Ontario abandoning corporate tax collection and audits

OPSEU questions 'bizarre and perverse' move by McGuinty Liberals

Toronto (16 May 2007) – Ontario is surrendering its ability to collect and audit corporate taxes by putting forward legislation that will cost the province millions of dollars a year, says the Ontario Public Service Employees Union (OPSEU/NUPGE).

Bill 174, which cedes control of corporate taxation to the federally-run Canada Revenue Agency (CRA), means Ontario will have no means to independently enforce corporate tax collection and won’t be able to audit companies.

“Right now, Ontario’s corporate tax function is entirely funded by the penalties and interest our auditors find - normally at companies the CRA has already audited,” says OPSEU president Warren (Smokey) Thomas.

“Our auditors recover over $300 million in unpaid corporate taxes every year. Under Bill 174, we won’t have any way to ensure that money is collected. Needless to say, the main beneficiaries of Bill 174 will be corporate tax-dodgers in the underground economy,” Thomas says.

In 2002, Ontario’s provincial auditor found that half of Ontario corporations – over 350,000 – had failed to file the required corporate tax returns.

“The decision to abdicate responsibility for tracking down non-filing corporations is both bizarre and perverse given the McGuinty government’s acknowledgement today of the need to crack down on the underground economy, as reported in the Toronto Star,” adds Thomas.

The union is particularly troubled by the issue of tax allocation, which determines provincial tax bills for corporations that operate in more than one province.

“Alberta and Quebec would never give the federal government control over provincial corporate taxes, and we shouldn’t either,” notes Thomas.

“Bill 174 means we’ll have nobody standing up for the rights of Ontario taxpayers, and this can only have a negative effect on the money we have available to fund the public services we all depend on.”