Transparency, Taxes and the Big Distraction

Geoff Currier and Evelyn Jacks

If Canada’s most famous WWII spy were around today, he might well have been speaking about the federal government's Fall Economic Statement (FES).

Then Finance Minister Chrystia Freeland postponed tabling the document until December 16th, and then she didn’t present it. In essence, she tossed it on the desk on her way out the door.  Aside from the political turmoil that continues to play out, legitimate and serious concerns about the FES are being raised by Canada’s Parliamentary Budget Officer (PBO), Yves Giroux. Here’s why this it’s important for taxpayers to pay attention in the middle of a challenging tax season: 

“Nothing deceives like a document.” William Stephenson (Intrepid)

In the FES the government admitted that the deficit for the 2023-24 fiscal year would be $61.9 billion, higher by 35% over the $40 billion projected. While the numbers themselves are in a stratosphere most taxpayers can’t imagine, those who understand even basic math and a budgeting process overall, can grasp that this is astounding.

The Government explained that away by saying that the extra $21 billion was for “one time contingencies” and that the actual deficit otherwise would have been $40.1 billion. Giroux’s office disagrees, pointing out that revenues were below what had been expected and that, even without the additional $21 billion, the deficit would have been $45.5 billion. Those are the facts.

Of even greater concern is the overall lack of transparency in the FES. Parliament was prorogued immediately afterward so there has been no opportunity to debate the Government’s accounting by the people taxpayers elected to the House of Commons, and there may never be. (We’ll get to that). This should be of great concern to anyone who pays taxes and voters who elect representatives to ensure that money is well spent and accounted for. 

With regard to Indigenous claims, which account for a large portion of the contingencies, Giroux states, "There is a clear and pressing need for additional transparency in the Government process for estimating contingent liabilities…PBO recommends that parliamentarians initiate a study of the contingent liabilities…to rectify current weaknesses.”  He even offers the services of his office to assist with transparency. 

Take the accounting for immigration figures, next, the PBO report is also critical: “Absent a current transparent demographic baseline, the Government's FES forecast is not substantially different from the PBO’s October outlook.” The PBO, in other words, does not believe that the government is being forthcoming with its figures.

That criticism gets even more blunt, though, and this is what really stands out as a concern for taxpayers: “The federal government’s ability (or willingness) to produce high-quality timely financial statements continues to deteriorate….it reached a new low this year.”

The stinging rebuke continues: “As noted ad nauseam by the PBO, the timely publication of the Public Accounts is crucial for transparency and accountability in government finances.” There’s the T word again. Transparency. It’s obvious the PBO does not believe the government is either able or willing to be transparent. 

As things stand, a government can delay the tabling of the Public Accounts until December 31 or within the first 15 days the House resumes sitting. Here’s where we get back to the possibility that the FES may never be debated in the House.

A new Liberal leader, elected on March 9, will soon take over from Justin Trudeau and possibly before Parliament is set to resume on March 24th. If an election is triggered before the 15 days have passed, the current government will have escaped the prospect of having to reveal all of its numbers and to openly debate those figures in the House.

It’s speculation at this point, but the new leader may have some incentive to call an early election, depending on how damaging those numbers could be. An election must be held no later than October 20, 2025 according to the Canada Elections Act, but it may be sooner.

Taxpayers, meanwhile, are stuck grappling with tax law that has featured a roller coaster of complex and expensive provisions - introduced and postponed and contradicted by Finance Canada and the CRA – throughout the year.  All of this threatens the ability for taxpayers to comply with their income tax obligations with certainty, all-the-while facing an enormous burden of proof and the prospect of stinging future tax audits.

And ultimately that’s the Big Distraction. . .in many things, timing is everything.  Will governments be held to as strict a standard as Canadian taxpayers when it comes to the transparency the various tax acts demand? 

Bottom Line: It will be important for taxpayers and their advisors to look up during tax season and pay attention. It might also be a good idea to recommend all future representatives to the House of Commons take Canada’s Income Tax Fundamentals Course, if they are going to spend and tax wisely.

Stay tuned weekly to Knowledge Bureau Report for continuing coverage of breaking tax and economic news and tune in to a new podcast- Real Tax News You Can Use with Evelyn Jacks and host Geoff Currier: podcast@knowledgebureaureport.com

Additional Educational Resources.  DMA Personal Tax Services Specialist and Corporate Tax Services Specialist Programs.