In Harper's Canada, charities face intimidation while tax evaders go free

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As its website notes, "PEN Canada envisions a world where writers are free to write, readers are free to read and freedom of expression prevails."

With goals like those, no wonder the little charity has found itself in the crosshairs of the Harper government.

Earlier this week, PEN became the latest charity to face a massive tax audit as part of a sweeping clampdown that appears aimed at intimidating groups critical of the Harper government.

PEN had the audacity to criticize the government for muzzling scientists in the civil service, and for spying on Canadian citizens alongside U.S. intelligence agencies.

But the little org, which includes iconic Canadian literary figures like Margaret Atwood and Yann Martel, insists it won't be deterred by the audit.

"I refuse to let it have a chilling effect on us," PEN president Philip Slayton told The Canadian Press. "We are not going to have some kind of fear … stop us speaking out on issues."

The writers at PEN have a long history of defending free speech in the face of intimidation from repressive governments around the world. You just don't expect them to face intimidation from the Canadian government.

PEN now joins Amnesty International, the David Suzuki Foundation, Canada Without Poverty, the United Church and other groups that, having criticized an array of Harper policies, have been obliged to devote precious resources to defending themselves from a special probe of charities ordered by the Harper government.

This beefing-up of tax audits of charities is particularly striking when compared to Harper's laid-back approach to auditing the real bad guys: corporations and citizens using offshore tax havens to cheat the government out of billions of dollars in revenue.

Indeed, the allocation of an extra $13 million to carry out audits of charities has taken place even as the government slashes the overall Canada Revenue Agency (CRA) budget by $250 million over three years and lays off hundreds of auditors.

Meanwhile, as worldwide pressure has grown for a clampdown on tax havens, Ottawa announced last year that it was ramping up its efforts to investigate offshore tax evasion. But it only allocated $15 million -- over five years -- a piddling amount, given the existing departmental cuts and the sheer scope of the offshore problem.

The illegal caching of money offshore by Canadian companies and individuals results in an annual revenue loss to Canadian governments (provincial and federal) of about $7.8 billion, according to Dennis Howlett, executive director of the Ottawa-based Canadians for Tax Fairness.

This inevitably leaves law-abiding Canadian taxpayers facing higher tax bills -- and leaves big holes in government coffers.

A more economically prudent government would see tax auditors as a good investment -- particularly when they're assigned to international investigations, where the real money is. An estimated $32 trillion is held in offshore tax havens around the world, according to the U.K.-based Tax Justice Network.

In Canada, an experienced international tax auditor typically costs Ottawa about $100,000 a year, but brings in ten times that amount in revenue, according to sources.

Internal CRA documents, obtained under access-to-information by Sen. Percy Downe, reveal that an infusion of $30 million by Ottawa in 2005 to counter "aggressive international tax planning" resulted in the collection of an extra $2.5 billion over four years.

By contrast, putting extra resources into auditing charities will almost certainly produce no additional revenue.

The government says its aim in auditing charities is to ensure they comply with rules governing political advocacy. It insists it does not intervene politically in the choice of charities audited.

However, the Conservatives certainly sent strong signals -- presumably noticed by senior CRA bureaucrats -- about which kinds of charities they wanted investigated. Former environment minister Peter Kent said the government was concerned that environmental groups were using "foreign funds" to promote foreign interests. And Conservative Sen. Nicole Eaton, making similar allegations, launched a Senate inquiry into foreign money in Canadian environmental charities.

The large number of outspoken organizations among those audited -- including environmental groups opposed to Harper's pipeline plans -- has fuelled suspicions the government is using the audits to harass some of its most effective critics, prompting the NDP to call for an independent probe.

Certainly, the Harper government is making life miserable for struggling charities like PEN, which, with a meagre budget of about $240,000, tries to defend free speech around the world.

So while there aren't enough auditors to go after many of the wealthy Canadian corporations and individuals hiding money offshore, the government managed to find two auditors to spend three days this week at PEN's little Toronto office -- the beginning of an audit that will go on for many months.

The Harperites may be inept at using audits to collect vast sums of revenue hidden by the rich -- but they sure know how to beat up on defenceless groups trying to promote the public good.

Winner of a National Newspaper Award, Linda McQuaig has been a reporter for the Globe and Mail, a columnist for the National Post and the Toronto Star. She was the New Democrat candidate in Toronto Centre in 2013. She is the author of seven controversial best-sellers, including Shooting the Hippo: Death by Deficit and other Canadian Myths and It's the Crude, Dude: War, Big Oil and the Fight for the Planet. Her most recent book (co-written with Neil Brooks) is The Trouble with Billionaires: How the Super-Rich Hijacked the World, and How We Can Take It Back.

This article is reprinted with permission from iPolitics

Photo: John Bristowe/flickr

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