Hey there, time traveller!
This article was published 15/7/2014 (709 days ago), so information in it may no longer be current.
The Canada Revenue Agency's snitch line, opened Jan. 15, had by the end of May yielded names of 80 people who may be hiding wealth in offshore tax havens. That's a good start, but since the International Consortium of Investigative Journalists (ICIJ) last year said it had names of 450 such Canadian tax evaders, the revenue agency still has a lot of catching up to do.
A summary of the results achieved by the government's Offshore Tax Informant Program was provided to CBC News through an access to information request. Ordinarily the government likes to draw all possible attention to its successes in sniffing out tax evaders in the hope of scaring the others into voluntary disclosure. In this case, however, it took a formal Access to Information request to extract the information from the agency.
The government offers a share of the tax collected to anyone who calls the snitch line with information about a Canadian who is hiding money in an offshore tax haven. The informant may have to testify in court, but if the case results in $10,000 or more of tax recovery by Canada, the informant may be offered between five per cent and 15 per cent of the tax proceeds.
In the United Kingdom, meanwhile, the ICIJ reported earlier this month that a fresh leak of information had given it the names of thousands of wealthy individuals -- including donors to the ruling Conservative Party -- who were hiding money in a private bank in the island of Jersey, one of the Channel Islands between Britain and France. Those tax evaders, the ICIJ said, were clients of a U.K. wealth-management firm -- almost as though the leak had come from a source inside that firm.
This may suggest a line of inquiry the Canadian authorities might pursue: Canadians are not born knowing how offshore tax havens operate and how to slip money surreptitiously into them. They have to learn this information from someone who already knows the system. If the CRA can win the co-operation of a disgruntled employee whose boss advises the super-rich on tax evasion, they may obtain lists of candidates in wholesale quantities as opposed to one-by-one disclosures through the snitch line.
The CRA may run into political interference with its campaign to smoke out the offshore tax-haven users. The wealthy individuals who find an advantage in using tax havens may include some of the same people our political parties rely on for the large donations that finance election campaigns. The parties, anxious to protect their sources of revenue, might therefore want to encourage the CRA to tread lightly in its pursuit of the largest evaders. The late Jim Flaherty announced the informant program in his March 2014 budget, but it took 10 months to launch the program and the results so far are modest. Mr. Flaherty is no longer with us and the CRA is surprisingly shy about publicizing what has been achieved.
The CRA should not be shy. It should publicize several times a year the results its Offshore Tax Informant Program has achieved without waiting for an access to information application. It should make the promised rewards available to independent bounty-hunting entrepreneurs who might be more focused and aggressive than the agency itself in locating informants and winning their co-operation.
Tax-law compliance is achieved most efficiently if evaders who have been lying low approach the government with a proposal for a negotiated settlement. This is most likely to happen if the wealth management firms that advise the super-rich on tax havens conclude that tax havens are inherently untrustworthy.
The CRA should aim to achieve and publicize so many leaks of information about tax-haven users that the rest see the game coming to an end and propose a settlement.