03/01/2012 12:02 EST | Updated 05/01/2012 05:12 EDT

Tax Evasion: Canada And Harper Government Letting Overseas Cheats Off Easy, Says Senator


OTTAWA - The federal government isn't doing enough to catch tax cheats who stash money in overseas havens, says a Liberal senator.

Percy Downe said the government has the names of more than 100 people who hold million of dollars in Liechtenstein bank accounts, but hasn't cracked down.

However, Nancy Bishay, a spokeswoman for Revenue Minister Gail Shea, said the government has been diligent in chasing tax dodgers.

The Liberal senator from Prince Edward Island said the Canada Revenue Agency managed to recoup only $6 million in taxes and interest from these people last year.

But Bishay says the agency has gone far beyond that in pursuit of cheats.

"Over the last two years, through audits of Canadian taxpayers involved in aggressive international transactions, the CRA has made great strides," she wrote in an email.

"As an example, in 2009-10 alone, we identified over $1 billion in additional taxes. Compare that to 2005-06 under the Liberals where $174 million was identified."

In his news release, Downe said the government seems to be bending the rules to let some tax evaders off the hook.

Downe adds that at a time when the government is scrambling to deal with the deficit, there's no excuse for letting tax cheats off easy through a voluntary disclosure program.

Bishay, though, said the program has worked by encouraging people to come forward with previously unreported income.

Downe said evaders aren't being punished.

"Not one penny has been assessed in fines," he said of the Liechtenstein cases.

"That is because not one charge has been laid. In the four years since this information has come to light, not one of these Canadians who have hidden their money abroad to avoid paying taxes in Canada have stood before a judge, in Canada or overseas."

Downe, a former chief of staff to Jean Chretien who was named to the Senate by his boss in 2003, says it's a matter of fairness.

"Tax fairness, like justice, must be seen to be done," he said. "Honest, law-abiding, taxpaying Canadians should not have to feel let down by a federal government unable or unwilling to make a serious effort to recoup monies from Canadians who try to avoid paying their fair share."

He said wealthy Canadians have billions secreted in offshore tax havens. They should be exposed publicly and brought to account for back taxes, penalties and interest, he argued.

But Bishay said the government is going after these people.

"We expect CRA to focus on aggressive audit efforts to find money that is hiding in offshore accounts and take the steps necessary to ensure Canadian law is respected."

Also on HuffPost

Photo gallery 7 New Tax Rules That Could Save You Money See Gallery