The View From Olympus

 

As I tried to suggest in my post the other day, rich people really are different from us, and people like Justin Trudeau, part of that rarified group, have no desire to really disrupt their status quo. 

While it might seem reductionist, in my view that fact goes a long way toward explaining the inability of the Canada Revenue Agency to recoup taxes that have been sheltered in off-shore havens. If you believe that the CRA acts without political interference, you need only remember how Harper sicced them on non-profits that were active on environmental issues, often embarrassing the prime minister in the process. The same thing is happening under the Liberal administration; it is just taking a different form.

And people are noticing the CRA's apparent impotence:

Five years, 200 audits, zero charges, Oct. 5

Aside from hearing how the wealthy continue to evade paying taxes in this country, what is even more infuriating is reading about how the Canada Revenue Agency (CRA) does very little to recoup this money or charge these people for this kind of criminal activity … all the while charging hundreds, even thousands of dollars in penalties and fees to small businesses or average citizens for filing our taxes late or not making our payments on time.

Heidi Bigl, Toronto

Heidi Bigl is not the only one. Writes Terry Glavin:

As for Canada’s diligence in capturing tax revenue — it’s not much to boast about. It was only after the ICIJ’s Panama Papers bombshell in 2016 that the CRA dropped a court fight intended to prevent the Parliamentary Budget Officer from releasing estimates on how much the treasury was being effectively bilked out of revenue by individuals and corporations resorting to secret offshore accounts. That was just one minor impact the Panama Papers had on government policies worldwide, but Canada remains a laggard in corporate transparency.

And the same laxity seems to apply to money-laundering:

For years, Transparency International Canada has been campaigning against what it calls “snow-washing,” a kind of money-laundering that allows foreign investors to hide dubiously sourced capital in Canadian assets, notably real estate. It was only earlier this year that the federal government promised to introduce a searchable “beneficial ownership” registry in the House of Commons.

The adverse impacts of snow-washing in real estate is most noticeable in British Columbia, where a provincial expert panel reckoned in 2018 that in that year alone, money-launderers had sunk $5.3 billion into real estate investments, mostly in Metro Vancouver. It’s a racket that’s been going on for years, causing dramatic distortions in the city’s house prices, and it has spurred B.C. to introduce a beneficial ownership registry of its own.

The promise of a federal registry to identify the real owners of corporations investing in Canada was made in the Liberal budget that was introduced in the House of Commons last April. The registry is supposed to come into effect within five years. But a federal election has since come and gone. So will Ottawa finally act to clean up Canada’s reputation and start collecting taxes on the super-rich with the same rigour the CRA applies to the rest of us?

We’ll see.

The view from Olympus can be dizzying, and it is a great height to fall from. Hubris and nemesis, anyone?

They Really Are Different From The Rest Of Us

 

H/t de Adder Canada

Justin Trudeau has rightly earned severe criticism for his holiday in Tofino on National Truth and Reconciliation Day. However, in my view there is another very important story here as well, one that imparts a lesson we would all do well to bear in mind, especially in light of the new revelations made in the Pandora Papers.

My contention is a simple one. When you have friends in high places, when you associate and identify with them, you are likely to handle them with especially soft kid gloves and certainly be wary of offending them by tax measures that may capture a scintilla of their wealth.

What does any of this have to do with our prime minister? Justin Trudeau is of the financial elite, and those he considers friends breathe the same rarified air as he does. One remembers his ill-fated holiday on the private island of close family friend, the Agha Khan. Then there was his impassioned defence of his good friend and major fundraiser Edgar Bronfman over his unsavoury involvement in an offshore scheme. As well, although perhaps a minor example, consider where he stayed during his B.C. sojourn, an abode called Surfer's Paradise, which is currently on the market with an asking price of  $18,750,000. While I do not know what rental he paid for the house, it would likely be beyond the budget of most.

Does the fact that Trudeau can afford such an indulgence impugn his leadership? Of course not. But it is yet another reminder that the truly wealthy are different from the rest of  us, and that the filter of wealth is often an impediment to being in touch with the rest of us or seeing us on the same level of humanity as they are. In other words, empathy is compromised, one of the subjects Chelsea Fagan addresses in her video, 6 Secrets I Learned Working For Rich People, which I recommend you view as time permits. 

Accompanying the video are some very useful links to articles she cites in the video:

Articles on rich people and empathy can be accessed here, here, and here.

An article on rich people and philanthropy can be accessed here.

Now, it would clearly be an offence to the ideal of critical thinking to suggest that any of this directly indicts the sensibilities of Mr. Trudeau. But, as they say, actions (or in this case inactions) speak louder than words, something I shall return to in a moment.

I am thinking anew of the financial elites in light of the release of The Pandora Papers, a kind of successor to the Panama and Paradise Papers, all of which reveal the off-shore dodges the rich use to avoid paying their fair share of taxes. Those using these tax avoidance measures range from world leaders to prominent Canadians, and it is estimated that there is more than $14 trillion squirrelled away by the entitled.

Now, I am not suggesting for a moment that Mr. Trudeau or any of his family makes use of such havens. However, as I expressed in a series of posts in 2017, I am concerned that his identification and affiliation with the truly wealthy has prevented any meaningful reforms that would close the loopholes that allow for such selfish behaviour. Particularly damning is the fact that since the 2016 release of the Panama Papers, which showed the magnitude of off-shore tax-avoidance havens, not one Canadian has been charged, and it appears no money has been recovered.  This stands in sharp contrast to his campaign avowals in 2015 to close such loopholes. And in the 2021 campaign, he made similar promises which, even if some were to be enacted, would result in mere tinkering around the edges and would do nothing to advance lofty goals such as pharmacare and $10 a day childcare.

Mr. Trudeau is very well-known for talking a good game. His rhetoric even soars at times. But it is absolutely essential that Canadians demand more than words if we are ever to become the country that history shows us we are capable of becoming.

Not So Fast, Capitalism

The triumphalism of capitalism can sometimes be hard to take. Platitudes such as "A rising tide lifts all boats" abound, rarely questioned except by the most astute among us, thereby excluding much of the MSM.

Fortunately, there are still people like Linda McQuaig to set the record straight on a recent claim in the NYT that life just keeps getting better today:

Amid growing criticism of extreme inequality, expect to hear lots more about how today’s capitalism is benefiting the world — especially next week when the global elite meets for their annual self-celebration in Davos, Switzerland.

It’s a powerful narrative. If capitalism is working wonders for humanity, maybe it doesn’t matter that a small number of billionaires have an increasing share of the world’s wealth.

But is the narrative true?

McQuaig suggests something other than capitalism is at work that has improved people's lives:

Life expectancy only began to improve towards the end of the 1800s — and only because of the public health movement, which pushed for separating sewage from drinking water. This extremely good idea was vigorously opposed by capitalists, who raged against paying taxes to fund it.

So sanitation, not capitalism, may be humanity’s true elixir.

Indeed, things only truly got better, says British historian Simon Szreter, after ordinary people won the right to vote and to join unions that pushed for higher wages and helped secure public access to health care, education and housing — again over the fierce objections of capitalists.

This suggests that it’s not capitalism but rather the forces fighting to curb capitalism’s worst excesses — unions and progressive political movements — that have improved people’s lives.

This is not to imply, however, that advocates of unfettered capitalism are helpless against such onslaughts of insight. While public polling suggests widespread, growing support for greater taxation of the wealthy, they have a potent threat in their arsenal:

Don’t even think of taxing us, because we’ll just move our money offshore.

The antidote to such extortionate tactics is suggested by Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley, in their book, The Triumph of Injustice:

... they argue that advanced nations could effectively clamp down on tax havens if they co-ordinated their efforts, just as they do in other areas, like trade policy.

Saez and Zucman point out there’s nothing to prevent advanced nations from simply collecting the corporate taxes that the tax havens don’t.

Recent reporting requirements make this possible. “It has never been easier for big countries to police their own multinationals,” they argue. “Should the G20 countries tomorrow impose a 25 per cent minimum tax on their multinationals, more than 90 per cent of the world’s profits would immediately become effectively taxed at 25 per cent or more.”

As always, there are solutions to the ills that plague us. What is in short supply, however, are politicians with the vision, integrity and backbone to implement them.

Friends In High Places Are Good (For Some)

Having friends in high places is certainly something the wealthy must savour as they continue to hide money in offshore tax havens. Yes, the very same havens the Trudeau government promised to crack down on. And the very same tax havens that, as I recently posted, seem to inspire timidity in our Canada Revenue Agency.

A new report by the CBC/Fifth Estate suggests that timidity is deepening:

The Canada Revenue Agency has once again made a secret out-of-court settlement with wealthy KPMG clients caught using what the CRA itself had alleged was a "grossly negligent" offshore "sham" set up to avoid detection by tax authorities, CBC's The Fifth Estate and Radio-Canada's Enquête have learned.

This, despite the Liberal government's vow to crack down on high net-worth taxpayers who used the now-infamous Isle of Man scheme. The scheme orchestrated by accounting giant KPMG enabled clients to dodge tens of millions of dollars in taxes in Canada by making it look as if multimillionaires had given away their fortunes to anonymous overseas shell companies and get their investment income back as tax-free gifts.

Apparently, who you are and what you are worth entitles you to special privileges, including a totally sealed record of your settlement with the CRA:

... tax court documents obtained by CBC News/Radio-Canada show two members of the Cooper family in Victoria, as well as the estate of the late patriarch Peter Cooper, reached an out-of-court settlement on May 24 over their involvement in the scheme.

Details of the settlement and even minutes of the meetings discussing it are under wraps. A CBC News/Radio-Canada reporter who showed up to one such meeting this spring left after realizing it was closed to the public.

Quite understandably, many are outraged by this:

Toby Sanger, executive director of the advocacy group Canadians for Tax Fairness, says the CRA should never have agreed to settle the case.

"I think it's outrageous," he said. "We've had a lot of tough talk and promises from this minister [National Revenue Minister Diane Lebouthillier] about how they will crack down on tax evasion by the wealthy and corporations, but unfortunately we've seen no evidence of this so far."

The Trudeau government's previous tough talk on the so-called KPMG sham had come after a document leaked to The Fifth Estate/Enquête showed the CRA itself had offered a secret "no penalties" amnesty in May 2015 to many of the other KPMG clients involved in the scheme.

The CRA offered to have them simply pay the back taxes owed — but with the condition they not tell the public about the offer.

Apologists for the Trudeau government will insist that the CRA was acting independently of the government, but that clearly flies in the face of reality, given Trudeau's promises in 2017 to do a "better job of getting tax avoiders and tax frauders."

Like their attempts to influence the course of justice in the SNC-Lavalin affair, this latest report is yet one more arrow indicating where the sympathies and loyalties of our federal government really lie.

Our Timid Canadian Revenue Agency

Over a year ago I posted about the sad record of the CRA in pursuing offshore tax cheats as revealed by the Panama Papers. It seems that little has changed since then.

In a Policy Options article, Senator Percy Down asks, Why can’t the Canada Revenue Agency catch tax cheats?

Recently, on the third anniversary of the release of the Panama Papers, we learned that other countries have recovered more than $1.2 billion in fines and back taxes:

Australia has recouped $92 million.
-Spain is counting $164 million in its coffers.
-The United Kingdom has recovered $252 million.
-Even Iceland, with a population of roughly 350,000 people, was able to recover $25.5 million.

Of the 894 Canadians (individuals, corporations and trusts) revealed by the Panama Papers to have accounts, the Canada Revenue Agency hasn’t recovered a dollar.

While the CRA talks a good game, its results tell a different story:

The agency talks tough every time there is a public leak of information from some bank or law firm operating in a tax haven. Nevertheless, not one person has been charged with overseas tax evasion, much less convicted, fined or sentenced since the 2006 information leak we know the most about, from a bank in Liechtenstein, where 106 Canadian-held accounts were found to contain more than $100 million.

In fact, as reported by the Auditor General, the CRA “waived referrals for potential criminal investigation to gather information.” In other words, the agency promised not to charge the people involved in that tax scheme in exchange for them explaining to the CRA how it actually worked and agreeing to pay what they owed.

This strange acquiescence to tax evasion is contrasted by other jurisdictions that have worked hard to discourage such criminality:

Compare this to Australia, for example, where not only are back taxes and penalties paid, but individuals are charged with committing a crime and in many cases convicted, fined and jailed, and the country uses those convictions to warn citizens that it is serious about tax evasion.

“As a result of Project Wickenby’s focus on preventing the abusive use of secrecy havens,” a 2012 audit of an Aussie anti-tax evasion task force noted, “Australia is presently less attractive for international tax fraud and evasion than it otherwise would have been. After a slow start, the project has achieved substantial results from its activities, which contribute to protecting Australia’s revenue base.”

And make no mistake. We are all paying for the Canada Revenue Agency's laxity:

Because Canada has not recovered any money, three things have happened. One, we don’t have that money to fund our priorities without incurring a deficit; two, the rest of us have to make up the shortfall by paying more taxes; and three, Canadians are wondering why we have a two-tier justice system for tax evasion. Try to cheat on your domestic taxes, and the CRA will likely find you, charge you, convict you and force your repayment. Hide your money overseas, and you likely will never be charged or convicted. The odds are good you will get away with it, and your federal government allows this double standard to continue.

Like the Harper government before it, the Trudeau administration seems to be using the CRA for its own purposes. Is it too much of a leap to conclude that one of those purposes is to protect its friends in high places?

Less Than Meets The Eye?

Given its recent rather dubious pursuits of lost tax revenue, I readily admit that I don't know what to make of the latest report that the CRA has actually begun to pursue monies lost to offshore tax havens.

Zach Dubinsky reports the following:

Canada Revenue Agency officers, backed up by police, raided locations in three provinces Wednesday as part of a criminal tax-evasion probe stemming from the Panama Papers, the agency said.

About 30 criminal investigators from the CRA executed three search warrants in the Toronto area, Calgary and West Vancouver, with assistance from the RCMP and the West Vancouver police, the CRA said in a statement online.

My first reaction, upon reading this, was that it was bloody-well about time. However, then I started wondering whether or not this was a move intended more for public consumption than fiscal rectitude in advance of the upcoming federal budget, full of sound and fury and perhaps signifying little.

Consider the evidence.

Last year, CRA assistant commissioner Ted Gallivan told the Star his priority was going after lawyers and accountants who orchestrated offshore tax evasion schemes for “dozens” of clients.

Last month, the Star reported that tax authorities around the world had recovered more than half a billion dollars in tax through their investigations into the Panama Papers.

By contrast, Canada has recovered nothing.

Additionally, in recent months, the CRA has had domestic targets in its sights, targets that in some cases seem like easy, even dishonorable, pickings.

The Guardian from Prince Edward Island reports that citizens, some among our most vulnerable, are feeling the tax man's wrath:

A 25-year-old Stratford woman struggling to pay off her student debt has been hit with a $15,000 tax bill by the Canada Revenue Agency over her tips.

Anita Casey is one of dozens of servers with the Murphy Hospitality Group who received letters three weeks ago saying they were being audited over their tips, retroactive two years.

“It’s pretty crazy that they’re coming after the poor young population who are in school and just trying to support themselves,’’ Casey told The Guardian.

Then there is the CRA operation targeting people's postal codes:

The Canada Revenue Agency's Postal Code Project is targeting the wealthiest neighbourhoods in all regions of the country, those with gold-plated postal codes, where auditors will pore through the tax filings of every well-heeled resident, address by address.

They're looking for undeclared wealth, signs that a taxpayer is actually richer than their income tax filings suggest.

"Comparing someone's lifestyle — cars, boats, houses — to their reported income helps us identify people who are non-compliant," said CRA spokesperson Zoltan Csepregi.

A well-publicized initiative, it has the whiff of class-warfare about it, one that will inevitably prompt some to look upon the wealthy with suspicion and disdain. And perhaps yet another effort at misdirection, given their singular absence of progress on bringing the offshore havens to account?

Our country is renowned for its "snow washing," a testiment to the ease with which money can be hidden and laundered thanks to Canada's laws facilitating shell companies. It will therefore take more than a well-publicized raid to convince me that the Trudeau government and the Canada Revenue Agency are serious about making corporate evaders pay their fair share.

As Fox Mulder would say, "I want to believe." However, I shall wait to see the money before I am convinced that serious changes are underway.

Seeking Some Substance - Part 2

In Part 1, I tried to establish that there is a gross discrepancy between the rhetoric and the reality of Justin Trudeau's promise to makie sure corporations pay their fair share. Indeed, if truth be told, his government has done little or nothing to alter the CRA ethos, imposed during the Harper era, to give the corporate world an easy taxation ride. For example, as outlined in the previous post, where other countries are recovering significant sums previously lost to offshore tax evasion and avoidance, Canada has thus far recovered nothing.

The CRA, it appears, would rather indulge in some domestic spying than go after the real evaders:

The Canada Revenue Agency's Postal Code Project is targeting the wealthiest neighbourhoods in all regions of the country, those with gold-plated postal codes, where auditors will pore through the tax filings of every well-heeled resident, address by address.

They're looking for undeclared wealth, signs that a taxpayer is actually richer than their income tax filings suggest.

"Comparing someone's lifestyle — cars, boats, houses — to their reported income helps us identify people who are non-compliant," said CRA spokesperson Zoltan Csepregi.

Class warfare, anyone? Or how about a little misdirection to distract people from the real villains of the piece, the corporations?

In fact, the CRA is really not making any effort to conceal their true motives:

"The Postal Code Project also has the potential to demonstrate to the public that the CRA is actively working towards its fairness objective, which speaks to our integrity as an organization."

While not opposed to this measure, Diana Gibson of the Ottawa-based Canadians for Tax Fairness

said it deals with only a small part of the problem.

"It's a good step. It's a small step," arguing that Canada's big corporations are responsible for about two-thirds of the country's tax avoidance problems.

"We applaud it, even if it's small," she said. "It's nowhere near adequate."

While this government-approved misdirection is taking place,(and one would be exceedingly naive to believe the CRA acts independent of government direction) a new report by The Tax Justice Network shows that Canada is, effectively, one of the world’s more attractive “onshore tax havens.”

Every two years, the Network releases its Financial Secrecy Index, which shows how much

a country’s legal system facilitates global financial crimes such as money laundering and tax evasion.

Canada is No. 21 on the list, slightly higher than its 2016 ranking at No. 23. The higher the ranking, the more financially secret a country is.

“It’s a bad exam grade on the state of the country’s financial secrecy laws,” said Arthur Cockfield, a tax law scholar and policy consultant at Queen’s University. “It means that if you’re a crook or a super rich person who wants privacy, then you can use our corporate laws to hide the identity of the ultimate owner of the shares (of your company).”

You can read the details at the above link, but Cockfield draws a damning conclusion:

“The hypocrisy is that Canada is part of the OECD, forcing countries like the Bahamas, like Panama, to change,” Cockfield said. “We use our power to make them change their laws, but that just makes Canada (a) more attractive place for these crooks. We won’t change our laws.”

So, to repeat the question posed in Part 1 of this post, "What is to be done?"

There are some obvious answers, like closing the loopholes that allow this corporate cheating to take place. That is exactly what a strange alliance between the NDP and the Conservatives (politics does indeed make for strange bedfellows) is calling for:

“The system is designed for multinationals and big companies to avoid tax,” said NDP tax critic Pierre-Luc Dusseault in an interview. “The system is the problem.”

And that worm, Conservative finance critic Pierre Poilievre, chimed in:

“Those who have the financial means to set up complex arrangements are always better off under regimes that are highly complex.”

“The smaller, leaner entrepreneurial businesses can’t afford to have large legal and tax accounting departments that allow them to game the system. So they are automatically at an unfair and unjustified disadvantage,”

Do not forget that we are talking about some very, very significant lost tax revenue that the individual has to make up:

In 2016, Ottawa collected $3.50 in income tax from individuals for every $1 it collected from businesses.

The Star/Corporate Knights investigation revealed that Canada’s 102 largest corporations collectively avoided $62.9 billion in income taxes over the past six years. On average, that’s $10.5 billion less per year than if they paid the official corporate tax rate.

It’s also an average of $100 million missing from the public purse per company, per year.

The message about tax cheating is filtering down to the average citizen as well, with

more than 27,000 Canadians [having signed] a petition calling on the government to raise corporate taxes and close tax loopholes.

The petition also asks the government to consider imposing a special levy on banks, which are the country’s biggest tax avoiders.

While the Big Five banks are collecting record profits, their income tax rates have dropped to the point where companies in the banking sector paid 1/3 the rate of other large Canadian companies in 2015.

At 16 per cent, the tax rate paid by the biggest Canadian banks is the lowest in the G7.

Canada is hardly a passive victim of tax avoidance and evasion. It is clearly a facilitator. If Justin Trudeau's speech in Davos about the need for corporations to pay their fair share is to be seen as anything more than his usual pious pontifications, it is long past due that he finally prove that he is no longer interested in giving these entities the free ride they have thus far enjoyed.

Trudeau Town Halls: Baubles Of Distraction, Not Questions Of Substance

Prime-Minister-For-A-Day Kim Campbell is probably best remembered for saying, “An election is no time to discuss serious issues.” She might just as well have been talking about town halls, particularly the kind our Prime Minister is currently in the midst of.

Justin Trudeau's meet-and-greet will undoubtedly constitute a public-relations success. That success, however, will be thanks to two things: Trudeau's ease in front of large crowds, and the profound colloquialism and ignorance of the people attending these sessions. It is the latter I wish to address today.

In theory, town halls, being somewhat unscripted, are an opportunity to put the convener on the hot seat. Unfortunately, the topics thus far brought up have been tritely predictable and easily defused, no doubt because they are exactly what the PMO has prepared Mr. Trudeau for. Consider, for example, what was asked at his Sackville gathering. While the questions may be important to the posers, they lack, shall I say, a certain concern for national and international issues that the government is, in my view, badly fumbling. Here are two examples:

Abdoul Abdi’s sister Fatouma Alyaan asked ‘Why are you deporting my brother?...My question to you is if it was your son, would you do anything to stop this?’

And this one:

Why do we have medical doctors who come here from different countries who are unable to integrate into the system?

To be sure, he was also asked about his visit to the Aga Khan's private island retreat, for which Trudeau has been rebuked by outgoing ethics watchdog Mary Dawson, but again, this was a predictable and easily-handled question for which I am sure the Prime Minster was well-prepared.

The questions at yesterday's session in Hamilton were similarly trite and predicable:

Prime Minister Justin Trudeau told a woman heckling him about Omar Khadr during a town hall in Hamilton that he, too, is angry about the multimillion-dollar settlement the former Guantanamo Bay inmate received from the government.

“The anger that some people feel, and that a lot of people feel about the payment the government made to Omar Khadr is real and quite frankly — this might surprise you — but I share that anger and frustration,” he said.

Score another one for good preparation.

Yet I can't help but wonder how Mr. Trudeau would respond if truly important questions were asked of him. Questions like the following:

Why does your government insist on protecting the rights of multi-nationals to sue our government over legislation that might interfere with their profits?

Known as investor-state dispute settlement, it is a mainstay of NAFTA and eagerly sought for the TPP. So far, Canada has been sued five times under NAFTA provisions for trying to protect the environment.

Another question well-worth posing would pertain to the government's continuing support for the immoral Saudi arms deal, arms that have been shown, in contravention of the deal, to have been used against Saudi citizens.

In July, after The Globe and Mail's reporting of conflict in Awamiyah, Foreign Affairs Minister Chrystia Freeland issued a statement saying she was "deeply concerned" and announced a probe of the incident.

The Trudeau government has never released the results of this investigation nor has it explained to Canadians what happened.

These are the questions I would ask on this issue:

Why have you refused to release the report, and why is your government now trying to quash the most recent legal challenge to the deal, an attempt that a federal court judge has rejected?

Finally, I would ask about the Trudeau government' attitude toward tax cheats using offshore havens:

A dozen governments around the world say they've recovered a combined $500 million in unpaid taxes so far thanks to the Panama Papers leak of tax-haven financial records in 2016.

But not a penny of that is destined for Canadian government coffers. The Canada Revenue Agency maintains it will be at least another 2½ years before it will have an idea of how much it might recoup.

When other governments are enjoying considerable success in recovering tax money thanks to the Panama and Paradise papers, why is your government and the Canada Revenue Agency so reluctant to aggressively pursue them?

So those are some of the questions that will likely not be asked at the town halls. God forbid that this government should actually have to make an honest accounting of itself to the Canadian people.

On Tax Fairness

Ed Broadbent recently wrote on the need for real tax reform, calling for an end to the various favours our government bestows on the ultra rich. His thesis was compelling:

Tax avoidance and evasion by the rich ultimately undermines democracy: it starves social programs and public services, increases after tax income and wealth inequality, and further concentrates economic resources in the hands of a few. The overall message to a majority of Canadians is that the rules of the economic game are rigged against them.

He went on to excoriate the Trudeau government for its hypocritical failure to pursue real tax reform:

The Liberals promised change. In their 2015 election platform, they promised to “conduct a review of all tax expenditures to target loopholes that particularly benefit the top 1 per cent.”

But there has been no broad public review in which citizens could participate. And action to date has been limited to stopping abuse of some private corporation rules. Minister Morneau has said he will impose higher taxes on the small number of private corporations that shelter investment assets of more than about $1 million, which is an action that should be supported.

While I did not agree with all of his suggestions, I doubt there would be many who would dispute Broadbent's thesis. In today's Star, readers offer their views on his piece as well as the sickening truths made evident in the recently-released Paradise Papers. Here is but a sampling of their thoughts:

Ed Broadbent writes, “The case for taxing investment income on the same basis as employment income on the grounds that ‘a buck is a buck’ dates back to the Carter Commission of the 1960s when another Liberal government failed to act on it.”

The problem is the ultra-rich are Prime Minister Justin Trudeau’s personal friends and he prefers to run defence for them than to do what is right for the public good.

Former finance minister Allan MacEachen tried to reform the tax system under then-prime minister Pierre Trudeau but, like Carter before him, the government of the day distanced itself from any idea of true reform and let both of these truly honourable men get practically eviscerated by all the real (rich) powers. It’s all about the Golden Rule: “Them that’s got the gold makes the rules.”

Jennifer A. Temple, Welland, Ont.

After decades of tax avoidance by Canada’s wealthy, we now have the exposure in detail of the Panama Papers and the Paradise Papers.

Our current federal government assures Canadians it will restore the principle of tax fairness. Why should Canadians believe this promise? It is the political process and our elected MPs that preserve this economic injustice.

As the Star reported, Parliament and those who bankroll them control the law. It is highly unlikely the wealthy will forfeit their advantage simply because Canadians think it’s unfair.

Talk is cheap and the government won’t move until pushed. I challenge all Canadians to organize a Canada-wide tax boycott. Until tax fairness is achieved, we should refuse to pay any taxes owing, beginning April 2018.

And every MP should be lobbied to support an immediate tax overhaul. Tax fairness can only be achieved by law, not mealy mouthed promises by those concerned only with preserving their own self-interest to the detriment of the rest of us.

Gordon Wilson, Port Rowan, Ont.

Ed Broadbent shines a bright light on the biggest issue of our time: tax reforms that will cut through many complex aspects of our socioeconomic system.

A progressive and clearly defined tax system would address many issues we have been struggling with since the dawn of the 21st century.

We need a tax system that encourages savings and productive investments, while it shifts the tax burden from working people to the wealthy and big corporations. For many years, the middle- and lower-class have been paying taxes while the rich have been taking advantage of it.

A reformed tax system will prevent the creation of generations of wealthy individuals and corporate monopolies, which have taken advantage of societal privileges without paying their fair share. The wealthy have made their money on the backs of the working people.

The Paradise Papers show how the rich, with the help of law firms, have parked 12 per cent of the world’s wealth in offshore accounts, which does nothing to improve the economy. The sheer number and diversity of people and corporations involved in these tax havens is frightening. It is truly like discovering a galaxy of hidden money that public officials have a hand in helping hide away.

Reforming the tax system is possible if there is political will.

Ali Orang, Richmond Hill

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

The Point Is

In her latest iPolitics article, Kady O'Maley offers the view that the revelations of The Paradise Papers do not constitute a scandal for Justin Trudeau and his government. And while the Scheer-led Opposition is making every predictable effort to connect non-existent dots, few are suggesting that Trudeau had any personal knowledge of the alleged offences committed by chief fundraiser Stephen Bronfman, who has stoutly denied any wrongdoing.

However, to assert Trudeau's blamelessness in all of this is to look only at the immediate situation, one that Justin undoubtedly made worse with his unseemly and ready acceptance of Bronfman's innocence, about which I posted last evening. The larger implications of the ease with which the ultra rich transfer their money to jurisdictions beyond the reach of the tax man constitute the real threat to our democracy and our way of life.

Recently, I wrote this:

The revelations now in the public arena thanks to the collective efforts of hardworking journalists reinforce a perception that many, many people have held for a long time: the tax system is gamed, and talk of tax fairness is simply convenient posturing that ultimately means nothing. This perception/reality is very damaging to public morale; those who believe in paying their taxes are now being shown that they are, in fact, the patsies for their betters.

Nothing could be worse for those who believe in a society where all of us pay to maintain a social safety net, programs to help the disadvantaged, and a public medical system where no one is turned away because their wallet is too thin. Just more fodder for the rabid right wing, and governments have no one but themselves to blame.

It is a sentiment recently echoed by Thomas Walkom:

... tax havens have proved so embarrassing that they put the entire government revenue-raising machine at risk.

The cost to Canada’s federal treasury of offshore tax havens is estimated at between $6 billion and $8 billion a year. While that may seem a lot of money, when compared to the roughly $300 billion that Ottawa pulls in each year, it is relatively small.

Most tax revenue comes from the broad middle-classes — people who are willing to pay as long as they deem the system fair. Revelations, like those in the Paradise Papers, which detail at an individual level how the wealthy and well-connected get special treatment, break that trust. This threatens the entire fiscal basis of the state.

Put succinctly, no one wants to be played for a fool. And it is that fact that makes the cossetting of the utra rich by governments so dangerous.

In its editorial today, The Star offers this:

The latest revelations from the leak of the Paradise Papers raise troubling questions, not only about government’s failure to collect what’s owed, but also about the power of money to subvert our democracy.

They serve as a reminder that those who can afford to hide income from the taxman can also afford to hire the very best lobbyists to help ensure that, whatever the public interest, governments don’t close the loopholes that allow tax avoiders to get away with it.

There is, of course, a solution to all of this, one that I am not holding my breath waiting for:

The Paradise Papers are doing nothing to soothe those who worry about the unseemly intertwining of money and power in politics or about the extent to which the economy is rigged by the few against the many. The government can do something about that. It can, for instance, close unfair and ineffective tax loopholes and collect what’s owed. Or it can sit back, defend the current arrangements and watch the cynicism grow.

It would be nice to believe that The Paradise Papers will lance the massive carbuncle of complicity that exists between government and business, but like its predecessor, The Panama Papers, it will likely last only for a few more news cycles before being replaced by a feat of political legerdemain that suggests we just move along, as there is nothing to see here.

On Corporate Plundering

H/t makaycartoons.net

Having written previously on the breath-taking legalized theft of our groundwater made possible by an Ontario Liberal government that has yet to meet a corporate entity it doesn't love, I avidly follow public reaction to this outrage. Today's Star offers an excellent series of letters on the topic, two of which I reproduce below:

Re: Let's stop being suckered by water-bottling giants, Aug. 27

The long-standing practice of allowing our fresh water supplies to be drawn by huge private commercial multinational companies like Nestlé and bottled for profit is egregious. In the ultimate perverse and twisted irony of capitalism a free, publicly owned resource is privatized and then sold back to those who previously owned it.

For decades the Ontario government has allowed Nestlé and other private companies to draw Ontario’s fresh water from our aquifers at literally no charge so that it could be bottled and sold back to us at a massive profit in the form of bottled water, beer and soda pop. After an outcry at this practice by environmentalists many years ago, they then placed an insultingly low token fee on the water of $3.71 per 1 million litres and quietly allowed Nestle to continue taking an average of 3 million litres a day of our publicly owned finite resource for bottled water.

Recently, without fanfare the Ontario government renewed the agreement. This should have been a large front-page headline in the Star but was not even noted.

As Ontarians we should all be outraged that a large multinational private enterprise is given our water without charge and under secrecy by our own government in what amounts to nothing more than legalized corporate theft with the willing collusion of the province.

Ontarians gain absolutely nothing from these arrangements while losing our finite supply of fresh water; Nestlé gets everything.

What possible motivations or explanation could the government have for agreeing to such terms while they are struggling with a large cumulative debt and an ongoing deficit and cutting government funding for a variety of critical services? What obligation does the government feel to a faceless mega-corporation that is happily stealing our water for its own enrichment with the blessing of the government? This is corruption at the highest level. Would Nestle agree to the deal if the terms were reversed?

The Ontario government is willingly forgoing billions in water revenues that are desperately needed. Why would the government at the very least not bottle our own water and sell it on the open market to recoup full value for Ontarians for this precious resource while eliminating the middle-man? Water bottling is not a sophisticated, expensive or complex process.

This is yet another example of the corruption of free enterprise and the willing collusion of our own public officials in its practice much like the recent revelations about offshore tax havens. The Minister of the Environment should resign. These agreements should all be cancelled.

We are regularly treated to egregious examples of governments selling off public assets to the private sector in perpetuity at fire-sale prices. It happened with Highway 407, it is happening with Hydro and it has been going on for decades with our water. The private sector is licking its chops over the LCBO. Where will it end and when will we have and demand a government that is truly a steward of the shared resources we all own.

The sale of any public asset should be placed under the lens of critical public scrutiny. These public resources are not theirs to sell to the lowest bidder! There should be a public inquiry into the privatization of public assets. If this keeps up soon we will have water, water everywhere but not a drop that we own.

Robert Bahlieda, Newmarket

Martin Regg Cohn’s evaluation of Nestlé’s right to bottle large quantities of Ontario water at a cheap price, then to sell it back to us, reveals an insidious corporate profit-making ploy that has gone on for several years. It happens in the U.S., too.

I suppose that Ontario Liberal Premier Kathleen Wynne believes that $3.75 per million liters of water is better than nothing, but she fails to note the effect on rural aquifers. Farmers depend totally on water they draw from their expensive wells, and resent bottling companies drawing down their valuable resource so city folk can sip from costly plastic bottles.

I hope that this report will persuade some Torontonians to revert to tap water, thereby reducing Nestlé’s profits and water draw. Meanwhile I suggest Mr. Cohn investigate the many government-instigated restrictions that cause farmers to wonder why we should keep working as farmers.

Charles Hooker, East Garafraxa

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.

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.

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.

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.

The Long Reach Of Partisan Politics

h/t Montreal Simon

In Ontario, we noticed the long federal reach of divisive partisan politics during our recent election. Joe Oliver, our alleged finance minister, interposed his views, lamenting the fiscal state of Ontario that, according to him, is bringing down the rest of Canada. Of course, the disingenuous Uncle Joe denied trying to interfere in our electoral contest. Indeed, he kept up his unsolicited advice post-election, suggesting the following to Premier Kathleen Wynne:

“We hope that her government will follow our lead toward a balanced budget,” he said. “Canada cannot arrive at its potential if the biggest province remains in difficulty.”

In her column today, The Star's Carol Goar offers a pungent rebuttal and some advice to the minister and his government:

He ignored the fact that Ontarians had just rejected his formula, championed by defeated Conservative leader Tim Hudak. He ignored the fact that Ontario is struggling to replace its manufacturing base. And he ignored the fact that Ontario, unlike Ottawa, doesn’t have resource revenues pouring into its coffers.

Compounding the problem, observes Goar, is the fact that the Harper regime is doing nothing to help the province regenerate its economy. In my view, this sad state is the result both of partisan prejudice and a paucity of ideas from the regime's braintrust, Nonetheless, The Star offers some suggestions that we can be certain will be ignored:

- Close the multitude of tax loopholes that allow the country’s wealthy elite to stash income in shell companies that pay low corporate taxes; hide assets in offshore tax havens; write off personal expenses and exploit all the tax credits, deductions, refunds and allowances in Canada’s 3,236-page Income Tax Act.

While the late Jim Flahety closed some loopholes, much more needs to be done.

- Restore Canada Mortgage and Housing Corp.’s original purpose.... If the federal government made it clear that CMHC’s first job is to make housing affordable, it would alleviate the need to build social housing, remove some of the risk from the real estate market, encourage residential construction and boost employment — all of which would benefit Ontario.

- Pay as much attention to Ontario’s mineral wealth as Alberta’s oil reserves.

While the regime can't do enough to promote and develop the tarsands, it has shown no interest in helping Ontario finance the infrastructure needed to mine the Ring of Fire and its rich chromite reserves.

- Fix Ottawa’s unfair equalization system.

Oliver ignored Ontario’s claims that it was being shortchanged by hundreds of millions under the convoluted formula Ottawa uses to ensure the financial burdens of all the provinces are comparable. But now Parliamentary Budget Officer Jean-Denis Frechette has confirmed Ontario is being underpaid by $640 million this year. That revenue would allow the province to knock 5 per cent off its deficit.

I expect that little attention will be paid to these sensible suggestions. As we have all learned over the years, Harper and company have developed a long list of enemies. Given its ideology and its resounding recent rejection of Harperesque medicine through his surrogate, Tim Hudak, there is little doubt that Ontario has a prominent place in that pantheon of distinguished Canadians.

Harper Lies: The Dismal Truth About Corporate Tax Evasion

My friend Gary recently alerted me to this, which should sicken all Canadian citizens. It is a story of corporate greed, massive amounts of lost tax revenues, and a government that aids and abets both. After viewing it, be sure to read the missive from Star letter-writer Robert Bahlieda that follows, and think about it when you hear the empty rhetoric from the Harper cabal about its 'tough on crime' agenda:



Recently, a Global TV investigative report on offshore tax havens indicated that as much as $20 billion of uncollected taxes are owed by major Canadian corporations and other wealthy individuals who employ these tax loopholes to evade/avoid taxes in Canada.

To add insult to injury these same individuals are given generous tax credits for moving their businesses offshore, leading many corporations like Gildan and the Toronto-Dominion Bank to pay little or no taxes year after year while making millions and billions in profits. This is not new — it has been going on for decades and there are thousands of companies doing this.

In effect, the Canadian government is subsidizing Canadian companies for moving jobs offshore to other countries, killing jobs in Canada and raising everyone else’s taxes in the process while implementing austerity measures here to supposedly stimulate the economy.

The final insult is all this is legal. While federal Finance Minister Jim Flaherty talks a good game on tax cheats, it appears he has intentional blindness about these egregious abuses of his own tax policy and no interest in pursuing his corporate friends.

Even more disturbing is the complete lack of interest and deafening silence on this important issue by government, business, academia or the public and particularly the media as indicated by the recent headlines. The antics of Rob Ford, senators like Mike Duffy who have evaded a few thousand dollars or selected abuses by a few nursing homes are deemed to be a more salacious and newsworthy headline than $20 billion in missing tax money owed by the corporate elite of Canada.

The self-righteous opposition parties are also silent on this issue. Better not to bite the hand that feeds them. Academics and economists who regularly opine on the abuses of unions have nothing to say about this unrealized multi-billion dollar tax windfall.

The massive amount of money owed by these upstanding Canadian tax cheats is a serious issue and should be top of the agendas of all in Canadian society. It is unfair, unjust and illegal despite what the tax law says. These “loopholes” (a polite term for legal corporate tax fraud) are quietly put in place and ignored by governments of all stripes to maintain their cozy relationships with powerful big business interests who have them in their hip pockets.

This is how capitalist democracy works. Powerful special interests lobby the government to get special treatment that ensures they remain powerful special interests. Meanwhile we prevaricate about increasing the Canada pension by a niggling amount or introducing a Guaranteed Income Supplement that would massively reduce social support costs in the long run, saving taxpayers additional billions.

Capitalist economics isn’t about making democracy work better, its about making it work better for the select few. Let’s start getting angry and take action on things that really matter in this world and relegate Rob Ford and the Senate scandal to the comics section.

Robert Bahlieda, Newmarket

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

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.