Canada’s record on finding tax evaders is dismal

Only a week after the so-called Panama Papers burst into the media spotlight early last month, the Canadian government issued a news release vowing to “crack down on tax evasion and tax avoidance.” The leak of a staggering 11.5 million documents from a Panama City law firm promised to reveal as never before the inner workings of tax havens from Switzerland to Cyprus to the British Virgin Islands—and Ottawa at least appeared to be taking decisive action.

Pledging $444 million in new money for the Canada Revenue Agency, the governing Liberals suggested the beefed-up CRA would soon be running down Canadians in the ranks of high-rolling tax evaders who can afford the elite, illicit financial services exposed by the Panama data. “These wealthy Canadians,” the news release said, “should not be able to buy their way out of paying the income tax that they owe.”

Read: Ottawa politicos investigate KPMG offshore tax plan

Despite the timing, the news release wasn’t, in fact, a direct response to the Panama Papers. Finance Minister Bill Morneau had earmarked extra money for the CRA back in his March federal budget. Still, given the fresh outrage over tax evasion, Liberals must have been hoping to earn some applause from experts who have long criticized the federal government’s lacklustre record when it comes to catching and convicting big-time tax evaders.

But from those who know the system best, the response was tepid. “Overall it’s positive, but it’s not really new,” said law professor Geoffrey Loomer of Halifax’s Dalhousie University, who works with an international network of academics on tax issues. David Chodikoff, a prominent tax lawyer at the Toronto firm Miller Thomson, warned honest taxpayers not to get their hopes up about seeing cheats behind bars anytime soon. “The real question is how long will it take to do more,” Chodikoff said, “and my guess is it will take years—not months, not a year, but years.”

Read the full story at Advisor‘s sister magazine, Macleans.ca.

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