September 2018

A survey of auditors at the Canada Revenue Agency (CRA) has revealed that the vast majority believe Canada’s tax system favors the wealthy.

Nine out of 10 of the auditors and tax professionals polled agreed that corporations and wealthy Canadians find it easier to avoid paying taxes than the less well-off. The majority of respondents also suggested the government needs to enforce tax laws more strictly to tackle this issue.

However, the poll, which was sponsored by the union that represents tax professionals working at the CRA, received widespread criticism for being unreliable, as the respondents were all civil servants.

Kim G C Moody, the director of Canadian tax advisory at Moodys Gartner Tax Law, said, “A non-biased poll would have polled all stakeholders — practitioners, academics, bureaucrats, non-profit members, etc. — and not just union members.”

“Most auditors have very, very limited tax knowledge or education other than CRA provided,” Moody continued.

The Professional Institute of the Public Service of Canada (PIPSC), the largest union representing scientists and other professionals working for the Canadian government, conducted the survey with 1,741 tax professionals and auditors at the CRA.

PIPSC president, Debi Daviau, used the survey results to pressure the government to increase CRA funding. According to Daviau, tax auditors face a lot of pressure ensuring Canada’s tax system “remains fair in the face of off-shore tax havens and other tax avoidance schemes.”

The agency has operated on a slimline budget, $500 million less than in 2012, since the former Harper government cut spending.

A spokesperson for PIPSC insisted the union always maintained ethical standards. “All of our auditors need to have either a CPA designation or equivalent education, so they are indeed professional accountants,” he said. “Generally speaking, PIPSC auditors look at corporations and the most complex individual files, as well as leading teams that may include members from both groups.”

The Canadian national broadcaster, CBC, also came under heavy criticism for media bias for backing the poll’s findings on the topic of tax avoidance and evasion. The headline, “Most CRA auditors polled say Canada's tax system is skewed to protect the wealthy,” published online by the CBC on August 17, 2018, attracted particular backlash. Some commentators labelled the reports ‘fake news’ while others described CBC as socialist-controlled media.

Regardless of the poll’s findings, the Chartered Professional Accountants of Canada (CPA Canada) recognizes that the Canadian tax system needs improvement. “CPA Canada also believes there must be a full review of Canada’s tax system to make it simpler, fairer and more competitive.”

An Environics Research poll, also sponsored by the union, found 79 percent of respondents agreeing that “it is easier for corporations and wealthy individuals to evade and/or avoid tax responsibilities than it is for average Canadians.”

The public opinion results are based on the views of some 1,000 respondents who were telephoned between July 3 and 8. The results are considered accurate within plus or minus 3.2 percentage points, 19 times out of 20.

In general, the wealthy have more resources at their disposal to seek advice about navigating loopholes, such as offshore tax havens. More often than not, these creative accounting practices are extremely complicated. For the authorities to keep up, they must unravel the paper trail.