Stephen Hume: Politically motivated tax audits chill government’s critics

Stephen Hume / Vancouver Sun

Is Prime Minister Stephen Harper Canada’s equivalent to Richard Nixon, that U.S. president who was eventually impeached for using state powers to punish critics of his government and policies?

Whether or not you dismiss such a comparison as casual water cooler opinion, there are real grounds for a perception that Canada’s politicians can use government to silence critics, the Environmental Law Centre at the University of Victoria warns after doing a study of recent federal tax audits.

It urges immediate reform to place the supposedly-neutral Canada Revenue Agency indisputably beyond the influence of politicians who are busy defending government policies from criticisms by groups that are subsequently investigated by the agency.

The study, for the Vancouver-based environmental organization DeSmog Canada, starts with the Harper government’s special allocation — during otherwise deep budget cuts — of $13.4 million to fund tax audits of “political activities” by non-profit groups that provide tax receipts for donations.

CRA has since audited at least 52 such charities to see whether they exceeded a 10-per-cent spending cap on political activities, the report says. By comparison, private companies donating directly to political parties can claim it as a tax credit and the cost of lobbying is a tax-deductible business expense.

Charities investigated by the CRA include the Nobel Prize-winning human rights group Amnesty International; Pen Canada, which advocates freedom of expression under the Universal Declaration of Human Rights and the Canadian Charter of Rights and Freedoms; and the Canadian Centre for Policy Alternatives, a left-leaning economic think-tank that balances the right-leaning Fraser Institute.

Last September, 422 university professors from across Canada sent a letter to the federal government expressing concern that conservative think tanks appeared to have escaped audits. They concluded that the decision to audit the Canadian Centre for Policy Alternatives was “politically motivated to intimidate and silence its criticism of your government’s policies.”

The Broadbent Institute, a left-leaning think-tank that focuses on democratic process and social issues, also claimed “mounting evidence suggesting the audits are being used as a politicized tool to exert pressure on critics of the government.” It called for an independent inquiry.

Seven leading Canadian environmental charities were subject to audits: David Suzuki Foundation, Tides Canada, West Coast Environmental Law, the Pembina Foundation, Environmental Defence, Equiterre and the Ecology Action Centre.

The UVic study cites research at Royal Roads University that found that while most charities passed their audit, a severe “advocacy chill” had fallen on groups intimidated by the federal audits.

Complaints against environmental groups were brought to the revenue agency by a private organization, Ethical Oil. It was originally headed by Alykhan Velshi, a former senior staffer in federal cabinet minister Jason Kenney’s office. Velshi left Ethical Oil a few months after starting it to take a senior position in Harper’s office. Jamie Ellerton, formerly executive assistant to Kenney, subsequently became Ethical Oil’s executive director.

“The suspicion that the audits targeted environmental groups has been heightened by reports that staff moved back and forth between the Prime Minister’s Office, minister Jason Kenney’s office and Ethical Oil — the private group which filed complaints against a number of environmental groups,” the study observes.

“It has also been pointed out that government has targeted environmental groups by changing the Canadian Environmental Assessment Act to severely limit the legal standing of such groups in environmental assessments and, in some cases, to eliminate their ability to cross-examine industry on proposals. (It has) muzzled government scientists to prevent them discussing oil sands development or climate change, and enacted sweeping retrenchment of environmental laws at the direct request of the oil and other resource industries.”

Groups exceeding their “political” cap can have their charitable tax status revoked, be required to either give away or forfeit all the charity’s assets within 12 months and face losing all donors who require charitable tax receipts.

But the study says that what constitutes “political” activity is vague and subject to “undue bureaucratic definition.” Canada’s limits on such activity are far more restrictive than in the United Kingdom, Europe and the U.S., where limits are liberal or non-existent.

The study says there is potential for perceived bias in Canada’s tax auditing process because the Canada Revenue Agency is directly accountable to the cabinet minister responsible for national revenue.

“The current concern is that the Conservative government is using their direct influence over the (agency) to target charitable organizations opposed to their governmental policies. It appears to some that the Conservative government is using the tax authority to fight its policy battles. As much as the (charities) directorate may deny it, the fact remains that there is a direct structural chain of command from an elected politician to the directorate which audits charities,” the study says.

“If there is political direction to these audits, then we face a situation not unlike the one that triggered the impeachment of President Nixon. However, even if there is no political direction, the mere appearance of possible targeting is having a grievous impact. It is silencing organizations.”