Auditor General: Billions in tax breaks given without proper oversight

I always remember the smugness and sometimes even arrogance of Finance officials in their criticism of MCs, TB submissions and other issues in pointing out weaknesses. The issue was not so much pointing out weaknesses (that is their role) but rather the tone and manner in making their points (TBS shared this trait).

So it is with some satisfaction to see Finance on the receiving end, recognizing that some of this reflects political, not official decisions.

Finance Canada is failing to properly manage billions of dollars in tax credits it offers to Canadians and, in many cases, does not know if they are relevant, effective or achieving the government’s goals, says the federal auditor general.

The Finance Department also does not provide adequate information to parliamentarians on the tens of billions of dollars in so-called tax-based expenditures, Auditor General Michael Ferguson says in a stinging report released Tuesday.

Among his criticisms – which, coincidentally, come at the height of the tax season and just a week after a federal budget touting tax relief – is the government’s failure to include the projected future cost of its many tax breaks.

Opposition parties, spending watchdogs and many economists have for years criticized some of the “boutique” tax credits offered up by the Conservative government, and have instead called for more broad-based tax relief rather than the targeted measures they say are being used to buy votes.

… In its audit, Ferguson’s office examined the relevance, efficiency, effectiveness, equity, implementation costs and how frequently the credits were evaluated, among other factors.

The auditor general found examples of where Finance Canada identified issues with certain tax credits before implementing them, but – despite those potential problems – has yet to evaluate the tax measures.

“Overall, we concluded that the department fell short on managing tax-based expenditures. We reached this conclusion because these expenditures were not systematically evaluated and the information reported did not adequately support parliamentary oversight,” Ferguson says in his report.

The auditor general made three recommendations to Finance Canada, which have been accepted by the government.

They include conducting “systematic and ongoing” evaluations that assess a tax measure’s relevance and appropriateness, determining whether the tax system is the most effective way to meet the desired policy objective, and establishing whether to retain, abolish or modify certain tax credits.

Ferguson also recommended the government improve its reporting practices on the billions of dollars in tax credits, including providing projected cost estimates in future years, and more timely and relevant information for parliamentarians.

Auditor General: Billions in tax breaks given without proper oversight | Ottawa Citizen.