Canada Revenue Agency’s (CRA) new snitch line, known as OTIP, for Offshore Tax Informant Program, has proved to be a success beyond the wildest dreams of the dreariest government bean counter.
By the end of May, nearly 1,000 Canadians have dropped a dime on their fellow tax evader, captured by the siren call of potentially cashing in on someone else’s fiscal misfortunes. The new tip line offers a cash reward system that could have the government forking over up to 15 per cent of the amount in taxes the agency eventually collects.
But that’s only if CRA successfully collects more than $100,000 in taxes owed. A similar program in the U.S., which pays rewards as high as 30 per cent, recently saw one tipster take home $104 million after the Internal Revenue Service collected on $5 billion hidden away in Swiss banks.
Casual Canadian snitches waiting on the line for a quick payoff by turning in a friend, neighbour, or employer will probably start to dry up once the CRA’s tip line has become more established, and tipsters learn they will need to reveal their identities to get their personal paws on some public taxes.
Banking on the time-honoured premise that money talks and less attractive things walk, CRA appears to have hit on a scheme that might actually be successful in bringing to light billions hidden in illegal or semi-legal tax havens overseas.
The previous system appealed to the somewhat mythical idea of the socially-conscious citizen standing up and zealously pointing out Canada’s tax criminals without a thought toward personal gain.
While that idea might help us to view our fellow citizens the way we would like to think they really are, unfortunately reality can be a harsh taskmistress. Perhaps not surprisingly, relying on the proverbial Dudley Do Rights of the nation to fork over juicy tips based on nothing but their duty to queen and country was proving to be a significantly less than efficient approach to dealing with wealthy tax evaders.
Taking to task some of Canada’s richest white-collar offenders — those individuals who apparently feel that the public cut of the millions or billions they earn annually is too much — is probably no easy job.
It is hard for the average Canadian to have much if any sympathy for the wealthy tax evader. At the end of the day, no matter how much those individuals make and how much the government wants to take, it is more than likely they will still be wealthy beyond the dreams of your local waitress or gas jockey — those who likely pay their taxes in full, despite a bit of grumbling, good-natured or otherwise.
As with any new idea that appeals — quite rationally, as it usually turns out — to the avarice of the average citizen rather than to their sense of righteous indignation, the morality of offering cash rewards for not turning the other cheek is often viewed as a way to exploit our more base impulses rather than promoting more civic virtues.
Tax evasion is not a victimless crime, despite what some people might think.
While it isn’t exactly rape or murder, when wealthy tax evaders salt away billions in unpaid taxes overseas, it only increases the tax burden on those who can least afford it, squeezing more dollars out of the pockets of lower class wage earners across the country because white collar criminals want more than one yacht this year, or need to take an extra long holiday in French wine country.
Whether or not CRA is taking advantage of people’s greed to bring tax evaders to justice is a worthy question for the think-tanks, politicians, policy makers, or representatives of the moral majority. It is, perhaps, morally questionable to encourage one to turn in his fellow man because he covets his neighbour’s wealth and possessions.
On the other hand, what is morally questionable and what achieves successful results are often two very different things. If the CRA’s new tip line helps bring in billions in illegally hidden money to hard-pressed federal coffers, it begs the question if in this case, the ends really do justify the means..