Ontario's cash-strapped government plans to write off at least $1.4 billion in unpaid taxes because it failed to act promptly and lacked the manpower to collect them, auditor general Jim McCarter found in his annual report.
The province, which is facing a $14.4-billion deficit, is owed about $2.4 billion in taxes, mostly from businesses, the report found. But it isn't doing enough to collect them.
About three-quarters of Ontario's tax collectors were transferred to the federal tax agency after the governing Liberals brought in the harmonized sales tax in July, 2010. At the time, the Liberals boasted that the move would reduce their spending by taking public servants off their payroll.
But it also hindered the province's ability to collect billions in back taxes, with some collectors seeing their workload double or even triple.
It took collectors an average of seven months to even attempt to contact a taxpayer by phone, and in two-thirds of cases there was at least one six-month gap where no action was taken, the auditor found. Field visits weren't made, and liens and warrants for the seizure and sale of properties weren't enforced.
"Taking prompt action is vital to collecting debts," McCarter said in a release. "Research shows that the probability of collecting money that's owed drops dramatically as time passes."
The $1.4 billion is mainly made up of older accounts that have accumulated over years, the report said.