’t about action, they’re about studies and this and that. I don’t think this goes nearly far enough for Canadians.”
The NDP says recent cuts to the federal revenue agency will make it even harder to track down tax cheats.
However, Rajotte said divisions that deal with tax evasion will not be receiving less resources as a result of any federal cuts.
With files from The Canadian Press