Public Servants ‘blow the whistle’ on tax system shortfalls
OttawaCitizen.com – News/Politics+PS
December 13, 2015. Kathryn May, Ottawa Citizen
More than two dozen tax auditors, fraud investigators and managers at Canada Revenue Agency appear to have breached their code of ethics by contributing to a major report on political meddling and other problems plaguing Canada’s tax system, which they claim cost billions in uncollected revenues.
The “insider” report by Canadians for Tax Fairness was built on a series of secret one-on-one interviews with 28 current and newly retired tax agency employees who oversee audits of complicated international companies. The interviews were done during the election campaign.
“The picture that emerged was of an organization struggling to carry out its function in the face of government mismanagement. This includes major budget cuts, a poorly conceived restructuring effort, and targeting those who make tax filing mistakes rather than prioritizing big time tax cheats,” concluded the report.
The public servants interviewed claimed politicians and lobbyists influence the agency’s operations, corporations successfully lobby to avoid prosecution, and there allegedly is political interference in audits to stop investigations.
They also complained about the impact of reducing or shutting down enforcement offices across Canada. Seasoned colleagues are often poached for higher paying jobs at legal and accounting firms, they said, and many felt unable to carry out their professional responsibilities.
It’s highly unusual — if not unprecedented — for public servants, who are supposed to be both loyal to the elected government and non-partisan, to team up with an advocacy group to complain about the government and its policies. The public servants weren’t identified, but they knew their input was central to the report, which calls for an overhaul of the CRA.
Their role raises questions around public servants’ right to complain in the “public interest” about government policies they feel don’t serve Canadians.
Like all public servants, CRA employees must comply with a written values and ethics code. It forbids them to use any “public medium” to make “pronouncements critical of CRA policies, programs, or officials, or on matters of current political controversy where the statements or actions might create a conflict with the duties of your position or CRA programs.”
They are also expected not to say anything about CRA and its operations that isn’t truthful and must ensure anything they do say “does not impair your employment relationship.”
Debi Daviau, president of the Professional Institute of the Public Service of Canada (PIPSC), said the union co-operated with the project, helped to find auditors for interviews, and will represent the workers if the department seeks to discipline them.
PIPSC represents federal auditors and Daviau said the union got involved because its concerns about CRA aligned with the project. The largest union, the Union of Taxation Employees, didn’t get involved, though its president, Bob Campbell, was interviewed.
“This is an area where we share common ground and we will work with (the advocacy group) and anyone else to get there. This was about effective tax collection, not about jobs,” said Daviau.
PIPSC campaigned to defeat the Conservatives during the election, and fixing the problems it perceived at CRA was one of its priorities.
Daviau said the union was particularly concerned that Conservatives closed units responsible for international tax havens and fraud investigations, and rolled the specialists from those units into multi-disciplinary teams that she said have proven ineffective, collecting a fraction of the revenues that the special units did.
Dennis Howlett, executive director of Canadians for Tax Fairness, said he was approached or contacted by CRA employees so often that the organization decided to dig deeper for an insider’s view of what was wrong with the agency and how to fix it.
He said the those still working at CRA knew their jobs could be at stake but were willing to take this risk to blow the whistle on what they saw as serious problems. CRA officials did not respond to a request for comment.
He said he was struck by the fear and frustration of employees who felt the concerns and evidence they presented to the government went unheeded. The Conservatives typically didn’t want or seek public servants’ advice, which alienated many bureaucrats over the years.
“This was at our initiative because so many employees had come forward to me out of the blue; we thought it warranted a more systematic investigation. I think it was an indication of how desperate people were feeling,” said Howlett.”
Howlett said the group went to great lengths to protect the confidentiality of employees and hired a former journalist to conduct the interviews. The organization itself has no idea who was interviewed or how to identify them.
He said employees who alleged political interference in files were encouraged to go public but they refused. They also wouldn’t lodge a whistle-blowing complaint or use the internal complaint process for fear of reprisal. The group even found lawyers to represent them pro bono.
Howlett said he wanted the report released during the election but lawyers feared the government would order an investigation. Public servants face stricter limits on their behaviour during an election period.
Daviau said whistleblower laws don’t provide public servants enough protection from reprisal.
Whistleblower legislation is aimed at protecting public servants who reveal wrongdoings in violation of laws or policies. Allegations of political interference in audits could be investigated as wrongdoing, but most of the report’s complaints are about Conservatives policies and restructuring of the agency and could not be investigated under that law.
“It’s outside the traditional role of public servants to publicly criticize budget cuts, restructuring decisions, the level of experience of ministers, the appropriateness of tax ‘loopholes’ or misplaced government priorities,” said Karl Salgo, executive director of governance at the Institute on Governance.
“These are essentially views of whether the public is well served by government policies and practices and the answer depends partly on one’s political perspective. That’s not the role of public servants.”
But the Liberal government will be hard-pressed to pursue discipline, with its promises for a new culture of open government, respecting public servants and seeking their advice. The Liberals also campaigned on changes at CRA, including a crackdown on tax evasion, a review of tax expenditures and providing data so the Parliamentary Budget Office can calculate the “tax gap” — the difference between money owed in taxes and what’s actually collected
Senate independent Liberal Percy Downe, who has pressed for a crackdown on overseas tax evasion, said he’s not surprised public servants took part in the project. Employees regularly contacted him in his battle to get CRA to calculate the “tax gap.”
He said senior management, not the employees, should be on the hook and accountable for what’s happened to the agency. “Management has a lot to answer for in doing little to protect the erosion of the tax system,” he said.
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Tags: budget, economy, ideology, standard of living, tax
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