Good Practices and Innovations in Public Governance 2003-2011

2010 Category 2: Canada
Europe and North America
Canada
2010 Category 2 — 1st Place Winner
Ensuring Fiscal Equity: Wealth Indicators
Revenu Québec
Description
A project to encourage compliance with Québec’s income tax and consumption tax
laws by systematically identifying tax evaders.
Summary
Revenu Québec’s mission involves collecting income tax and consumption taxes, so
that all taxpayers pay their fair share of the financing of public services. However,
because the taxation system is based on self-assessment, there is a risk that some
taxpayers will not comply with the laws. The project known as Ensuring Fiscal Equity:
Wealth Indicators was designed to support Revenu Québec's fight against tax
evasion and the underground economy by making it possible to identify taxpayers
who conceal significant income from the tax authorities. The ultimate goal is to ensure
that such taxpayers meet their fiscal obligations, so that the tax burden is equitably
distributed and the state has adequate revenue to finance public services. The
initiative has the support of both the public and the Québec government.
The Problem
Like many public administrations worldwide, Canadian tax authorities, including
Québec’s, are confronted with taxpayers who do not fulfiltheir fiscal obligations, to
the detriment of the entire population. Certain taxpayers do not report all their income;
others do not file income tax returns.
Using traditional audit methods based on tax returns and accounting, it is not always
possible to identify taxpayers who enrich themselves by concealing a significant
amount of income from the tax authorities. Revenu Québec has attacked that problem,
relying on an innovative approach that produces significant benefits.
The Solution
The project Ensuring Fiscal Equity: Wealth Indicators makes it possible to systematically
identify taxpayers whose reported income could not sustain their lifestyle and
who are failing to pay their fair share of income tax and consumption taxes. To identify
such taxpayers, Revenu Québec gathers considerable social and financial information
about individuals (their estimated cost of living, property, vehicles, investments, etc.)
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