Photo: waronwant.org

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The upcoming G8 Summit is an unprecedented opportunity to go after tax cheats who use tax havens. But Canada threatens to be a spoiler. Again.

British Prime Minister Cameron wants G8 leaders to endorse a strong action plan to tackle tax havens when they meet in Northern Ireland next week.

But Stephen Harper could block agreement, unless we mobilize strong public pressure to get him to change his mind.

Reliable sources tell me that Canada is still withholding support for two key parts of the G8 tax havens action plan:

-that all governments be required to have a public registry of the ultimate beneficial owner of all bank accounts, trusts or corporations, and

-that there be multilateral automatic tax information sharing between governments.  

These two measures are key to lifting the veil of secrecy that allows wealthy individuals and corporate tax evaders and criminal organizations to hide their wealth off shore.

It is not clear why Canada won’t agree to these measures, as Canada stands to be able to raise tens of billions of dollars of additional revenue if tax havens are shut down. One reason may be that Canada may now be falling short of the proposed international standard on beneficial ownership, as an international comparative study has shown it was possible to register shell corporations in some jurisdictions in Canada without providing proper documentation on the ultimate owner.

While some provinces may be forced to bring their corporate registration rules up to new international standards, they would probably be quite willing to do so as they also stand to gain billions of dollars of badly needed tax revenue as well.

If all wealthy individuals and multinational corporations were prevented from using tax havens to evade taxes and were forced to pay their fair share of taxes, the painful cutbacks to health, education and other public services as well as the thousands of layoffs of public servants would be unnecessary.

Prime Minister Harper did announce in London this week that Canada will support a third measure proposed by British Prime Minister Cameron — country by country reporting by multinational corporations of where they have paid taxes and earned their profits.

The G8 Summit takes place June 17 and 18. Agreement on several key issues is going down to the wire. Prime Minister Harper will be with his friend, British Prime Minister Cameron, and with French President François Hollande, before the G8 and will come under strong pressure from both men to back the tax haven action plan.

There is also growing public pressure in Canada for action on tax havens. A public opinion poll by Strategic Communications, commissioned by Avaaz, found that 85 per cent of Canadians support Canada joining international efforts to address tax evasion and aggressive tax avoidance at the G8.

This poll also found that 81 per cent of Canadians think PM Harper should agree with the G8 proposal requiring countries to list the true owners and beneficiaries of corporations. Avaaz delivered a letter to the Prime Minister signed by over 50,000 Canadians, including over 900 business owners calling on Mr. Harper to support Prime Minister Cameron’s action plan on tax havens at the G8.

Poor countries are also losing ten times as much as they receive in aid because of illicit financial flows facilitated by tax havens. With aid flows falling, including from Canada, poor countries are under increased pressure to raise more resources domestically. But their efforts are undermined by tax havens which facilitate corruption and corporate tax evasion. It is very important that the action plan to tackle tax havens also benefit developing countries. There is a danger that the automatic tax information exchange could be limited to just between developed countries.

This is why International development NGOs such as Oxfam are pushing hard for an action plan that would benefit developing countries. The additional revenue that could be raised would go a long way to improving health and education services and reducing poverty. 

 

Dennis Howlett is Executive Director of Canadians for Tax Fairness.

Canadians for Tax Fairness is asking you to send a message now to Prime Minister Harper, asking him to support the global effort to go after tax cheats using tax havens.