01/22/2016 11:39 EST | Updated 01/22/2017 05:12 EST

Is Canada's Financial Cupboard Really Bare?

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3D render of piggy bank with Canadian flag

As we embark upon another year and our shiny new Liberal government gears up its legislative plans, it's becoming all too apparent that there just isn't enough cash to go around.

The Liberals' primary planned revenue generator is the increased tax rate for Canadians in the upper income tax bracket but it's coupled with a one-and-a-half percent cut for middle income earners. They originally claimed that these measures taken together would add $3 billion to the federal coffers. However, they're already backing away from that rosy prediction.

Maybe the Liberals' tax rate changes will only yield an additional one or two billion dollars. What then? More debt or, as is more likely, a plea to tighten our belts and forego some of those fancy new programs promised us mere months ago.

However, it doesn't have to be an either-or situation. There's plenty of money available to fund everything from daycare to infrastructure repair. It's just a question of whether the current government has the courage to take the necessary steps to go after the untapped sources of revenue.

First off, forget the middle class tax cut. Everyone has to chip in and do their part. Leave the middle bracket rate as it is and increase the upper bracket rate as planned. Then maybe the promised $3 billion will reappear in this year's budget.

But perhaps we wouldn't have to tinker with the tax rates at all if the government would go after taxes that some folks should have been paying all along. There are millions of tax cheats in this country working in the so-called underground economy where service providers take cash in order to avoid the GST and income tax.

I'm sure you know one or two of these folks and probably don't give their illegal actions a second thought. So many people do it, you figure, that it can't be that bad. Yet those billions of dollars foregone have to be made up by the rest of us.

The problem is that the Canada Revenue Agency has been starved of funds and thus is unable to adequately chase down all these reprobates. Typically a CRA auditor can bring in many times his or her salary in penalties and foregone tax revenue. The simple solution would therefore seem to be to hire hundreds more auditors to track down and collect the revenue due us.

A related issue is CRA's inability to effectively go after the big time tax cheats, the millionaires who hide their money offshore with impunity. CRA was recently able to track down some of these cheats who were benefitting from sham transactions funneled through the Isle of Man by the supposedly reputable firm KPMG. Think how many more tax-evading crooks the CRA could catch if only the government would give them the tools and manpower to do so.

Given the high-powered legal and accounting talent that the wealthy can employ, it's probably no surprise that they often pay far less in tax as a percentage of income than the average Canadian. Take, for example, the $3 billion Bronfman trust. It was given a 21-year tax exemption back in the early 1970s when the current Income Tax Act was implemented.

After 21 years, the trust was supposed to pay tax on its deemed capital gains. Instead, thanks to political influence and over CRA's objections, the trust was granted an exemption to move the money to the United States and avoid approximately $800 million in tax. Who knows how many billions of dollars of revenue have been foregone over the years in similar situations?

There are lots of other things the government can do to increase tax revenues. For example, they could eliminate the differential tax treatment of dividends and capital gains. They could also eliminate the tax credit for charitable contributions.

After all, why should a real estate flipper's gains or a coupon clipper's income only be partially taxed when the proceeds of hard labor are fully taxed? And why should some of us indirectly subsidize the charitable donations of others, particularly those gifts in kind so beloved by the well-to-do?

I suspect that if all of these measures were implemented and all Canadians were obliged to pay what's owing, we would have billions and billions of extra revenue that could not only fund our needed programs and infrastructure repairs but could also make a significant dent in our national debt. The cupboard's not bare; the only thing lacking is political courage from the government of the day.