Panama Papers: How Ottawa made corporate tax evasion easier
2016Barry Weisleder 2016-08Read it in the scan (PDF at ETOL), page 10 →
The words are the paper's own, from its digital file; the division into articles was made by machine, so a box or caption can end up inside the article next to it.
Scan page 10
Race for NDP Leader a vacuum after socialist withdraws 10 SOCIALIST ACTION AUGUST 2016 Question: When does a law against tax cheating become a huge loophole that le galizes giant corporate tax avoidance?
Answer: When a capitalist government is involved.
Does that seem a tad cynical? Well, con sider this. For decades big businesses and rich individuals have been hiding their “earnings” in overseas tax havens The search for a socialist candidate for NDP Leader intensifies, in the wake of Ontario MPP Cheri DiNovo’s withdraw al due to health reasons.
An Aug. 5 Globe and Mail article, “NDP needs a strong leader to return wind to its sails” by John Ibbitson, shows that the NDP establishment has no ready or obvious contender able to recover its poise and restore total bureaucratic control. The brass is still reeling from the Tom Mulcair electoral disaster, and the repudiation it suffered at the NDP federal convention last April.
In an Aug. 2 statement, Cheri DiNovo said: “The dream of a national party that embraces both democratic social ism, climate justice, anti-racism, the UN declaration on indigenous peoples, LG and dummy corporations. As a result, the Canada Revenue Agency has been deprived of billions of dollars of tax rev enue—and that becomes a convenient government argument for cutting social and infrastructure spending, for freezing public sector workers’ wages, slashing pensions, and reducing workplace health, safety, and environmental protection.
In 2010, Ottawa joined an initiative of the Organization of Economic Co-opera BTQ2S rights, child care now, pharma care, free tuition and a truly progressive tax structure is still very much alive. Those who represent the grass roots of the NDP and those progressives who want the NDP to represent them from across the country will not be silenced.
“I am confident a candidate will step forward who will be up to the task. That candidate, the one who puts principles and values at the forefront, will have me and my supporters’ full backing.
“I am so sorry that it cannot be me but this was never about me anyway. It is about the principles and values of the brave souls who penned the Regina Manifesto and their legacy that so many still share.”
— BARRY WEISLEDER tion and Development to force tax havens to be more transparent. They started signing Tax Information Exchange Agree ments (TIEAs) with notorious tax havens such as the Cayman Islands, Jersey, the Isle of Man and the British Virgin Islands, where tax rates are close to zero.
But at the same time, Ottawa’s tax code was altered to allow any Canadian multinational corporation doing business in a TIEA partner country to bring profits home tax-free. American multination als have to pay tax when they repatriate international profits. But, in Canada, the TIEAs mean that profits can be declared in a tax haven, where there is little or no tax, and brought back without paying a penny more.
Many of the biggest firms on the Toron to Stock Exchange now have a presence in tax havens and use Canada’s treaties to reduce their tax bill dramatically at home. One company, Gildan Activewear (the world’s largest T-shirt maker), re duced its taxes by more than 90 per cent in 2015.
While it seems “there is no money” to ensure there is clean water in many in digenous communities, or to improve public transit, or for youth employment, money stashed in tax havens is piling up rapidly. The storehouse of stacked cash is up by more than 50 per cent in the Cay man Islands and in the Bahamas since 2011, when their TIEAs came into force. It rose a staggering 600 per cent in Pana ma since 2013 when its TIEA became law.
Canada has now signed 23 TIEAs, with seven more under negotiation. And so far, no disclosure of the names of those guilty of tax fraud.
The new Justin Trudeau Liberal govern ment pledged to end the Stephen Harper Conservative regime’s “tax unfairness,” and to beef up CRA enforcement. When asked about this loophole, Finance Min ister Bill Morneau, a former Bay Street CEO, said only that the agreements would be evaluated as part of a planned overall review of tax policy.
No hurry there. And likely, no real ac tion. Not if it involves biting the hand that feeds a government of, by, and for the 0.1 per cent.
Postscript: Since this article was writ ten in June, a Federal Court judge ordered the Royal Bank of Canada and Citibank, N.A. to hand over all transaction infor mation for accounts held by Cayman Na tional Bank Ltd. between 2009 and 2015. This is to determine whether Canadian residents used these banks to transfer money home without reporting it.
In another development, the Canada Revenue Agency revealed that between 2010 and 2015, 662 people were convict ed for tax evasion or tax fraud overall, but only 49 had “money and other assets lo cated offshore,” according to documents obtained by the Toronto Star. The CRA issued fines totalling $13.4 million since 2010—less than half the $35.7 million in taxes the cheats were caught evading.
In terms of all the banks and all the avoided taxes involved, the description “tip of the iceberg” would be an under statement of the case. n