Showing posts with label tax avoidance. Show all posts
Showing posts with label tax avoidance. Show all posts

Saturday, November 11, 2017

Canadians React To The Paradise Papers



If you aren't yet outraged over recent revelations, check your pulse to make sure you are still amongst the living.

Happily, signs of life are plentiful among Toronto Star readers:
Liberal Party fundraisers held family millions in offshore trust, Nov. 6

Coverage of the Paradise Papers’ celebrity tax evaders has tended to revolve around the potential illegality of their actions. For example: how “blind” the offshore trusts of Stephen Bronfman and Leo Kolber actually are. I imagine most Canadians could care less whether Bronfman’s $60-million, tax-free snowball is being managed from home or from offshore. The real issue is, why is it legal in the first place?

The answer, which these leaks are revealing, is that our federal leaders are so beholden to Canada’s richest men — their chief fundraisers — that substantive crackdowns on these schemes are being prorogued. [Emphasis added]

These tax evasions are a spit in the eye to the Liberals’ fabled “middle class,” let alone to the 12 million Canadians who collectively own less than our richest 100 families.

Jeremy Withers, PhD student, University of Toronto

Thank you again for enlightening us on the machinations of the 1 per cent to avoid paying their fair share of taxes. An outstanding editorial. Surely, I am not the only one thinking of voting for the NDP in the next federal election.

Norma Martinez, Toronto


One of the main reasons for U.S. President Donald Trump’s victory was the snail-pace change to the status quo. People are fed up with the failure of governments to act. Whether the Paradise Papers news is based on legal or illegal actions of wealthy people or organizations is irrelevant. We must find ways to finance the needs of the populace and it is evident that this must come from those who have. Unless the current government acts decisively to outlaw these types of actions, Canadians, too, will either not vote or seek alternative populist methods. Justin Trudeau, be warned. [Emphasis added]

Harry Coupland, Etobicoke

This four-page article about offshore tax havens proves the point of American billionaire hotelier Leona Helmsley, who famously said: “We don’t pay taxes; only the little people pay taxes.”

It seems that democracy is on sale. The rich families finance politicians to fight elections and, as a quid pro quo, politicians protect their wealth through favourable legislation.

The article shows how Leo Kolber, a wealthy man who had accounts in offshore money centres, was appointed senator and then became chairman of the Senate’s powerful banking committee. He held back proposed unfavourable legislation on offshore trusts for 14 years.

These multimillionaires are not paying their share of taxes, forcing government to cut back on social services, health care, education, affordable housing, etc. It is estimated that the Canadian government is losing $6 to $8 billion per year in tax revenue. [Emphasis added]

Is it too difficult to force countries like Panama and British protectorates like Grand Cayman, Isle of Man and the British Virgin Islands to stop hiding money for wealthy Canadians.

Anis Zuberi, Mississauga

It is in the public’s interest to take tax avoidance seriously because we now know this is not a one-shot deal carried out by the odd, cunning billionaire, but rather a widespread scheme common among the wealthy.

We can no longer consider tax dodging and offshore accounts to be trivial, when everyone from the Queen to U.S. President Donald Trump’s cabinet are benefitting from them.

It is especially important for lower- and median-income households to care about this epidemic because it is they who suffer from the increased taxation and lack of public funding caused by the millions lost in tax revenue from offshore holdings. [Emphasis added]

It is the vulnerable and the poor who get the short end after this game is played out and it is time they force this issue into the public sphere and demand it be made a talking point.

Benjamin Rawlings, Ottawa

Tuesday, May 10, 2016

Enemies Of The People

I hardly think that is too harsh a description of both those who park their money offshore to avoid taxes and those who facilitate such evasions. Indeed, an open letter signed by some of the world's leading economists makes the cost of such selfish and criminal behaviour eminently clear:

As the Panama Papers and other recent exposés have revealed, the secrecy provided by tax havens fuels corruption and undermines countries’ ability to collect their fair share of taxes. While all countries are hit by tax dodging, poor countries are proportionately the biggest losers, missing out on at least $170bn of taxes annually as a result.

... we are agreed that territories allowing assets to be hidden in shell companies or which encourage profits to be booked by companies that do no business there, are distorting the working of the global economy. By hiding illicit activities and allowing rich individuals and multinational corporations to operate by different rules, they also threaten the rule of law that is a vital ingredient for economic success.

To lift the veil of secrecy surrounding tax havens we need new global agreements on issues such as public country by country reporting, including for tax havens. Governments must also put their own houses in order by ensuring that all the territories, for which they are responsible, make publicly available information about the real “beneficial” owners of company and trusts.


The impact of such behaviour is felt everywhere, but never more than in developing countries:
... while estimates put the cost to Canadian tax coffers at between $6- and $7.8-billion per year, the effects on developing countries is far greater, said Haroon Akram-Lodhi an economist and professor of international development at Trent University.

“The amount of capital flight from sub-Saharan Africa is absolutely huge and it’s all going into these tax havens,” said Akram-Lodhi, one of the signatories of the letter. “This is reducing the ability to fight poverty on a global scale.”

Will governments merely go through the motions of doing something, and then go back to the old ways once the fierce glare of the public subsides? I don't know, but I am somewhat dubious of any substantive changes, since the rich and powerful are, well, rich and powerful.

Now that a searchable database is online, this interview with The Star's Marco Chown Oved sheds some light on what can be found there:



One hopes against hope that real change is in the offing.

Monday, May 9, 2016

We Are All Capuchin Monkeys

Or at least I suspect we will feel like the one on the left in the following video, once the Panama papers releases its database of tax cheats and avoiders this afternoon.



Tuesday, April 12, 2016

Panama Papers Aftermath



While the revelations thus far about offshore holdings for the purpose of tax avoidance or evasion have provided us with a glimpse into the lives of those well beyond our pay grade, whether or not they have any lasting effect depends largely, not on the reactions of you and me, but rather those of the world's governments. And while public outrage may be high right now, whether those governments will simply ride out that outrage with sanctimonious promises to "go after the tax cheats" and do little, or enact substantive measures to curb this most foul and unpatriotic practice, remains to be seen.

Canada seems to be promising action, with National Revenue Minister Diane Lebouthillier promising substantial resources to go after those who put their own extreme personal wealth above the common good:
With an extra $444 million promised in the March budget, the CRA plans to hire additional staff to target what it dubs “high-risk” taxpayers and corporations. In return, the agency expects to collect an additional $2.6 billion in tax revenues over the next five years.

It also plans to boost its information technology capabilities to better sort the overseas financial transactions to detect tax fraud. The agency already tracks all financial transactions worth more than $10,000 — about a million a month.

Now it plans to focus its attention on all transactions involving individual jurisdictions known to be tax shelters — starting with the Isle of Man, off the west coast of England. Three other jurisdictions will also be targeted this year but agency officials refused to say which ones.
While all of this appears to be a good start, a couple of things puzzle me. It is estimated that between $6 and 7.8 billion is lost to our treasury annually through undeclared offshore holding. Yet, our government is promising only that the initiatives announced will collect an additional $2.6 billion in tax revenues over the next five years. Huh?

Secondly, our government has announced which offshore haven it will be examining first, the Isle of Man:
The first is the Isle of Man, which past transactions involving some KPMG clients have already been flagged by the agency. Quebec Liberal MP François-Philippe Champagne said $860 million in funds were transferred there in the last year along. Sixty audits already underway in relation to investments held in the Isle of Man. The CRA intends to contact another 800 taxpayers and corporations to obtain more information about their holdings.
Now, I know nothing about the arcane world of tax evasion and avoidance, but is it possible that by signaling its intent, the government is also giving the fiscal malefactors an opportunity to move their lucre to other havens not currently under the CRA's scrutiny?

I think these are legitimate questions to ask, given the fact that the CRA has previously treated tax scofflaws with great consideration. A Star editorial provides reasons we should be a bit cynical:
...while agencies such as the CRA and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) are happy to name the small fish they catch breaking the laws and regulations, that hasn’t always been the case with bigger fish.

Just last week FINTRAC, which tracks money laundering and terrorist financing among other things, announced it had levied a stiff $1.1-million penalty on a Canadian bank for failing to report a suspicious transaction and various money transfers. But it declined to name the institution involved. Meanwhile it is busy naming players who have been slapped with fines of $15,000 or less.

And CRA has drawn criticism for quietly offering an amnesty deal to unnamed multi-millionaire clients of the KPMG accounting firm who were allegedly involved in tax avoidance on the Isle of Man. The Canadian Broadcasting Corp. reported that the group was required by CRA only to pay back the taxes they owed, plus interest. Yet the CRA routinely prosecutes and names people who fail to file tax returns or otherwise run afoul of the law.
For more details about how the CRA has one approach for most of us and another for the monied class, click here; you may also want to watch the following video:



To close, I'll leave you with this excerpt from the Star editorial that likely sums up how so many of us feel:
If the government hopes to “give Canadians greater confidence that the tax system is fair to everyone,” its agencies should be prepared to publicly name offenders. Cutting deals to spare Ottawa the trouble of prosecuting, or to preserve the “good name” of financial institutions and their wealthy clients, isn’t going to reassure anyone other than the scofflaws themselves.

Ottawa shouldn’t be in the business of shielding those who have gone to extraordinary lengths to insulate themselves and their assets from public scrutiny.

Monday, April 4, 2016

The Panama Papers



Marie over at A Puff of Absurdity offers a very good overview of something that is certain to have long-lasting reverberations, The Panama Papers. Be sure to check out her post.

The Toronto Star reports the following:
In the largest media collaboration ever undertaken, more than 370 journalists working in 25 languages dug into 11.5 million documents that revealed Mossack Fonseca’s [a Panamanian law firm renowned internationally for establishing shell companies] inner workings and traced the secret dealings of the firm’s customers. The more than 100 news organizations involved shared information and hunted down leads generated by the leaked files using corporate filings, property records, financial disclosures, court documents and interviews with money laundering experts and law-enforcement officials.
Significantly, the only Canadian media organizations to participate in the consortium undertaking this massive investigation are The Toronto Star and the CBC/Radio Canada. At least someone in our country is concerned about the public good.

Why is this such an important investigation? First and foremost, it identifies a panoply of individuals and companies whose main motivation is tax avoidance. Their allegiance to themselves and, in the case of corporations, their shareholders, is paramount.

It should be stressed here that the vast majority of those involved in these schemes are doing nothing illegal, merely taking advantage of loose tax laws that permit such avoidance. But to me, this points to an incontrovertible truth about some wealthy individuals and many corporations: they feel no obligation to pay the country of their residence their fair share of taxes. In other words, they are putting their own financial security and profits above the land that nourishes and hosts them, the land that provides them with an educated workforce and the infrastructure that make their wealth possible.

And that should serve as a cautionary tale of great magnitude as we contemplate, for example, signing both the CETA and TPP free trade deals. The Investor-State Dispute Settlement provisions of such trade agreements give priority to corporations over state sovereignty so that should a country's laws impinge upon a company's profits, that company can sue the government. Given that The Panama Papers will confirm that loyalty and patriotism are concepts foreign, indeed, inimical, to those who pursue profit at almost any cost, there is surely reason for real caution.

The investigation is a wake-up call for governments to amend tax laws that in fact aid and abet theft from national treasuries. Here at home,
... Canadians have declared $199 billion in offshore tax haven investments around the world, according to Statistics Canada.But experts say that figure is a small fraction of the Canadian offshore wealth that goes undeclared.

The precise annual cost to Canadian tax coffers is unknowable. But credible estimates peg Canada’s tax losses to offshore havens at between $6 billion and $7.8 billion each year.
One need not have an especially rich imagination to consider how an increase in federal coffers of that size could be used for the benefit of all.

Every so often, thanks to circumstance and the indefatigable efforts of investigative journalists, the curtain is pulled aside and we are able to get a peek at an underlying and ugly reality. Ours is a world in which selfishness and evil often prevail, thanks to the complicity of far too many and the shield of darkness behind which much of this takes place.

Perhaps The Panama Papers can help to bring some much-needed light and eventual reform to this shameful and unjust state of affairs.

Wednesday, March 9, 2016

Remembrances Of Things Past (And Present)



I suspect it is only the very young and the profoundly naive who believe that justice is blind, that all are treated equaly under the law. While a pleasing fiction that governments like to perpetuate, nothing could be further from the truth.

Consider the latest revelations about the Canadian Revenue Agency's shoddy hypocrisy, begun under the Harper regime but showing no signs of abatement under the Trudeau government.
The Canada Revenue Agency offered amnesty to multi-millionaire clients caught using what's been called an offshore tax "sham" on the Isle of Man — a reprieve that was supposed to remain secret and out of the public eye until it was uncovered by a CBC News/Radio-Canada investigation.

Canada Revenue officials demanded, and offered, secrecy in a no-penalty, no-prosecution deal to high net worth clients of accounting giant KPMG involved in a dodgy offshore tax scheme.

The amnesty allows for "high net worth" clients of the accounting giant KPMG to be free from any future civil or criminal prosecution — as well as any penalties or fines — for their involvement in the controversial scheme.

The clients simply had to agree to pay their back taxes and modest interest on these offshore investments, which they had failed to report on their income tax returns.
While this might come as no surprise to many, what compounds this egregious injustice is the fact that the CRA is far less forgiving of ordinary people, many of whom, through no fault of their own, found themselves the victims of very punitive CRA action:
Toronto tax lawyer Duane Milot, who represents middle-income Canadians in disputes with the CRA, says his clients are routinely dragged through the courts for years by Canada Revenue.

"It's outrageous," he told CBC News after reading the leaked document. "The CRA appears to be saying to Canadians, 'If you're rich and wealthy, you get a second chance, but if you're not, you're stuck.'"
Just how much contempt the CRA feels for non-wealthy people is evident in the first four minutes of the following report:



Will relief for such iniquitous inequity be forthcoming from our 'new' government? In his finely-honed prosecutorial style, Thomas Mulcair asked some hard questions of the Prime Minister in the House. I was less than reassured by the answers he was given:


I couldn't help but note that in the response he gave, Mr. Trudeau sounded alarmingly like his predecessor, deflecting the questions by criticizing the questioner and then launching into some pious platitudes.

It seems that in some ways, our new government is getting old very quickly. Consequently, the CRA's foul practices continue apace.

Monday, April 8, 2013

More On Wealthy Tax Cheats

As noted in a previous post, many of our more prosperous citizens feel no obligation to the country that made their great wealth possible. Rather, they are quite happy to hide it in offshore financial institutions, which, while being ethically questionable, is not illegal. However, many of them are also committing crimes by not declaring profits that accrue to them in those faraway places, and tax evasion is most definitely illegal.

Today's Star readers weigh in on the issue in their usual insightful manner. I am taking the liberty of reproducing their letters below:

Rich can no longer hide millions; Crack down on tax havens, Editorial, April 5

Regarding the recent articles about tax havens and governments world-wide saying they will now put more effort into getting those public monies back from the super-affluent. Well, the world’s supposed democratic governments have been aware of these billions of dollars illegally absconded by the rich and powerful for a long time. It has only been through the efforts of private citizens (journalists, authors, the Tax Justice Network) that this information has become common knowledge. Why is it that, as the editorial states, “. . . until recently there has been little political will to crack down on the super-affluent”?

The U.S. Republican party, our own Conservative government and democratic governments world-wide have been crying their “austerity” mantra ad nauseam, claiming massive shortfalls in revenues as their reason for cannibalizing tax-funded social programs. Yet they cogently and deceitfully failed to mention or address the flagrant abuse (tax evasion) by the world’s 1 per cent in causing these monetary shortfalls. Collusion between our elected officials and the super-rich is common knowledge. So now the question is why do the super-affluent and their political lackeys seem so determined to undermine the finances, wealth, health and security of The People (99 per cent) in our democratic systems of society?

Al Dunn, Kingston

Any Canadian with money in tax havens should be treated like the holders of accounts in Cyprus banks — charge them 60 per cent when they are found out. Tax havens should be made impossible through international laws. They work to the detriment of society.

Tony ten Kortenaar, Toronto

Friday, April 5, 2013

The Scourge of Wealth- UPDATED

I often think of the famous line from the New Testament in which Jesus says "It is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God." Some say the reference is to a gate in Jerusalem called the Needle''s Eye through which a camel could enter only by getting on its knees. Many progressive biblical scholars regard the term 'kingdom of heaven' as the inner peace and happiness that arises when we are in harmony with the will of God, treating our fellow humans with compassion and justice.

Whatever the precise intended meaning, the analogy proclaims a truth that is hard to deny: the more affluent one becomes, the more difficult it is to resist the impulse to expand that wealth at the expense of others. This is, of course, a truth that the Occupy Movement recognized, and it is a truth that is getting widespread exposure thanks to recent news stories. For example, prominent Canadian lawyer Tony Merchant and his wife, Liberal Senator Pana Merchant, have been discovered to have set up an offshore account with $1.7-million in the Cook Islands.

According to documents obtained by the Washington, D.C.-based International Consortium of Investigative Journalists, the Merchants were among 130,000 people from around the world to have stashed money in accounts in the Cook Islands, a self-governing New Zealand territory in the South Pacific.

While there is nothing illegal in such set-ups, they are often used as mechanisms of tax avoidance, usually through the illegal failure to report income accruing from those assets. According to the Consortium of Investigative Journalists,

A recent report by the Tax Justice Network found that the equivalent to the total combined GDP of U.S. and Japan is being hidden away by those rich enough to use offshore accounts.

As revealed in today's Star editorial,

The Tax Justice Network, based in London, estimates that some $21 trillion to $31 trillion is stashed away worldwide in unreported income. That’s a potential tax loss of $190 billion to $280 billion, based on a 3-per-cent return and assuming a 30-per-cent tax rate, the network reckons. The “black hole” of unreported wealth is vast and it has a major impact on public finances, political influence, the distribution of the tax burden and inequality.

Will these crimes of tax avoidance soon be addressed? While the editorial acknowledges that Jim Flaherty has recently declared his intention of going after these tax cheats, the fact is that the Canada Revenue Agency is expected to be substantially downsized over the next three years, calling into question the Finance Minister's sincerity. And the editorial makes clear how serious a problem this is for our country:

Canadians for Tax Fairness, a group that campaigns for sharing the burden equitably, estimates affluent Canadians have stashed $160 billion into offshore havens, costing us nearly $8 billion a year in foregone tax revenues. That’s many times what Ottawa hopes to recapture. And even that may understate the problem.

All of which brings to mind something Leona Helmsley once said: “We don’t pay taxes. Only the little people pay taxes.” Her view, I suspect, epitomizes the kind of disdainful and contemptuous thinking that many of the rich in their splendid isolation fall prey to. We should be equally wary of their enablers.

So I think we are right to be very suspicious and cynical about Ottawa's intentions. Recovering billions in tax avoidance dollars might not only disrupt its very cozy relationship with the corporate world, but also derail the Harper regime's relentless drive to reduce government's presence by starving it of the tax revenue needed to fund the many programs that help to define the Canadian quality of life, a quality of life that may not resemble that of the rich and famous but does frequently offer surprising and profound moments of grace.

H/t Alex Himelfarb

UPDATE: Click here for Linda McQuaigs lacerating assessment of the Harper regime's 'efforts' at recovering the aforementioned lost monies.