Policy Forum: Using Retributive Justice to Ensure Public Trust in Canada's Tax System

Abstract

To ensure public trust in the tax system, retributive justice must be present. That is, tax offenders must be held accountable for their unethical behaviour and punished in accordance with tax laws. In this article, the authors first summarize recent academic research about the deterrent effect of knowledge of others’ tax-crime punishments.

They classify this research into two categories: archival “naming-and-shaming” research and experimental tax ethics research. Next, they report the results of a survey of adult Canadian taxpayers in which they assess the perceived severity of tax-crime punishments. They compare these survey results with aggregate tax-crime punishment data in Canada and show that there is an expectations gap between what Canadians believe constitutes appropriate punishment for tax crimes and actual punishments. Finally, the authors discuss enforcement and other challenges for tax authorities in bringing about retributive justice, and consider other ways in which tax authorities might make tax offenders accountable for their crimes. Their ultimate suggestion is that the Canada Revenue Agency needs to increase its perceived power by increasing the frequency of actual prosecutions for tax evasion. Recent proposals for reform of the general anti-avoidance rule may lead to more prosecutions.

Keywords: Justice, Ethics, Tax, Penalties, Enforcement, Canada Revenue Agency