Tax Fairness: A Doubtful Prospect

Recently I wrote a post expressing doubt that the tax treaties signed by Stephen Harper at the urging of big business will not in any way be amended by Justin Trudeau. Tax Information Exchange Agreements (TIEAs), as manipulated by Harper, allow for the legalized theft of countless billions of corporate tax dollars from the public treasury, thereby limiting what government can do to alleviate social and economic woes here at home.

Judging by some letters in today's Star, I see I am not alone in my suspicion that relief will not be forthcoming from our 'new' government:

Re: Why not outlaw use of tax havens? Letter June 22

Re: Loopholes costing Canada billions in lost revenue page, June 17

Sadly, Robert Bahlieda is a prophet crying in the wilderness. The criminalization of corporate tax avoidance is next to impossible when, as he rightly argues, it is ingrained in our culture and politicians routinely coddle business interests.

While it took great courage for Prime Minister Justin Trudeau to reject austerity and embrace infrastructure spending, it will take even more political chutzpah to entertain radical tax reform when Canadians are unwilling to pay even for the programs and services they need.

In the end it is we the citizens who must object to the privatization of our democracy. We need to care enough about it to insist that our representatives uphold the importance of taxation in a civilized society – the principled starting point of any true reform.

Salvatore (Sal) Amenta, Stouffville

This article should leave no doubt in anyone’s mind about who Western governments, and in particular the Canadian government, represent. It sure as hell isn’t the average voter in Canada.

I resent my hard earned tax dollars being spent on giveaways to multinational corporations like Bombardier, GM, and many others to ostensibly “create” new jobs, or “preserve” current employment, when these wealthy corporations pay next to no Canadian taxes. They then use their profits to buy back shares to better reward their executives, while at the same time cutting employees.

As the article points out, Canadian government policy has been to encourage the offshoring of profits.

The most effective way to stop this corporate gravy train is to eliminate income taxes on profits and replace them with a turnover tax of 1 to 3 per cent on all sales in Canada. Taxes on profits are easily subverted as we have seen with the shifting of taxes between Ireland and other jurisdictions.

A tax on corporate sales for the privilege of selling in Canada would at one fell swoop eliminate all the fancy accounting practices and legal manoeuvres to avoid taxes. Sales are the easiest thing to monitor and the most difficult to obscure.

Don Buchanan, Etobicoke

When discussing corporate tax avoidance the argument is made that Canadian multinationals need these “tools” to give them the “best ability to compete on international and global scale.” We’ve heard this kind of argument in another sphere – doping and steroid use in professional and amateur athletics.

Perhaps it’s time the multinationals were also barred from competition and stripped of their hardware so that the ethical ones can thrive.

Sid Potma, Toronto

The integrity of Canada’s tax system, as it’s currently written, looks disproportionately to its citizens for the tax base to maintain our country. I would appreciate it if some one would publish a list of the Canadian companies/corporations blatently avoiding billions in corporate taxes, thus placing an unfair burden on all of us to maintain the basic lifestyle we have become accustomed to.

Richard Kadziewicz, Scarborough

The Perspective Of Age

I suspect that much of the wisdom attributed to old age is the perspective that the years bestow. Having lived a certain length of time, it seems inevitable that people will more easily see through rhetoric and facades, much of them perpetrated by democratic governments who claim to represent the interests of the people. One example would surely be Tax Information Exchange Agreements (TIEAs) involving what many would say are a massive fraud perpetrated on Canadian taxpayers.

Under the guise of combating tax evasion, the federal government opened up dozens of tax loopholes that have allowed Canadian corporations to avoid paying tax on $55 billion in international profits over the last five years.

The money is funnelled into offshore tax havens and can be brought back to Canada tax free by multinationals based in Toronto, Vancouver and Calgary.

These offshore manoeuvres translate into billions of dollars in lost tax revenue for Canada, not because companies are cheating, but because they are encouraged to avoid taxes by government policies.

Not surprisingly, the abuses the treaties allow were engineered by the Harper government at the behest of corporations.

In 2010, Canada joined an initiative launched by the Organization of Economic Co-operation and Development to make tax havens more transparent and started signing Tax Information Exchange Agreements (TIEAs) with notorious tax havens like the Cayman Islands, Jersey, the Isle of Man and the British Virgin Islands.

At the same time, the tax code was altered to allow any Canadian multinational corporation doing business in a TIEA partner country to bring profits home tax free.

Says Arthur Cockfield, a professor of tax law at Queen’s University,

“The corporate lobby is alive and well...“Why did (the government) do it? They were persuaded by industry that it was necessary to be globally competitive.”

Yielding to the corporate lobby has proven quite costly.

A joint investigation by the Star and the CBC has found that, since the first TIEAs were signed in 2011, the deals have allowed corporations working in low- or no-tax zones like Bermuda, the Bahamas and Panama to avoid paying taxes on some $55 billion in profits. If earned in Ontario, that money would have yielded more than $14 billion in tax revenue. That’s the equivalent of nearly half of this year’s projected federal deficit.

It is, of course, quite easy to demonize the Harper government that engineered these loopholes, starving much-needed programs and placing an even heavier burden on us, Leona Helmsley's 'little people.' Moreover, the true test of whether our new government is any better will be whether or not it revokes these obscene deals.

As one who has come to the conclusion that government is not really there to represent our interests, its rhetoric notwithstanding, I'm betting that Mr. Trudeau will opt for the status quo.