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Probe Harper's use of tax audits

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The Harper government two years ago intensified tax auditors' scrutiny of non-profit groups that engage in political advocacy. Some of the groups involved -- especially environmental bodies and overseas development agencies that quarrel with the Harper government's policy -- feel the government is using the threat of a tax audit to cow them into silence.

The government is not free to use administrative powers to silence its critics. From this distance, it is hard to tell if the government is abusing its powers or merely enforcing the law in an even-handed way. It's high time we found out. The Auditor General of Canada should investigate.

Registered charities enjoy the privilege of issuing tax receipts so that their donors can claim a tax deduction. The Canada Revenue Agency audits charities and occasionally cancels their charitable status. This year, for instance, CRA revoked the registration of an outfit that was raising funds for a Kashmiri terrorist organization. Last year it revoked the registration of an investment scam that was cloaking investments as charitable donations.

In 2012, Joe Oliver, who was then minister of natural resources, complained that radical non-profit groups financed from outside Canada were opposing development of the Alberta oil sands. The budget that year provided an extra $8 million for audits of non-profits. This week, a coalition of non-profits including the writers' group PEN International and members of the Canadian Council for International Co-operation was formed to demand explanations from CRA.

A similar case arose in the U.S. when right-wing groups opposed to the Obama administration formed the impression that the Internal Revenue Service was targeting them in order to silence them. Lois G. Lerner quit her post at the IRS after congressional investigators unearthed her intemperate emails about conservative non-profit groups. The IRS has simplified its process for registering small non-profits to make life easier for them.

In Canada, Revenue Minister Kerry-Lynne Findlay has repeatedly said the government gives no instructions to the CRA about which charities to audit -- but that is hardly the point. Joe Oliver's public complaints and the provisions in the 2012 budget made the government's views abundantly plain. The non-profits that are now feeling the pressure are left-wing critics of the government, not right-wing bodies. It is possible that all the cheating is being done on the left and none on the right, but that would be surprising.

The New Democrats in Parliament have asked for a summer meeting of the Commons finance committee to discuss the auditing of charities. That could be a way of publicizing the grievances of non-profits, but it is not likely to cast new light. Parliamentary committees have no professional investigative staff and no power to extract information from government departments. The revenue minister and her staff will repeat their protestations of innocence and the essential question will remain unanswered.

That essential question is whether the government is using its investigative powers to intimidate its political adversaries while going easy on its political allies. That would be an intolerable abuse of power. The sequence of events raises a legitimate suspicion. Recent U.S. experience suggests that tax authorities may not be above wielding their powers to serve their political masters. But just because people complain of persecution doesn't prove they are being persecuted. They may just be cheaters who got caught.

The Auditor General of Canada has the power, the staff and the skills to find out if the CRA's powers over non-profit groups are being abused. The auditor general should review the CRA's treatment of politically active charities and its selection of audit targets and let the country know what to make of the complaints. In the meantime, the CRA should go about its business as best it can in the murky world of charity enforcement. It should review its own performance and select audit targets in a way that is visibly even-handed.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition August 13, 2014 A8


Updated on Wednesday, August 13, 2014 at 7:46 AM CDT: Adds photo

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