Another politician found using tax havens

When the rich and powerful use tax havens to avoid paying their share, the money going into their overseas bank accounts is effectively coming from public services that could be making life easier for people who are struggling.

Ottawa (8 Oct. 2019) — Yesterday it was revealed that yet another politician in a powerful position has been benefiting from tax havens. That politician joins a list that includes powerful political figures from more than one party. Given that the Panama Papers and Paradise Papers are just the tip of the iceberg when it comes to tax havens, it’s reasonable to assume that there are others in positions of power in Canada who are using tax havens.

Tax havens are used by the wealthy and large corporations to avoid paying their share in taxes. The amounts involved are huge. But while low and middle income Canadians get in trouble for relatively minor infractions, Canada is doing relatively little about tax havens. While the Panama papers leak revealed 894 Canadians were using tax havens, no charges have been laid.

Morally, using tax havens is stealing from the most vulnerable

When we push for a national pharmacare program, we are told the money isn’t there. When we push for more childcare spaces we’re told the money isn’t there. When we ask why people on reserves have to wait for clean drinking water, we’re told the money isn’t there. When we ask why many social service workers are living in poverty because wages are so low, we’re told the money isn’t there.

But while we’re being told the money isn’t there to help people struggling to get by, the failure to crack down on tax havens is costing Canada between $8 billion and $25 billion a year in lost tax revenue. That is money that’s desperately needed for improvements to the social safety net. When the rich and powerful use tax havens to avoid paying their share, the money going into their overseas bank accounts is effectively coming from public services that could be making life easier for people who are struggling. That’s not just wrong. It’s immoral.

Governments have the ability to crack down on tax havens

There is a lot that governments can do to crack down on the use of tax havens that the Canadian government isn’t doing right now.

Canadians for Tax Fairness have identified the following measures:

Stronger enforcement and penalties to confront tax evasion and aggressive tax avoidance by high incomes and corporations (current fines are seen as too low to be an effective deterrent)
Increased funding to the Canada Revenue Agency (CRA) for investigation, audits, enforcement and prosecution of offshore, corporate and high income tax evasion (the CRA still hasn’t recovered from Harper era cuts)
Restrict corporations or consortiums that engage in tax evasion and aggressive international tax avoidance from obtaining federal government contracts
End double non-taxation agreements with tax havens
Take a lead in advocating for and implementing fundamental reform of the international corporate tax system

In addition, Canada needs to improve corporate transparency to remove the secrecy that make it easier for large corporations and the wealthy to break the laws against tax avoidance.

This includes

Create a pan-Canadian accessible public registry of the real/beneficial owners of Canadian corporations and of foreign corporations doing business in Canada
Modernize and strengthen anti-money laundering reporting requirements to high-risk sectors of the Canadian economy
Publish more detailed aggregate statistics of how much corporations, private family trusts and top incomes pay in taxes

What parties are saying or (not) doing about tax havens

Liberal	Conservative	NDP	Green
Continued to allow KPMG to advise on tax policy after KPMG’s involvement in a tax dodging scheme using a tax haven was revealed.	Continued to allow KPMG to advise on tax policy after KPMG’s involvement in a tax dodging scheme using a tax haven was revealed.	Will make it harder to use tax havens by eliminating bearer shares, and by requiring companies prove the economic reason for offshore transactions.	End offshore tax dodging by taxing funds hidden in offshore havens and requiring companies to prove that their foreign affiliates are actual functioning businesses for tax purposes.
Modernize anti-avoidance rules to stop large multinational companies from being able to shop for lower tax rates by constructing complex schemes between countries.	Cut staff and resources at the CRA, making it harder to deal with tax evasion by wealthy individuals or corporations.	Improve transparency on taxes paid by large corporations	Provide adequate funding to the Canada Revenue Agency (CRA) to collect tax revenue hiding in offshore tax havens.
Supports a registry of beneficial owners of corporations to make it harder to use tax havens, but has not committed to the registry being public (making the registry public is seen as a key step to ensuring it’s effective).	Supports a registry of beneficial owners of corporations to make it harder to use tax havens, but has not committed to the registry being public (making the registry public is seen as a key step to ensuring it’s effective).	Work with the provinces to create a public beneficial ownership registry of corporations and trusts that own land.