It’s a familiar pattern: talk tough and do nothing. The Harper government says that they want to crack down on tax evaders; all the while they cut 3,000 positions from the very agency that could investigate. To top that, they fail to pass legislation that would plug loopholes.
To enable tax avoidance, the Harper government signed a treaty in 2011 with Bermuda to allow Canadians to transfer money there and transfer tax-free dividends back, reports Paul Weinberg in the CCPA Monitor.
For appearances sake, the finance minister made a trip to Bermuda in 2013 to assure fellow G8 countries that Canada was on board in the effort to close tax loopholes.
It’s fine to talk tough but actions speak louder. Alain Deneault, professor at The University of Quebec discloses that Canada is complicit in sheltering tax avoiders in his soon to be released book Canada, A New Tax Haven: How the Country that Shaped Caribbean Tax Havens is Becoming One Itself.
While researching his book, Professor Deneault found inside sources that exposed the government’s hypocrisy. “Officially, Canada shows solidarity with other western countries about tackling tax avoidance. I have informants in other countries, people whom I talk to when I travel, and they say that Canada, in the meeting rooms, is also always fighting against any kind of proposal that would make it difficult for corporations to use tax havens.”
It’s not just big Canadian corporations that are avoiding taxes. Court documents recently obtained by the CBC reveal that a wealthy Victoria family paid virtually no tax over a span of eight years in a sham cooked up by one of the most respected accounting firms, KPMG Canada.
The Canadian Revenue Agency found that that between 2002 and 2010, the Victoria family paid little or no tax, despite receiving nearly $6 million from an offshore company. KPMG lawyers claim any money the family received were “gifts” and therefore non-taxable.
KPMG must have felt emboldened by the inaction of the Harper government. The feds were essentially signaling to KPMG that despite the tough talk, this kind of dodge was OK.
Imagine the number of tax avoiders that Canada Revenue Agency could find if they were properly staffed?
While other G8 countries are tightening up laws to reduce tax avoidance, Canada’s net to catch cheaters has holes in it big enough for a whale to swim through.
NDP tax critic, Murray Rankin, tried to pass a private members bill that would tighten the net and bring Canada up to par with the tougher approach to tax cheats taken by the U.S. It failed to receive government support.
“Murray Rankin’s bill is right on,” says Robert McMechan, a former general counsel in the tax litigation section of the Department of Justice. He’s seen too many “complicated corporate transactions where money goes around a circle and nothing of real economic substance occurs.”
I gladly pay my taxes, not just because the money is well spent in the services and infrastructure I receive in return, but as investment in the kind of Canada I believe in. It’s too bad the Harper government isn’t of the same mind.