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.

 

 

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.

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?

Seeking Some Substance - Part 1

In yesterday's Star, Christopher Hume had occasion to call Prime Minister Trudeau the princeling practitioner of the politics of appearance. In light of an alarming shortfall in revenues that is crippling our services thanks to the government's anemic corporate tax policies, that struck me as a particularly apt description.

Indeed, that element of his persona was very much on display for the world to see last week at Davos, where Mr. Trudeau had some stirring words :

"Too many corporations have put the pursuit of profit before the well-being of their workers … but that approach won't cut it any more," Mr. Trudeau told the elite gathering at the chic ski resort of Davos. "We are in a new age of doing business – you need to give back."

Apparently, however, that sternness of tone seemed more designed for public consumption than real-world application. If that is not the case, one has to wonder why Canada appears to be very soft in the corporate taxation department:

In a joint investigation with Corporate Knights magazine, the Star last month revealed the government has never collected a lower proportion of its taxes from corporations than it does now.

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

The foregone tax revenue is significant:

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.

So what is to be done about it?

Well, first off, they can start by emulating other countries that have thus far recovered $500 million in unpaid taxes thanks to revelations from the Panama Papers.

The Panama Papers have proved a treasure trove for some countries, with Spain recovering the most unpaid tax so far. Its national revenue agency announced in November a $156-million windfall from taxpayers with hidden funds. Most of that — $128.4 million — came from voluntary disclosures, where the taxpayers came forward themselves following the leak to declare previously unreported income.

The Australian Tax Office said last month it has collected $49 million thus far as a result of the Panama Papers revelations. Australian tax officials snapped to action following the leak, executing 18 search warrants in just a one-week span in September 2016, at one point seizing 170 kilograms of silver bullion and coins.

Even Ecuador, which historically has had problems collecting tax from its citizens, says it has recouped $82.6 million.

Perhaps, not surprisingly, Canada has recovered nothing:

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.

The stark contrast is fuelling criticism of the CRA's effectiveness at catching offshore tax cheats, and comes in the wake of a CBC investigation last month that found few, if any, of the criminal convictions the agency cites in defence of its record actually have anything to do with offshore tax evasion.

In fact, that investigation revealed that small businesses are the most likely targets of CRA wrath:

... Canadians convicted of tax evasion over the past two years are far more likely to be tax protesters or small business people who failed to declare all of their income.

And to make their statistics look better than they are, the CRA

counted each article of the law as a separate conviction.

For example, in the case of New Brunswick-based George's Heating and Plumbing, the agency counted two charges against the business as separate convictions, in addition to the convictions of five employees for having treated personal expenses as business expenses. While they were all part of the same case with the same court file number, on the CRA's list they counted as seven of the 78 convictions.

There is every reason to believe that the hands-off approach to corporate malfeasance, perfected during the Harper years and instilled as an operating ethos in the CRA, is alive and well; the current government apparently has no intention of changing that.

More evidence of this mindset, as well as the ongoing offshore tax evasion being widely practised by Canadian corporations, and what can be done about it, will be addressed in Part 2 of this post.

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 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.

Behind The Curtain

Ah, Star letter writers rarely disappoint. Truth, rather than political spin, always improves my mood.

Liberal Party fundraisers held family millions in offshore trust, Nov. 6

From Panama to Paradise, we have a tiny glimpse into the realities dictating our lives: aristocrats and power brokers taking aim at record profits while burying the booty in faraway jurisdictions. I remember voting for Prime Minister Justin Trudeau, drinking his Kool-Aid about helping us commoners. Meantime, Trudeau’s friends in high places helped the multi-generational political star with the winning script.

The truth matters not in politics, at least when it comes to speeches. We’re fed lines about a political spectrum, then we are asked to pick a team. The problem is that the rhetoric is irrelevant, it exists only to grease a discourse designed to secure votes. Once power is secured, anything is possible for the people that backed the winners. I’m now of the opinion our prime minister was born into a scheme, his life part of a plan to milk the system.

Mike Johnston, Peterborough, Ont.

The revelations of the Paradise Papers strike deep into the machinations of those corporations and individuals seeking to avoid taxation in Canada. It is estimated that billions per year are lost to the Canadian economy through these tax dodges. The Canadian Revenue Agency (CRA) has to close the loopholes that allow this drain of wealth to happen.

There are so many areas of the Canadian social and economic infrastructure that would benefit from the end of these tax dodges. Now is the time for federal and provincial governments to close the loopholes and bring back Canadian money to Canada.

Don Kossick, Saskatoon, Sask.

First, we had the Panama Papers. Now the Paradise Papers. What we need is the Purgatory Papers: a public list of tax monies recovered and fines levied from persons nefariously using offshore trusts for tax evasion. Otherwise Prime Minister Justin Trudeau’s promise of tax fairness is simply hollow electioneering.

Peter Pinch, Toronto

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.

More On Corporate Tax Evasion

The other day I posted some letters from The Star about corporate tax dodging and evasion as revealed by the Panama Papers, and included my doubts that Justin Trudeau will do anything to remediate the situation. An anonymous commentator took me to task:

You never miss a chance to attack Justin Trudeau do you? None of the people in the letters say anything about Trudeau so where are you getting that from?

I replied:

I am drawing that tentative conclusion from a couple of troubling indicators, Anon. One, there has been no government expression of opposition to the CRA's policy of shielding the identify of corporate tax dodgers (usually they are allowed to pay their back taxes in anonymity, as opposed to the small taxpayer being named and shamed on the CRA website) and two, Trudeau is a big enthusiast of free trade deals whose main benefits accrue to corporations, not ordinary Canadians. As well, during the campaign, he talked about tax fairness but not a word about increasing tax rates for corporations. Indeed, in May of 2015 he even opined about lowering those rates if Americans do so. All signs point to a man quite disposed to continuing the absurdly favourable treatment business currently enjoys.

Today's lead letter in The Star once more shows that I am hardly alone in being suspicious of our 'new' government's desire to rein in this egregious corporate theft:

Expose tax cheats, Editorial June 28

I’m finding your ongoing Panama Papers series on tax cheating most informative, as well as anger-provoking over the massive robbery of the public purse for decades, and — in one respect at least — puzzling.

My confusion arises from the fact that there seem to be two forms of theft involved: legal tax avoidance, made possible and encouraged — as you’ve reported — by government tax legislation, dating back decades, that leaves vast loopholes through which the very rich can drive truckloads of money into a series of tax havens around the world, thus avoiding their fair share of taxes at home; and then there is tax evasion, which has always been illegal.

I have read and saved every article in your series and, if there is a clear dividing line between legal avoidance and illegal evasion, I have seen nothing to explain that difference. In fact you’ve even lumped the two together as “tax dodging,” which further muddies the waters.

At this point it’s not clear to me whether the federal government intends to pursue avoiders or evaders — or both. Clearly, they can’t go after the former unless they change our laws to make “avoidance” illegal. But, as Marco Chown Oved reported on June 17, after eight months in office the Trudeau government, despite election campaign promises, “has done nothing to staunch the bleeding” that its predecessors made legally possible.

I’ve seen estimates as high as $31 trillion for the world-wide total stashed in tax havens by corporations and the 1 per cent (I’m betting that’s a conservative estimate). But, as your editorial notes, the only people Ottawa continues to “name and shame” to date are “dozens of small-time offenders . . . who have merely fallen behind on their tax payments.” The really big cheaters, even if caught, can apparently cut themselves a deal and stay anonymous under our laws.

We need tough new laws to ensure that everybody pays their fair share toward the building and maintenance of the strong public sector without which no democracy can survive. I’ll believe the Trudeau government is serious about this when I see that at least some of the very rich corporations and individuals, who have for years defrauded the country that made them wealthy, have been: named; required to pay it all back; heavily fined in addition; and deposited in their rightful onshore residence — behind bars.

In the meantime, talk is just talk and our health, education and infrastructure needs, among other essentials, continue to be woefully underfunded.

Terry O‘Connor, Toronto

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.

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

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?

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.