Measuring the Tax Gap: International Experience and Opportunities for Canada

​Closing Ottawa’s Tax Gap Not a Silver Bullet Post-COVID

• Canada Revenue Agency efforts to close the tax gap between paid and unpaid taxes could raise an estimated $3 billion in added revenues for Ottawa’s coffers, but would not be enough to negate the need for increased taxation to deal with Canada’s COVID-induced debts.
• Pierre-Pascal Gendron and Richard M. Bird examine the “compliance gap,” which includes not only tax evasion and avoidance, but also intentional or unintentional taxpayer errors, as well as, in some cases, unpaid and even uncollectible tax liabilities. The authors find that with extra resources and enforcement effort the Canada Revenue Agency could net about $3 billion.
• With the federal government projecting swelling budget deficits in the Fall Economic Statement and then the 2021 Budget due to pandemic relief measures, the debate is shifting to the revenue raising measures needed to pay for them. However, “closing the tax gap should not be considered a silver bullet to deal with burgeoning federal debt,” notes Richard Bird, an eminent tax scholar.