The Canada Revenue Agency is under a cloud. While the average Canadian might not feel much sympathy for tax collectors, we need them. The CRA collects taxes for both federal and provincial governments. Without its work, many of the public services we rely on, like hospitals and schools, would cease to function. It’s literally a mission-critical institution for Canada’s economy and society.

Our tax system works on the basis of self-assessment, guided by explicit guidelines and rules. Firms and individuals calculate the amount of tax they owe to governments and remit it voluntarily. CRA conducts audits to check whether the proper amounts are remitted, but those cover a very small number of taxpayers.

The system works on the basis of taxpayers’ trust and consent. So if taxpayers lose confidence in the CRA’s ability to do its job in a professional, non-partisan manner, the legitimacy of the institution itself is jeopardized, along with the public services it supports.

Recently, media reports have suggested that the federal government is using the CRA to intimidate and silence its critics. In 2012, then-minister of Natural Resources Joe Oliver wrote an open letter to media outlets denouncing “environmental and other radical groups” for opposing the government’s policy on the Gateway pipeline. Oliver accused the groups, which qualify as charities for taxation purposes, of accepting funds from “foreign special interests” to “hijack our regulatory process to achieve their radical agenda”.

The 2012 federal budget delivered extra funding for the CRA to audit charities to ensure they were complying with the rules limiting their political activities. Media commentary suggests that the charities selected for the costly and time-consuming audits are mostly environmental and international development NGOs that don’t line up with the federal government on key issues. Revenue Minister Kerry-Lynne Findlay and CRA officials deny that government opponents are being targeted. However, in keeping with the confidentiality of tax audits, they have been unable to provide evidence to support their claim.

The CRA is an essential national institution. We can’t run this country without it. The cloud over the CRA should be dispelled, and quickly.

The longer the public is in doubt about whether the CRA is conducting itself in a non-partisan, professional manner, the greater the damage to its reputation. Perhaps it is time to look at changing the governance of this national institution to limit the potential for political interference.

Fortunately, another national institution — the Canada Pension Plan — provides a useful example of an organization with a governance model designed specifically to limit the potential for political interference. The CPP is governed jointly by federal and provincial finance ministers. The bylaws require that changes to the CPP be approved by two-thirds of the provinces representing two-thirds of the Canadian population. Canadian provinces typically are governed by parties of different political stripes, so the likelihood of a single government meddling in the plan is remote.

To further insulate the CPP from political interference, its investment policies are overseen by a group of independent, professional directors appointed by the federal government in consultation with the provinces. This governance framework ensures that CPP investment policies work in the interests of contributors, rather than those of any particular government.

The CRA is an essential national institution. We can’t run this country without it. The cloud over the CRA should be dispelled, and quickly. The CPP provides a model for reform of CRA governance that could protect it from perceptions of political interference. All Canadian governments — and all Canadian taxpayers — have an interest in seeing the CRA’s reputation for professionalism and fairness restored.

Paul Boothe is Professor and Director of the Lawrence National Centre for Policy and Management at Western’s Ivey Business School.

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