Tax Fraud

In light of the most recent disclosure of the names of individuals and companies who have hidden some of their assets in offshore accounts to prevent paying taxes, it is tempting to go on a rant. It would be all too easy to express displeasure, disgust and surprise at the extensive list of past prime ministers, government advisors, well known Canadians and some of our best known companies who have been found to have, at one time or another, tucked some of their money in offshore accounts. From almost any perspective, the fact that individuals and companies knowingly hide some of their money is at best disheartening. It is not that these individuals broke the law -it appears as if many of them did only what they were allowed to do under Canada's tax laws- but rather that they made their own (or their stockholders) profit a priority. It would be so easy to condemn these people.  Every Canadian should willingly declare their full income to Revenue Canada. Everyone except for me and you and I am not too sure about you....

I have written before about the tendency of Canadians to raise their eyebrows in horror at the duplicity and dishonesty of our politicians and of big business. I have suggested that by us doing so - we are demonstrating what hypocrites we are. We expect everyone else to not just follow the law, but to do the right thing even when it hurts our bottom line.

Every spring, Canadians sit down and try to maximize, for their income taxes,  their deductions. We gather up our charitable and medical receipts; we try to find ways of writing off the costs of having children and we dig through our glove boxes, the pockets of our jackets and coats and our desk drawers looking for receipts to justify us writing off business or car expenses. We borrow money to invest in RRSPs and some even hire accountants to make sure that we have not missed a single opportunity to pay less income tax. If the government even suggests that they want to take away a deduction or two, it is front page news for weeks. Even when we do file our income tax forms, it turns out that some Canadians are not paying what they say they owe. In the April 17, 2016 edition of the National Post, it was reported that Canadians (both individuals and companies) owe Revenue Canada 38 billion dollars in past income tax. While a substantial chunk of that might be corporate tax, the amount the private Canadians owe is surprising.  So while we complain about the wealthy hiding their money ( and we should), we need to be sure that we too are paying our full share.

And we know that many Canadians are not following the rules. I had a repairman out last week to check why my fridge was not turning off. He looked at it, told me what the problem was and that it could not be fixed. We talked for a bit and then I asked how much - he said are you paying cash? I said "yes" - he said "$50.00" (on the phone, I was told that that the service call was  $72.00) After he left I realized I had not gotten receipt. My guess that money will never be reported. This sort of under the table payment happens frequently. While most of my fellow vendors at the farmers' market are very careful to keep track of their sales, I know there are some who never report that income. I would suspect that there are thousands of individuals and small companies that just do not report all of their income. in fact the Ottawa Citizen on February 4, 2016 reported that Statistics Canada estimates that every year 2 billion dollars is bled off of the economy by the underground economy.

I am not suggesting that it is okay that wealthy Canadians or large corporations hide some of their income in offshore accounts to avoid paying taxes. For those who have clearly broken the law, we need to charge them and ensure that they face significant consequences. For those who have followed the letter of the law but ignored the spirit of the law, we need to ensure that the expectation that all Canadians will declare all of their income is made absolutely clear.

Yes - we should rant and rave over the rich folks hiding their money. We should demand that our government pursue these individuals and corporations to the fullest extent possible. But we also need to look to our family, our neighbours and most of all to ourselves. It may seem absurd to argue that the rich person who is hiding millions of dollars is no worse than the person who is only hiding a hundred dollars - but it so much more effective to act righteous when we are following the rules we expect others to follow.