“Accounts receivable are not very important to this government” says Hughes
Algoma-Manitoulin-Kapuskasing MP Carol Hughes
Anyone in business knows that when money doesn’t come in the venture won’t last long. This critical point seems to escape the minds of Conservatives who have allowed uncollected tax to balloon under their watch. It is hurting Canada and punishing those who play by the rules.
Since the Conservatives took power in 2006, the uncollected tax debt has increased by 60% which adds up to $29 billion dollars. At the same time the budget of Canada Revenue Agency (CRA) tax collectors has been cut indicating the missing cash isn’t a problem for the government.
About 10% of the total tax debt is written-off each year. These are taxes the government knows has gone unpaid by individuals and corporations. This doesn’t include the unknown amount hidden in offshore tax havens, but the Conservatives cut the budget for investigators looking for offshore tax cheats too. This leaves them with the distinction of being consistent on this front in a rather unflattering way.
Still, most people play by the rules with 94% of individuals and 90% of corporations paying their taxes on time. Greece’s financial woes illustrate what happens when people make a sport of tax avoidance. That country has gone through the ringer and bailouts coupled with stringent International Monetary Fund controls are the new normal for the cash-strapped country. Why would we want to allow a similar problem to grow in Canada? But the trend is growing.
While this as a significant problem, it isn’t exactly new. Unpaid taxes are rising in recent years, but Auditor General (AG) reports from 1994 and 2006 showed uncollected tax debt increasing steadily under Liberal and Conservative Governments. Now the most recent report from April tells us the unpaid tax debt is increasing faster than the tax debt being collected.
On top of that the CRA is not conducting danger of loss reviews for accounts over $10 million. This means that a company or individual could be disposing of assets instead of paying their tax debt. Also, indiscriminate cuts to all ministries took $68 million from the department responsible for collecting tax debts by 2015-16 which amounts to more than 100 full time equivalent jobs cut.
The CRA can only collect a debt up to 10 years after assessment. In March 2014, the first debts will start to expire, but the AG report reveals that it is unlikely that the CRA will be able to respond quickly enough to collect on many of these debts.
The Conservatives’ failure to collect tax debts means that more of the cost for financing government programs is shifted onto the backs of hard working Canadians who pay their taxes. Instead of collecting tax debt in a smart and efficient way which includes bringing in a risk-scoring system to maximize revenue recovered, the Conservatives are starving the only outfit that can do anything about the problem. They should be investing additional resources to recover lost revenue – but they cut instead.
Conservatives like to call themselves ‘strong economic managers’. Maybe that’s one of those ironic nicknames, like when you call a big guy ‘Tiny.’
