Paradise Papers underscore need for tax justice

The Council of Canadians says it is time to end loopholes for the super-rich, clamp down on wealthy tax dodgers, and implement fair taxation.

The Toronto Star comments,

“The so-called Paradise Papers, a leaked trove of more than 13 million documents from three offshore law firms and the registries of 19 tax havens, make stark the extraordinary costs of the international community’s failure to come to grips with the challenges of tax evasion and avoidance. For the Trudeau government, in particular, the leaks are a political nightmare. The Paradise Papers make clear how inadequate the Liberals’ efforts on these issues have been. And, because some in the party’s inner circle, including its top fundraiser Stephen Bronfman, are implicated, the leak feeds into a dangerous narrative about why this government’s appetite for greater fairness may be suspect.”

Specific actions the Trudeau government should take include:

1. Direct the Canada Revenue Agency to estimate the tax gap. The difference between what the agency collects and the revenue that should be generated based on the country’s economy.
2. End the Tax Information Exchange Agreements that enable/legalize large-scale corporate tax avoidance.
3. Close the costly and unfair tax loopholes used by the wealthiest Canadians.
4. Prosecute major corporations and the super wealthy individuals who evade taxes.
5. Allocate this revenue into programs such as renewable energy, clean water for Indigenous communities, and pharmacare.

In April 2016, the Council of Canadians expressed its outraged at the information revealed in the Panama Papers.

At that time, Aljazeera reported, “The so-called Panama Papers highlight how easy it is for the wealthy, political elite and their families to set up shell companies in tax havens to conceal their wealth.”

The report quoted the Tax Justice Network, noting that “as much as $32 trillion was hidden in offshore accounts by rich individuals. It can cost as little as $1,500 to set up an offshore structure to hide your wealth.”

Our ally Canadians For Tax Fairness has estimated that Canadian corporations have as much as $199 billion in offshore accounts in countries including Panama, Barbados, the Cayman Islands and Luxembourg. The group estimates that federal and provincial governments lose $7.8 billion a year in tax revenue because of this. The National Observer reports the sum could be more than $20 billion a year.

To put those numbers in context, it would cost just $4.7 billion — over a ten year period — to provide clean drinking water and sanitation for First Nations peoples in Canada. That could be as little as the tax revenue lost in a three month period.

The CBC reports, “Among the financial institutions that regularly used the Panamanian law firm was Royal Bank of Canada, which with its subsidiaries set up 370 such corporations.”

Now, the CBC reports that among the 3,300 Canadian companies, trusts, foundations and individuals whose names appear in the Paradise Papers are the Montreal Canadiens hockey team, Canadian supermarket giant Loblaw, and at least 17 Canada-based resource extraction companies. Also named in the documents are former prime ministers Jean Chretien, Paul Martin and Brian Mulroney.

Image: Mark Hatot/flickr

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