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Revenue Minister steps back from claim Ottawa is close to recovering $25-billion in unpaid taxes

Minister of National Revenue Diane Lebouthillier rises during question period in the House of Commons, in Ottawa, on Oct. 30, 2017.

Adrian Wyld/THE CANADIAN PRESS

Revenue Minister Diane Lebouthillier has dialled down her claim that Ottawa is close to recovering $25-billion in unpaid taxes, stating instead that is the amount of lost revenue that the Canada Revenue Agency has identified and hopes to recoup from tax cheats.

The opposition has been hounding the federal government on the issue of tax evasion and aggressive tax avoidance since the release last month of the Paradise Papers. The leak of confidential legal and financial records showed that chief Liberal fundraiser Stephen Bronfman had had financial dealings with a trust set up in the Cayman Islands.

Ms. Lebouthillier responded to the attacks by vigorously defending the government's effort to crack down on tax evasion and tax avoidance, arguing the CRA had already reaped the benefits of hiring hundreds of additional auditors.

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"Over the past two years, we have invested nearly $1-billion to combat tax havens. This investment has helped our efforts to recover nearly $25-billion," Ms. Lebouthillier said in the House on Nov. 6.

In response to another question that day, she added: "Our efforts have borne fruit, as we are about to recoup $25-billion."

However, the NDP seized on a news report in Monday's edition of La Presse, a Montreal media organization, that the CRA could not confirm that these amounts had actually been recovered from taxpayers or even estimate how much money would eventually be paid back.

"Nobody knows where that number is coming from," NDP MP Alexandre Boulerice said during Question Period. "Does the minister know that there is a difference between identifying an amount and recovering that amount?"

Ms. Lebouthillier responded by stating that the unpaid taxes were found by auditors and that work was under way to recover the money.

"The CRA has an efficient recovery process, which has been strengthened by our historical budget increase of 2016," she said. "We are on the road to recovering $25-billion based on the auditing work that was undertaken over the previous two years. All companies and individuals involved have been advised of the changes and new notices of assessment have been issued."

Revenue agency officials pointed out to The Globe and Mail that, in 2016-2017, the CRA recovered the equivalent of 96 per cent of all new debts accumulated by taxpayers that year. Still, they acknowledged the recovery process can take time if cases go to court.

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In an interview, Mr. Boulerice added that one of the problems with tax evasion and aggressive tax avoidance is that the transactions are often legal under the current regime. As such, he said, Canada should be reviewing its treaties with tax havens around the world.

"We're at the point where we need to change the country's laws," Mr. Boulerice said.

First reported in Canada by the CBC and the Toronto Star, the Paradise Papers raised questions about some of the financial arrangements of two families with strong ties to the Liberal Party of Canada, the Kolbers and the Bronfmans.

Leo Kolber, who is now retired from the Senate, was the top fundraiser for the Liberal Party when Pierre Trudeau was prime minister. Mr. Bronfman has occupied the same position for the Liberal Party under the leadership of Justin Trudeau.

According to the Paradise Papers, Mr. Bronfman and his family's Montreal-based investment company, Claridge Inc., were linked to an offshore trust in the Cayman Islands that was set up by Jonathan Kolber, Leo's son, who left Canada to live in Israel decades ago.

Mr. Bronfman issued a news release after the Paradise Papers came to light to state that his only interaction with the Kolber Trust was a loan made more than 25 years ago, repaid within five months, "in full compliance with all legal requirements, including with respect to taxes."

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"Stephen Bronfman has never funded nor used offshore trusts. His Canadian trusts have paid all taxes on all their income to the Canadian government," said the statement.

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