Cheaters

Anne and her squeeze had a deer fence built at their summer place this past winter. The job was fine. Paying for it turned controversial.

“I received a price for completion by text,” she tells me. “I asked for a proper invoice, and was refused…. Along with the explanation ‘If you get my drift’”.

Yes, the fencing guy wanted to be paid in cash. With no record the work had ever been done.

“I was shocked and wanted to correct the situation… My husband said, “Don’t rock the boat, just pay the bill”. So I did, by e-transfer…..  But I will never ask him / them to do work for us again… but that doesn’t solve the national problem. There used to be an anonymous snitch line. Is there still one?”

Last week when we all discussed rock-licking bullion lovers on this pathetic blog, several posters suggested gold is great for making money and evading taxation. After all, you can just hand it to your kid.

Of course, it’s not that easy. Like all investment assets, gold must turn into cash to be useful in financing life. That act is a taxable one, with the capital gain assessed. The same for gifting your rocks to someone else. Also a taxable event. And, yes, eventually they’ll catch up when the cash exchange happens.

Anyway, during that convo I mentioned that holding gold to escape tax is evasion. Not only is that illegal, but it’s amoral, unethical and unjustifiable.

Anne like that sentence. “I am trying to find a quote from your excellent writing on those who do not charge taxes and work under the table,” she says. “Not only do I want to memorize the quote, I would like some “Garth methods” of explaining to a workman bidding on a job, that I will not hire him because of his stance on taxation.”

The best guess is that roughly $40 billion a year owed to the government remains unpaid because people cheat. Like the deer fence dude. Canadians would love to think fancy corporate accountants mining tax loopholes are the villains, but legal tax avoidance is not the same as evasion. The former is clever.  The latter is a crime. You can go to jail for it or, more likely, face serious financial reversal.

If people paid what they owe on work they perform the federal government this year could balance its books, not run a deficit, not add to the debt, reduce the costs of financing and hopefully provide better health care or have more than a week’s worth of ammo for the Canadian Forces. (We may need it on the southern border.)

When someone working on your house asks for cash, “so you don’t have to pay the tax” it’s not about avoiding HST on the job. Instead, the guy wants money which will not be declared, not added to his taxable income and remain completely untaxed in his hands – not yours. Meanwhile you’re likely paying these funds to him out of savings or cash flow on which you paid income tax.

There is only one reason you’re asked for cash payments – by the fencer, the cleaning lady, the driveway sealing company, the mechanic or the roofer – and that is tax evasion. By agreeing, you’re facilitating it, encouraging it, allowing it and condoning it.

Moreover, you’re taking a financial risk as well as abetting an ethical breach. If the work done turns out of be shoddy, substandard or wrong, there is no paper contract or receipt to fall back on. If the worker never calls or texts you after complaining, it’s over. Poof.

Why do so many people practice tax evasion?

Some will tell you it’s political, to starve the government, punish politicians for bad spending or simply because ‘they waste all my money’. But that’s crap. People practice evasion because they’re greedy, selfish, unsocial, irresponsible and it’s cool to cheat the government if it enriches the individual. When enough folks do it – yet still demand full public services, including cops, doctors, teachers, EMS, garbage collection, soldiers, nurses and firefighters – we get a financial crisis. Like now.

Societies break down when we let this happen. When we encourage it. When governments give up and turn a blind eye to unpaid taxes. That was on my mind when, ages ago, I briefly ran the CRA. Here’s a media report from that time.

EDMONTON: The Federal government will declare an income tax amnesty for Canadians who have fallen behind on their taxes, Revenue Minister Garth Turner said, “Were not going to prosecute, ‘we are not going to throw you in jail. If you need two years to pay, fine, that’s cool,” Turner said. Under the amnesty, taxpayers could contact Revenue Canada and work out a flexible payment plan that avoids running up penalties and fees.

That little exercise brought in billions. Maybe it’s time for a rerun.

By the way, Anne, the feds certainly do have a way for you to snitch on the cheaters. The ‘Leads Program’ investigated over 36,000 people last year. Details are here.

If you want a better country, be a better citizen.

About the picture: “I cannot believe that my 8 month old Griffon Bruno has moved his mother called Miss Jilly in,” writes Elsbeth, in Hampshire, England. “It is the expressions on their faces that cracks me up. Miss Jilly, the black one, thinking ‘is this ok that I’m in the basket too’ and the ‘so what are you going to do about it” look on her son Bruno’s face, the brown one, which is so human like. Reminds me of a USA President somehow.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.