OTTAWA – Canadian individuals and businesses owe $25 billion in overdue taxes to the federal government, newly released figures show – enough to pay off more than half the national deficit if the money were collected.
The tab for overdue taxes has been climbing in recent years, according to the Canada Revenue Agency. The $25-billion figure, the amount owing as of March 31, represents an increase of more than 35 per cent over the total owing five years ago, when overdue taxes stood at $18.5 billion.
Figures tabled last week in the House of Commons also show the Canada Revenue Agency wrote off $1.9 billion in taxes as uncollectible in the most recent fiscal year. Such write-offs have been relatively stable in the past five years.
The battle against delinquent taxpayers comes as the Conservatives look for ways to tackle the federal deficit, which is projected to hit $45 billion this year.
A Canada Revenue Agency spokesman emphasized that the overdue-taxes tally is a "snapshot" that reflects debt accumulated over several years.
"New accounts are added to it continuously, while others are collected in full and some are written off," spokesman Noel Carisse said in an emailed statement.
The amount of overdue taxes represents a relatively small fraction of the roughly $358 billion in taxes and duties processed last year by the Canada Revenue Agency, which employs more than 40,000 people.
Carisse noted the "vast majority of Canadian citizens and businesses pay their tax obligations when due."
Last year, the agency collected more than $27 billion in debt owed, and it anticipates the vast majority of debt currently owing will be collected, he said.
The agency’s internal numbers show that individuals pay on time at a rate of 93.7 per cent, while corporations meet the deadline in 93.5 per cent of cases.
Nevertheless, the agency conceded in its recent annual report to Parliament that the ratio of outstanding tax debt to taxes paid has been climbing in recent years, from 5.6 per cent to just under seven per cent.
When taxpayers don’t pay by the deadline set in their notices of assessment, the Canada Revenue Agency sends out reminder letters or places calls from the so-called Debt Management Call Centre.
Delinquent taxpayers can also arrange to repay their debts in installments. The agency contacted roughly 100,000 taxpayers between Nov. 2 and Dec. 10 to remind them to pay their installments, said Carisse.
If debtors don’t pay, the government tries to collect through legal action, such as seeking a court order to seize income or property. Last year, $12.5 billion was collected in this manner.
Tax debt that is written off can be reinstated if the debtor’s financial circumstances improve.
Last year, slightly more than 15 per cent of individuals were "non-compliant," meaning they did not correctly report their taxes, in the CRA’s view. But the biggest non-compliance problem is believed be among the self-employed and small and medium-sized businesses, according to the agency.
The agency has a communications strategy that includes the issuing of alert messages declaring that "tax cheating is a crime."
"For Canadians who do comply, communication about what the (Canada Revenue Agency) is doing to combat tax cheating reassures them that we are serious about this matter. For those who are considering not complying or who do not comply, publicizing the consequences of non-compliance may act as a deterrent and lead them to rethink the risk associated with tax cheating," the agency said in its annual report.
amayeda@postmedia.com
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