LETTER TO THE EDITOR: Tell them you’re upset

Opinion

Hey there, time traveller!
This article was published 13/03/2023 (555 days ago), so information in it may no longer be current.

Let’s be “that country!” The country that really means it when we say we want the best health-care system, the best education system, top-notch law enforcement and fire departments and so on. We should take pride in how our country has been committed to, and how it has been providing public “social” program services.

Now, of course, our social infrastructure is showing signs of cracking, and we are told that a lot of the trouble has to do with the system being underfunded!

So, when I came across a report by Canadians For Tax Fairness, published Feb. 7, I got very upset. In this report, there are two concepts that I found very disturbing. The first is “tax gap.”

So, what is a tax gap?

Tax gap is defined as the difference between how much a taxpayer actually pays in taxes, and how much they would pay at the statutory tax rate — the rate stipulated in the tax code.

It is the difference between monies that would be paid if all obligations were fully met in all instances and monies (taxes) that were actually paid and collected.

My concern would be, how can that happen? A tax gap? We hear about “lack of government funding” all the time, and that this lack of funding seems to be right across the board.

Affecting health care, education, infrastructure — roads, water treatment plants, public services — police, firemen, public health inspectors, etc.

So, simply put, taxes are not being paid and, if I can quote the Canada Revenue Agency: “Understanding how and why taxpayers are non-compliant is critical to help preserve the integrity of the tax system and to protect Canada’s revenue base, which supports programs and benefits that improve the quality of the life of all Canadians.”

It is explained that the tax gap results from three forms of tax avoidance: the use of deductions and tax credits; the use of sophisticated tax planning; and the evasion of taxes. Just to give you some perspective, the Canadians For Tax Fairness report states that: “In 2021, the combined tax gap of Canada’s 123 largest corporations jumped to $30 billion.” And that was during the pandemic.

Now, the second “concept” in the report has to do with the Canadian Emergency Wage Subsidy (CEWS). In March 2020, the federal government introduced this program to help and encourage businesses to retain employees during the pandemic.

I remember thinking, isn’t it great that our government is stepping up in this way to provide help to people in great need during these very trying, pandemic times? This publicly funded (tax dollars) program helped keep many workers attached to their jobs.

Great news!

However, it turns out the conditions for applying for and receiving CEWS were both broad and overly lax. So, get ready for this: some of Canada’s largest corporations received monies from the CEWS program while boasting profits, avoiding billions of dollars in taxes and making the corporation’s shareholders richer. And, take a deep breath, some of the companies actually cut back on their employment.

In the government’s defence, my assumption is that in those horrible times, they would have made a program like CEWS “easy” to access for those it was intended for.

In the report, Canadians For Tax Fairness looked at 74 publicly listed companies that were found to have a tax gap greater than $100 million. Now, just to clarify, these companies found a way to not pay the tax they “should have” to the tune of $100 million each.

That makes me upset.

And, of those 74 companies, 37 of them received CEWS. These 37 companies collected billions of dollars in profit during — yes, during — the pandemic.

The report also found that while receiving wage subsidies (CEWS), most of these companies actually reduced employment in 2020. Doesn’t that make you upset?

I agree with Katrina Miller, executive director of Canadians For Tax Fairness, when she states: “Canada needs a windfall profit tax for all large corporations to recover some of the funds and recognize, that corporations that profited during the pandemic, need to give some back for our recovery.”

What about the tax gap? Wealthy individuals and corporations are not paying their “fair share.”

In the report, there are several policy recommendations to recover corporate tax revenue for public good (remember health care, education, police, firemen, roads, etc.) in addition to other ways to decrease or maybe even get rid of the tax gap. These are:

1. A windfall or excess profits tax

2. A minimum book profits tax

3. Increase the corporate tax rate from 15 to 20 per cent (they are only paying 15 per cent?)

4. Close tax loop holes. For example, the way capital gains are dealt with

5. End tax agreements with places to “hide their money,” called tax havens

6. Make public reporting of corporate income and tax mandatory.

What we can do is make sure that our leaders (our MLAs, MPs) are aware of how upset we are about this and “we want something done.”

It’s only fair!

SCOTT BLYTH

Brandon