With mounting skepticism about whether Canada's wealthiest people are cheating on their taxes, the Canada Revenue Agency said it's planning to recover billions of dollars from tax cheats, while keeping them guessing about where it might look next.
The plan would see the government increase spending on audits and operations at the tax agency by $444.4 million over five years — estimating that this would allow it to recover $2.6 billion in lost tax revenues over that period of time. The money would also allow the agency to hire 100 new auditors to tackle "high-risk multinational corporations" and increase its annual review of high-risk taxpayers from 600 to 3000 per year.
"Today we are announcing what the previous government never had the courage to do," said Revenue Minister Diane Lebouthillier at a news conference. "Our government knows that what really counts is not how much we are investing, rather than how the money will be invested and that the results be made public. Canadians expect no less."
Lebouthilier announced the details after a major leak to a team of international journalists of the Panama Papers — a collection of documents from a Panamanian law firm that revealed how rich and powerful people from around the world were using shell companies to avoid taxes.
She added that the Canadian agency would also participate in an international meeting later this week to discuss revelations from the Panama Papers, noting that tax evasion is also a global problem that requires all countries to work together. Some of the tax avoidance practices are legal and could only be stopped through major international reforms.
Agency officials said that they would focus part of their new investigations on Canadian holdings in the Isle of Man and three other jurisdictions used by wealthy people to avoid taxes. The agency said it did not want to name those locations in order to keep tax cheaters guessing. The Isle of Man was flagged in a recent tax avoidance scheme that involved accounting firm, KPMG, a recent CBC News investigation revealed.
Lebouthillier declined to provide any updates on the ongoing court proceedings related to the case, but said she had confidence in staff at the agency.
"I've been touring the different offices in the agency for six months, and I can tell you that I have confidence in the people working there and those around me," she said. "We have an obligation to deliver results. I have full cooperation from all the people who are working with me."
She also set up a new advisory committee to come up with new solutions to address and discourage offshore tax cheating. The committee would also have a mandate to explore how the revenue agency can improve its criminal investigations. Lebouthillier added that Prime Minister Justin Trudeau's Liberals pledged in the 2015 election campaign to fix gaps in the Canadian tax system and that she was delivering what she was asked to do in her mandate letter.
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