UPDATE: A Lack Of Appetite: The Canadian Government, The CRA, And Tax Avoidance

 

While I have written extensively in the past about tax evasion and avoidance in light of the revelations of both the Panama and Paradise Papers, I felt it was time to do an update. To summarize what I wrote previously, there has been a striking reluctance on the part of our government, compared to other jurisdictions, to go after the entitled who have sheltered so much income in offshore accounts.

Consider, for example, France. as reported in La Monde.

Seven years [after the Panama Papers release] and hundreds of audits later, France has already recovered €195.5 million in tax revenue for the state budget... 

Rendered invisible in offshore arrangements, this money corresponds to 219 taxpayer files, both individuals and companies, caught in the net of the Panama Papers. It's the sum of all financial audits completed by December 31, 2022, as well as regularizations made.

This sum

place[s] France in the club of five countries to have recovered more than €100 million in taxes and penalties thanks to the Panama Papers, along with the UK, Germany, Spain and Australia.

Moreover, the cumulative amount recovered is greater:

All told, from the Offshore Leaks (2013) to the Pandora Papers (2021), the sum recovered today stands at over €450 million. However, this figure will remain incomplete until all checks have been completed.

By contrast, it would appear that the pursuit of tax scofflaws by Canada has been far less vigorous. While is is difficult to find any current reports, two Senate of Canada reports do not paint a rosy picture. The first, from 2019 and written by Senator Percy Downe, has this to say:

The Canada Revenue Agency (CRA) is up to its old tricks: misleading Canadians and not upholding its responsibilities to collect taxes owed to our country by those hiding their money overseas. When tax cheats are not caught, charged and convicted, and money owed isn’t collected, we have less money to invest in our priorities while the rest of us pay higher taxes to make up the shortfall.

Why the federal government allows this state of affairs to continue year after year remains a mystery. The government talks tough, “overseas tax evasion is a high priority”, “we will catch you if you cheat” and other reassuring words. Their results, however, speak for themselves: they have none.

Recently, on the third anniversary of the release of the Panama Papers, we learned that other countries have recovered more than $1.2 billion dollars in fines and back taxes. Australia has recouped $92,880,415, Spain is counting $164,104,468 in their coffers, the United Kingdom has recovered $252,762,000, and even tiny Iceland was able to recover $25,525,959. Some 894 Canadians (individuals, corporations and trusts) were revealed to have accounts in the Panama Papers, but Canada’s Revenue Agency hasn’t recovered a dollar.

A second piece by Downe, written two years later, reported no progress. 

In the immortal words of the Parliamentary Budget Officer, "there are hundreds of millions, if not billions, of dollars in taxes that go undeclared, unreported and that escape Canadian tax authorities, probably on an annual basis...”

The Canada Revenue Agency (CRA) has failed when it comes to collecting any of this money hidden overseas. Notwithstanding the CRA’s highly effective domestic tax collection, they have been an utter disaster on overseas tax evasion. Canadians are allowed to have accounts overseas but it is illegal not to declare the proceeds of those accounts.

This inaction costs all of us, considering how the foregone tax revenue would provide a healthy injection into a myriad of much-needed programs in Canada. 

In Canada, there is no risk to hiding your money overseas because your chances of being charged or convicted range from slim to none. The "hundreds of millions, if not billions, of dollars in taxes that go undeclared ... probably on an annual basis” identified by the PBO will not, by itself, solve our financial problems — but it will go a long way to restore prosperity for Canadians.

The failure to collect taxes owed undermines confidence that everyone is being treated equally. If we are all in this together, then we all pay taxes. Otherwise, there is special treatment for some Canadians with the resources to hide their money, while the rest of us must pay more to make up that shortfall.

There is much work to do. Since nothing else has worked, it’s time for solid action rather than empty words from the Government of Canada.

One is naive to believe that the CRA is truly independent of government influence. One may recall, for example, that Stephen Harper siced it on NGOs that were critical of his government, and despite the promising rhetoric at the beginning of Justin Trudeau's tenure, it is clear that certain entities (think corporate and individual titans) are essentially off-limits. 

I have said it several times here, that Mr. Trudeau has never met a powerful entity he doesn't admire. Perhaps he picked it up through his upbringing or his reported forays to Davos to meet with the world's elite. 

One thing is undeniable, however. His bromance is costing the rest of us plenty, both in terms of a loss of faith in the fairness of our tax system, and the underfunding of programs that could benefit all of us, if only we had access to Canadian elites' tax on their concealed wealth.

UPDATE: The G20 wants to impose a minimum global tax on billionaires. Keir Starmer, Britain's Labour leader, promises no new taxes on the wealthy if elected. I suspect Justin Trudeau shares Starmer's aversion to holding the ultra wealthy to account.

 

 

Star Readers Weigh In

I like to regularly post letters-to-the-editor that hit targets concisely and precisely. The following meet those criteria.

On the subject of the Pandora Papers, her is what one writer thinks:

Naive to think any changes will come of Pandora Papers

• Toronto Star
• 10 Oct 2021

Re Opening the Pandora Papers and what they reveal, Oct. 4

As your research on the Pandora Papers shows, Canada has been and continues to be a tax haven for laundered money on both the provincial and federal level with its lax laws. Provinces don’t require residency or even basic identification to register a company, and the end result is millions of illicit money is placed in real estate.

It is not surprising that, on the federal level, billions are placed into offshore accounts.

Much of these activities can take place because of the legal loopholes that allow criminals, millionaires, and corporations to stash billions in offshore accounts around the world.

Since the publishing of the Panama Papers in 2016, not a single charge has been laid.

It would be totally naive for anyone to think that those identified by the Pandora Papers will face consequences.

Canada and the rest of the world needs to close loopholes that allow billions to be stashed in offshore accounts, leaving hard-working Canadians and citizens of other countries shouldering the bulk of the tax burden.

These loopholes allow the rich to continue becoming richer while the rest pay the price. 

Sheila Gaal, Toronto

 A flurry of letters attest to the public reaction of disgust over the insane opposition to vaccines and certificates:

Freedom comes with obligations

• Toronto Star
• 9 Oct 2021

RICHARD LAUTENS TORONTO STAR

A vaccination protester was arrested after refusing to leave nurses alone as the Ontario throne speech was delivered.

Is there no end to anti-vaccination characters complaining about tyranny and coercion of people to get vaccinated?

One argument turns on being forced to get vaccinated or losing their job; if I lose my job, who is going to put food on my family table?

The question they should be asking is: if I don’t get vaccinated and contract the virus and spend weeks or months in hospital or even die, who is going to put food on my family table?

The part that anti-vaccination folk are missing is that, with freedom, come certain obligations. The society you are part of is asking you to step up and join your fellow citizens in an effort to quash the pandemic that has cost thousands of lives in Canada and millions worldwide.

Don’t complain that restrictions, such as the requirement to show a vaccination certificate, make you a second class citizen if you are not vaccinated!

If your definition of freedom is “I do what I please and to hell with everyone else,” then you are a second class citizen all of your own making.

Francis Zita, Scarborough

Venues that follow vax rules deserve support

Re Ontario must enforce its Covid rules, Oct. 2 

Eighty-three per cent of the population has stepped up and been doublevaxxed. It’s time for the majority of us to enjoy our freedom.

And it’s time for the 17 per cent to endure the restrictions that their ignorance has caused.

Stop pandering to the minority! We’ve been a divided community since the vaccine became available.

A vaccine certificate didn’t suddenly become the cause for division in our society.

It’s too bad our premier doesn’t recognize this; so many deaths and hospitalizations could have been prevented.

I am proud to support venues that follow the rules, and will certainly avoid those that flout them. I am certain I am not alone.

Linda Saxe, Toronto

Following COVID-19 rules good for business

No one wants to see businesses like gyms and restaurants suffer any more unnecessarily, but the requirement for proof of vaccination for entry is a necessity, and any owner who openly declares that the rules do not apply at their establishment needs to pay the price

And this disregard to the rules demands a big price be paid.

The unvaccinated are many, but still a minority, so, if the owner feels motivated to cater to the minority of his clients, the majority of them who are the vaccinated will likely stay home.

How is that good for business, never mind the obligation we all have as part of society to protect each other with every tool available against the scourge of COVID-19?

Margaret Perrault, North Bay, Ont.

Kids routinely vaxxed, so why raise objections?

Go to school? Get your shots!, Sept. 26

The problem with this selfish, misinformed bunch is that they are too young to remember all the previous health challenges their ancestors had to live through, and defeat.

Smallpox, diphtheria, polio, not to mention measles, rubella, mumps, all of which are controlled by … vaccines.

All school children get their measles, mumps and rubella vaccination and diphtheria, pertussis (whooping cough), and tetanus vaccination.

These anti-vaccination people all had these when they were children.

Yet they insist on listening to the those who spread unscientific misinformation and blame the various governments with infringing their rights.

The only right, when it comes to pandemics, is the right to do the right thing to protect themselves, their kids, their parents and their neighbours.

Roll up your sleeves and help defeat this disease!

George McCaig, Kitchener

Ontario needs system for reviewing exemptions

Re NDP leader calls out PC vaccine exemptions, Oct. 5

The recent furor over medical exemptions given to two government MPPs reminded me that, according to the news, medical exemptions in PEI must be approved by that province’s chief medical officer. Granted, there is a huge difference in scale between PEI and Ontario, but it illustrates the need to have those exemptions vetted by someone other than one’s own family doctor.

This is a matter of public health, and should be reviewed accordingly, with questionable exemptions reported to the Ministry of Health as well as to the College of Physicians and Surgeons.

The knowledge that such decisions of family doctors would be reviewed would ensure exemptions would only be granted for specific and relevant medical conditions.

Doug Lewis, Clarington

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?

If This Doesn't Enrage You

... check for a pulse.



Most people, I think, understand that proper taxation is essential to a viable society. All they ask is that the burden be shared equitably.

However, the CRA does not appear to share that philosophy of fairness, if the following is any indication:

Sometime in the first six months of 2018, the agency wrote off more than $133 million in taxes owed by one taxpayer. It's not clear whether the recipient of the writeoff was a person or a corporation.

The amount was for unspecified excise taxes or excise duties; the CRA has offered no further details.

The massive writeoff is cited in a Sept. 14, 2018 internal CRA memo to explain a big jump in the total tax dollars declared uncollectible, compared with the total for the same period a year previous.

"The above total amount submitted for writeoff represents an increase of $209M in comparison to the first submission of the 2017-2018 fiscal year," says the memo, obtained by CBC News under the Access to Information Act.

"The increase is attributable to a few large writeoffs, including one for $133M."

The federal government applies excise taxes on fuel-inefficient vehicles, automobile air conditioners and some petroleum products.

Despite the fact that this writeoff is tantamount to a subsidy the rest of us must bear, the CRA will not identify the offending entity, citing confidentiality provisions under the law. Apparently, however, this is not an isolated incident.

The Canada Revenue Agency in 2017-18 wrote off $2.7 billion in taxes owed. That's the largest single-year sum written off by the CRA since the $2.8 billion it abandoned in both 2014-15 and 2013-14.

The agency says that writing off a tax debt does not relieve a taxpayer of the obligation to pay — but it does mean no legal action will be taken unless the taxpayer's situation improves.

Only the very naive would believe that the CRA operates independently of government direction. One has only to recall how Stephen Harper sicced the agency on non-profits whose activities challenged his policies.

Now, all of Justin Trudeau's stout defenders need to start asking some hard questions about their man. His sympathies clearly lie with the corporate agenda, and he has a habit of going to extraordinary measures, both covertly and overtly, to meet his masters' needs. One need only look to the SNC-Lavalin affair to appreciate that sad fact.

For further evidence, consider that since the release of the Panama Papers, $1.2 billion in fines and unpaid taxes have been collected worldwide, while the CRA has revealed it should recoup more than $11 million in federal taxes and fines from 116 audits. In other words, a mere pittance compared to countries like the United Kingdom (more than $252 million), France ($136 million), and Australia (more than $92 million). Even tiny Belgium puts Canada to shame (over $18 million).

The critical thinker must ask why Canada lags so egregiously behind. Some of those thinkers may very well see a pattern of our government running interference for some very powerful interests, as Trudeau apparently did in accepting the word of Edgar Bronfman, a Liberal fundraiser, when the latter stated he never funded nor used offshore trusts. This, despite the fact that an investigation linked him to a $60-million US offshore trust in the Cayman Islands that may have cost Canadians millions in unpaid taxes.



I could go on, but I trust I have provided enough food for thought here.

The play Hamlet states that something is rotten in the state of Denmark. It would seem that Scandinavian country now has ample company in Canada.

Some Habits Die Hard

In some ways, it is hard to believe that the old Liberal propensity for corrupt coziness with corporate chums has reasserted itself so quickly, barely three years into Mr. Trudeau's tenure. In other ways, it is not hard to believe at all. After all, old habits die hard.

Th latest allegation is that Trudeau tried to influence former justice minister Jody Wilson-Raybould to help SNC-Lavalin avoid a criminal prosecution for bribery of Libyan officials in order to secure business contracts. It is an allegation the Prime Minister stoutly denies, but the fact is that Wilson-Raybould was recently demoted to Veterans Affairs.

Cause and effect? The smell of a smoking gun is in the air.

First, there is what has been described as Trudeau's legalistic denial in response to reporters' and House of Commons' questions:

“The allegations in the Globe story this morning are false,” Trudeau told reporters Thursday in Vaughan. “Neither the current nor the previous attorney-general was directed by me or anyone in my office to take a decision in this matter.”

The new justice minister, David Lametti, repeated Trudeau's words in answering the charge of interference in the House.

So, are we simply jumping to judgement, based on little or no evidence? The Toronto Star doesn't think so.

And what communications, if any, did members of Trudeau’s office have with Wilson-Raybould and her office on this issue? These are questions that can’t simply be waved away with a carefully worded blanket denial. The Globe reported that the company lobbied federal officials more than 50 times since 2017 on “justice” and “law enforcement” issues, including 14 times with Trudeau’s closest advisers in the PMO.

What exactly did they discuss? Did it include the possibility of SNC-Lavalin benefitting from a so-called remediation agreement that would allow the company to avoid a criminal trial on serious fraud and corruption charges (and therefore remain eligible for lucrative government contracts)?

And what communications, if any, did members of Trudeau’s office have with Wilson-Raybould and her office on this issue?

These are questions that can’t simply be waved away with a carefully worded blanket denial.

Susan Delacourt finds Wilson-Raybould's silence on the matter quite telling:

... she didn’t have a thing to say in the wake of the Globe and Mail’s explosive story of how the former justice minister reportedly stood in the way of a deal to let SNC-Lavalin detour around prosecutions that could have blocked it from receiving government contracts for years to come.

“That is between me and the government as the government’s previous lawyer,” Wilson-Raybould was quoted as saying in the Globe’s scoop, as well as a cryptic, “I don’t have a comment on that,” in reply to more pointed questions about how she handled the SNC-Lavalin case.

Pro tip: “No comment” only works as a clever misdirection in fictionalized political journalism. In real life, it is often regarded as confirmation.

Did she speak truth to power?

Delacourt attended a Robbie Burns dinner last week in which Liberal MP Celina Caesar-Chavannes took jabs at her own government:

One of those jabs was aimed squarely at the ouster of Wilson-Raybould from the justice job, and a joke about how an Indigenous woman lost her post for doing it well and unsettling the “white man.”

None of which 'proves' these allegations. However, it is worth noting that SNC-Lavalin, a Quebec company, has had a long relationship with the Liberal Party of Canada, even when it was out of power:

SNC-Lavalin, many were reminding us on Thursday, was the same firm that was detouring around election laws for much of that decade to put roughly $110,000 in the party’s pocket in those lean years.

And so, an old pattern re-emerges. Coupled with Trudeau's stout defence and dismissal of allegations regarding his good friend and fundraiser Stephen Bronfman over what was revealed about offshore accounts in the Panama Papers, as well as the CRA foot-dragging in going after the big corporate cheats who operate such accounts, one can justifiably wonder whose interests the Prime Minister really is protecting.

This may rankle those who believe a Liberal government should never be criticized, given the poor alternatives, but to take such a position is to be willfully and woefully ignorant.

Lord knows we have enough of that already today.

Just Who Is Protecting Who?

If you have never seen it, I highly recommend the Netflix documentary series Dirty Money. Of particular interest is the one detailing the massive fraud perpetrated by Volkswagen, in which the auto giant employed a diesel 'defeat device' allowing their cars to bypass environmental controls and thereby emit massive amounts of greenhouse gases into the atmosphere while claiming environmental rectitude. It was nothing less than a crime against humanity.

And they have paid a heavy price for their criminal fraud, except in Canada:

In the three years since the Volkswagen emissions-cheating scandal was uncovered, governments in the U.S., Germany and elsewhere have fined the company billions of dollars and sent some of its top executives to jail for breaking environmental laws — but not in Canada.

“There has been nothing done,” said David Boyd, the United Nations’ newly appointed human rights and environment watchdog.

Given Canada's less-than-aggressive pursuit of offshore tax evaders who were exposed in the Panama Papers, this does not surprise me, but I am nonetheless appalled by my government's timidity in going after major criminals.

While the company said in a statement it settled a $2.1-billion class action lawsuit in 2017 with customers who purchased one of roughly 125,000 affected diesel vehicles sold in Canada — as it did elsewhere in the world — Volkswagen hasn’t faced any charges under the Canadian Environmental Protection Act so far.

There is concern among some observers that the federal government may not act, continuing what Boyd said is a longtime trend of leniency.

“Three years have gone by and Canada has a track record of not enforcing environmental laws,” he said.

To put government timidity into perspective, consider the following:

In 2004, Petro-Canada was fined $290,000 for the spill that saw 1,000 barrels of oil flow into the Atlantic Ocean from the Terra Nova offshore production vessel. By comparison, Brazil’s petroleum regulator fined Chevron $17.3 million (U.S.) for a 3,600-barrel oil spill in 2011, and the company also agreed to pay $150 million to settle civil lawsuits related to the case, according to Reuters.

Or how about this?

Boyd said Canada levied $2.47 million (Canadian) in fines for environmental infractions under the Canadian Environmental Protection Act between 1988 and 2010 — less than the $3.65 million the Toronto Public Library collected in overdue book fines in 2012.

In contrast, the U.S. — where Boyd said enforcement of environmental laws has been “much more aggressive” — the Environment Protection Agency levied $204 million (U.S.) in civil fines and won court cases securing another $44 million in criminal fines from environmental lawbreakers in 2012 alone.

While Canada continues to investigate Volkswagen, the company has paid very substantial penalties in other jurisdictions.

Volkswagen paid the equivalent of $1.5 billion (Canadian) in fines in Germany and $12 billion in the U.S., according to an analysis by Environmental Defence, which is launching a public campaign this month to pressure Ottawa to take action against the company.

In the U.S. case, Volkswagen also agreed not to contradict anything outlined in the plea agreement or statement of facts in other jurisdictions.

This sorry dilatory approach to criminal enforcement should offend every Canadian, given that it conveys a wholly inappropriate message of weakness to the corporate criminals of the world, one best summed up by David Boyd:

“It’s just indicative of how absolutely scandalous Canada’s failure to enforce environmental laws has been over the past 25 years”.

Clearly, this is not the kind of business Canada should be open for.

The Distemper Of Our Times

For one who naturally inclines toward dark brooding, these are not good times. But then, if people follow the news and keep themselves reasonably well-informed about our headlong plunge toward environmental and climate disaster, I cannot imagine too many being in a celebratory mood. Except perhaps in Ontario, where the populace turned its back on anything resembling responsible and mature government by electing Doug Ford and his 'Progressive' Conservatives.

Now they are starting to get what they paid for, although the long-term cost may ultimately lead them to buyer's regret. As Martin Regg Cohn reports,

The premier-in-waiting has declared an end to carbon pricing in Ontario — no cap and trade, no carbon tax, no fuss, no muss, no nothing. No matter.

Never mind Earth’s rising temperatures. Ontario’s gas prices are coming down, and that’s a Ford promise (forget rising world oil prices).

Ford vowed in the campaign that he is “for the people.” His victory surely proves his grasp of the political environment — if not the planetary one.

Populist that he is, he seems quite happy for citizens to pay upwards of $30 million in a Supreme Court battle against a federally-imposed carbon tax:

Win or lose, he triumphs either way. If the federal carbon tax is upheld and imposed in Ontario, Ford will earnestly claim that the devil (the Supreme Court) made him impose the carbon tax dreamed up by that other devil (Prime Minister Justin Trudeau). The Thirty Million Dollar Man will cast himself as the Thirty Million Dollar Martyr.

And what about the money from the cap-and-trade that was used to combat climate change? Gone.

The program’s website was been reduced to one page Tuesday. Under the headline “The following programs are closed,” the site now lists everything from residential solar, window and insulation rebates to smart thermostats and programs for businesses.

Also about to be terminated are the rebates for buying electric vehicles, which paid out as much as $14,000 to defray consumer costs and encourage non-polluting transportation.

Of course, some might argue that Ford Nation and the other quislings who voted for Dougie and his brood are simply taking their inspiration from the United States, which shows no signs of retreating from its own madness under Trump. The Hill reports the following:

President Trump is repealing a controversial executive order drafted by former President Obama that was meant to protect the Great Lakes and the oceans bordering the United States.

In his own executive order signed late Tuesday, Trump put a new emphasis on industries that use the oceans, particularly oil and natural gas drilling, while also mentioning environmental stewardship.

The order encourages more drilling and other industrial uses of the oceans and Great Lakes.

The order stands in contrast to Obama’s policy, which focused heavily on conservation and climate change. His policy was written in 2010, shortly after the deadly BP Deepwater Horizon offshore drilling explosion and 87-day oil spill.

As my literary hero Hamlet said, "The time is out of joint." Too bad so many are busy worshiping the golden calf to notice.

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.