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.

The Scourge of Wealth- UPDATED

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

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

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

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

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

As revealed in today's Star editorial,

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

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

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

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

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

H/t Alex Himelfarb

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

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

Panama Papers Aftermath

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

Canada seems to be promising action, with National Revenue Minister Diane Lebouthillier promising substantial resources to go after those who put their own extreme personal wealth above the common good:

With an extra $444 million promised in the March budget, the CRA plans to hire additional staff to target what it dubs “high-risk” taxpayers and corporations. In return, the agency expects to collect an additional $2.6 billion in tax revenues over the next five years.

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

Now it plans to focus its attention on all transactions involving individual jurisdictions known to be tax shelters — starting with the Isle of Man, off the west coast of England. Three other jurisdictions will also be targeted this year but agency officials refused to say which ones.

While all of this appears to be a good start, a couple of things puzzle me. It is estimated that between $6 and 7.8 billion is lost to our treasury annually through undeclared offshore holding. Yet, our government is promising only that the initiatives announced will collect an additional $2.6 billion in tax revenues over the next five years. Huh?

Secondly, our government has announced which offshore haven it will be examining first, the Isle of Man:

The first is the Isle of Man, which past transactions involving some KPMG clients have already been flagged by the agency. Quebec Liberal MP François-Philippe Champagne said $860 million in funds were transferred there in the last year along. Sixty audits already underway in relation to investments held in the Isle of Man. The CRA intends to contact another 800 taxpayers and corporations to obtain more information about their holdings.

Now, I know nothing about the arcane world of tax evasion and avoidance, but is it possible that by signaling its intent, the government is also giving the fiscal malefactors an opportunity to move their lucre to other havens not currently under the CRA's scrutiny?

I think these are legitimate questions to ask, given the fact that the CRA has previously treated tax scofflaws with great consideration. A Star editorial provides reasons we should be a bit cynical:

...while agencies such as the CRA and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) are happy to name the small fish they catch breaking the laws and regulations, that hasn’t always been the case with bigger fish.

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

And CRA has drawn criticism for quietly offering an amnesty deal to unnamed multi-millionaire clients of the KPMG accounting firm who were allegedly involved in tax avoidance on the Isle of Man. The Canadian Broadcasting Corp. reported that the group was required by CRA only to pay back the taxes they owed, plus interest. Yet the CRA routinely prosecutes and names people who fail to file tax returns or otherwise run afoul of the law.

For more details about how the CRA has one approach for most of us and another for the monied class, click here; you may also want to watch the following video:



To close, I'll leave you with this excerpt from the Star editorial that likely sums up how so many of us feel:

If the government hopes to “give Canadians greater confidence that the tax system is fair to everyone,” its agencies should be prepared to publicly name offenders. Cutting deals to spare Ottawa the trouble of prosecuting, or to preserve the “good name” of financial institutions and their wealthy clients, isn’t going to reassure anyone other than the scofflaws themselves.

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

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

Tax Fairness: A Doubtful Prospect

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

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

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

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

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

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

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

Salvatore (Sal) Amenta, Stouffville

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

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

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

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

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

Don Buchanan, Etobicoke

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

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

Sid Potma, Toronto

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

Richard Kadziewicz, Scarborough

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.

 

 

Canadians React To The Paradise Papers

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

Happily, signs of life are plentiful among Toronto Star readers:

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

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

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

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

Jeremy Withers, PhD student, University of Toronto

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

Norma Martinez, Toronto

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

Harry Coupland, Etobicoke

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

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

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

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

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

Anis Zuberi, Mississauga

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

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

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

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

Benjamin Rawlings, Ottawa

But Is There A Will?

I was reading Owen's blog yesterday, in which he cites Robin Sears' view that, as Britain did during WW11, Canada needs to build back better post-pandemic. 

I am a skeptic as to the prospects of that happening. Here is the comment I made:

What I notice most about our current federal government, Owen, is their almost endless capacity for saying the right things, but the enacting of these aspirations seems mired in inertia. Any chance of 'building back better' would surely require a change in the taxation regime, but I don't hold my breath about that one. I read recently, for example, that despite large infusions of cash, the CRA has not prosecuted even one large tax evader, although they have called in a couple of them for 'a good talking to.'

I went back to the article and decided it merits further examination. It offers a devastating indictment, not only of the agency, but, implicitly, the government ethos it is reflecting.

Data from the Canada Revenue Agency shows its recent efforts to combat tax evasion by the super-rich have resulted in zero prosecutions or convictions.

In response to a question tabled in Parliament by NDP MP Matthew Green, the CRA said it referred 44 cases on individuals whose net worth topped $50 million to its criminal investigations program since 2015.

Only two of those cases proceeded to federal prosecutors, with no charges laid afterward.

The lack of prosecutions follows more than 6,770 audits of ultra-wealthy Canadians over the past six years.

It also comes amid a roughly 3,000 per cent increase in spending on the agency’s high-net-worth compliance program between 2015 and 2019 due to a beefed-up workforce, according to an October report from the parliamentary budget officer.

I believe, as does Matthew Green, that there are free passes for the rich, and severe penalties for the rest of us:

“The CRA is not pursuing Canada’s largest and most egregious tax cheats. And yet for a small mom-and-pop shop, if you don’t pay your taxes long enough — two or three years — then they will absolutely go in and garnish your wages … because they know you don’t have the ability to take it to court,“ he said.

To be fair, there is some validity in the claim that the wealthy have all manner of resources to try to thwart the CRA. Says National Revenue Minister Diane Lebouthillier,

“The super-wealthy are able to pay for super lawyers, super tax specialists. They can do everything to get out of paying their fair share.”

Increasingly, those individuals are going to court when audited in order to withhold documents, with about 3,000 “complex” cases now ongoing, the minister said.

However, the fact that other jurisdictions have been quite successful in their pursuits of the rich suggests that  Lebouthillier's explanation holds only limited water.

And it appears that Canada prefers a less costly, gentler, more accommodating strategy: 

Settlements are much more common than criminal prosecutions, saving investigators time and money, said Kevin Comeau, author of a 2019 C.D. Howe report on money laundering.

“The problem with that is that you don’t have on the public record that these persons did not comply with the tax law. And therefore you don’t have that public shaming and you don’t have that warning to other tax cheats out there,” he said.

But the problem will not go away, and needs to be addressed as quickly and as tenaciously as possible:

… critics say the vast troves of wealth that remain untouchable to government authorities reveal the need to tighten tax rules as well as hunt down cheats.

“In former times we didn’t see tax avoidance as a crime,“ said Brigitte Unger, professor of economics at Utrecht University whose book, ”Combating Fiscal Fraud and Empowering Regulators,“ was published in March.

“But now we see the public sector needs money, and this is effectively stealing money from public coffers, and should be treated as such.” 

As I said at the start of this post, I, for one, will not be holding my breath awaiting remediation from a government that is far, far too cozy with the moneyed class. 

Have You Signed Yet?

Despite all of his sanctimonious talk about tax fairness, there is little evidence thus far that Justin Trudeau is committed to anything more than indulging in his standard soaring rhetoric. Now, there is a a petition being circulated on Change.org. that seeks to change that.

As reported in today's Star, the petition

was launched by advocacy group Democracy Watch after the Star, in partnership with Corporate Knights magazine, published an investigation last month that showed how individuals pay three-and-a-half times more income tax than corporations.

An excerpt from the petition offers these disquieting statistics:

Canada's official corporate tax rate is now 26.6% but, on average, Canadian big businesses paid only 17.7% from 2011-2016 -- one of the lowest rates of all G7 countries.

Canada's Big Banks paid a tax rate of only 16% over the past 6 years -- lower than banks in other G7 countries. They are the biggest tax evaders of all Canadian big businesses and, not surprisingly, also the most profitable. They made a record $42.3 billion in profits in 2017.

And that lost tax money could have been used to accomplish so much good:

If Canada's big businesses and banks paid the official tax rate from 2011-2016, governments across Canada would have almost $64 billion more to spend on making hospitals, schools, housing, public transit and roads better, and on other things Canadians need.

Given the sociopathic nature of corporations, they will never pay any more than they have too. Their much vaunted 'fudiciary responsibility to shareholders' is the tenet by which they justify their efforts at tax avoidance and cheating others out of their rightful due.

Consider, for example, Sears Canada. Francine Kopun writes:

Handsome dividends paid to Sears Canada shareholders even as the company was faltering and its employee pension fund was running a deficit are being reviewed by the court-appointed monitor handling the company’s insolvency.

The transactions of interest, according to the monitor, include a dividend of $102 million paid to Sears Canada shareholders on Dec. 21, 2012, and $509 million paid on Dec. 6, 2013.

The problem is, Sears was already seriously bleeding cash when the dividend was issued, and guess who paid the price? The Sears pension plan.

The pension deficit was $307 million in 2010 and $133 million in 2013.

When the company sought creditor protection in June, the pension fund had a deficit of $270 million, potentially leaving retirees with reduced incomes.

“Certainly from our standpoint, we felt that the payments of dividends, when the company was not making money and there was no investment in the company and there was a debt to the pension plan, were inappropriate,” said Ken Eady, a spokesperson for Sears Canada retirees.

Companies will never act with integrity on their own. That is why the role of government is essential in moderating their greed.

Please give serious consideration to signing the petition at Change.org.

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.

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.

The Paradise Papers

The prospect of real tax reform in Canada just got a lot dimmer. Today's release of the Paradise Papers suggests why.

CBC News is reporting this about Justin Trudeau's chief fundraiser, Stephen Bronfman:

In the early summer of 2015, Justin Trudeau was the star attraction at a private fundraiser in Montreal hosted by philanthropist and financier Stephen Bronfman.

Bronfman, an heir to the Seagram family fortune and a close Trudeau family friend, was revenue chair of the Liberal Party. That day, according to news reports, the two men raised $250,000 in under two hours.

Within weeks, the Liberals would launch their federal election campaign, sweeping to power on a "Real Change" platform that focused on the middle class and a promise to tax the rich.

"Our government has long known — indeed, we got elected — on a promise to make sure that people were paying their fair share of taxes," Trudeau said shortly after his election victory. "Tax avoidance, tax evasion is something we take very seriously."

But an investigation by the CBC, Radio-Canada and the Toronto Star has found that Bronfman and his Montreal-based investment company, Claridge Inc., were key players linked to a $60-million US offshore trust in the Cayman Islands that may have cost Canadians millions in unpaid taxes.

It's a 24-year paper trail of confidential memos and private records involving two prominent families with Liberal Party ties that experts say appear to show exploitation of legal tax loopholes, disguised payments and possible "sham" transactions.

You can read much more at the above links.

On Corporate Propaganda and Tax Avoidance

It is the fashion among our corporate overlords and their rabid right-wing courtesans to utter a trite phrase that, because it is repeated so frequently, is taken as truth by many: We don't have a revenue problem, we have a spending problem. Like the magician who relies upon misdirection to perform the seemingly miraculous, the corporate cabal purports to prove, through both its rhetoric and 'studies' done by its think tanks (think The Fraser Institute in Canada, The Cato Institute in the U.S. as examples), that taxes are 'job killers' and that the key to robust economies and solid employment numbers is low taxation.

Of course, the falsity of such assertions has been amply demonstrated, most recently by Bank of Canada Governor Mark Carney, who has weighed in on more than one occasion about the abysmal rate of business investment in new machinery and equipment — considered vital to boosting growth, creating jobs and making the economy perform more efficiently. This sad state despite the fact that Canada has one of the lowest corporate tax regimes in the world.

While there will always be the true believers who subscribe to the myth of the efficacy of marketplace discipline and an ultra-low tax regime, I suspect more and more are starting to realize that the corporate agenda has nothing to do with the betterment of society or the support of democracy, and everything to do with its own self-aggrandizement. As reported last week in The Toronto Star, The OECD (Organization for Economic Cooperation and Development), consisting of 34 countries, issued a report condemning the practice of corporation, including giants such as Google, who are shifting profits to places where they pay little or no tax, places such as the Cayman Islands, Bermuda, and Barbados.

As the report points out, not only is this costing the countries in which these corporations do business billions of dollars in lost revenue, it is also encouraging a perception that the domestic and international rules on the taxation of cross-border profits are now broken and that taxes are only paid by the naive, and if nothing is done about the situation ordinary taxpayers might refuse to pay their share of taxes on the grounds that the system is unfair.

So there you have it: corporations with a patent disdain for the countries who make their businesses both possible and viable, without conscience or concern for the massive damage their schemes do to the social and economic fabric of those countries, beholden only to their own bottom lines and their shareholders.

If such misbehaviour is not an indictment of unfettered capitalism, then I don't know what is.

A Change Of Pace

With all of the tawdry tales of corruption, tax avoidance and tax evasion going on right now thanks to the Paradise Papers, I feel like lightening the mood a bit. I hope you enjoy these, especially if you have ever been fortunate enough to share companionship with a dog:

Trudeau Has Some Explaining To Do

While our 'new' government continues upon the Harper neoliberal path, apparently never having met a free trade agreement it doesn't like, one issue that never seems to be honestly addressed by either Mr. Trudeau or his most ardent acolyte, Chrystia Freeland, is the Investor-State Dispute Settlement provisions.

Thanks to always astute Toronto Star readers, this contentious issue is being kept in the public forum.

It seems if we look behind Prime Minister Justin Trudeau’s ‎”sunny ways” persona, we find he is perpetuating the agenda of the Harper government.

The hearings and meetings being held across the country are a sham, as the PM’s G20 remarks on European trade and the Trans Pacific Partnership ‎show the Liberal government is right in line with the Harper regime, promoting flawed so-called trade deals like the Trans-Pacific Partnership.

Consultation with Canadians on the TPP has consistently raised concerns and objections over the same issue that concerns Europeans – the Investor State Dispute Settlement (ISDS) clauses that give corporations power above that of the federal government and bypass our judicial court system‎.

The PM states that Canadians are largely supportive of international trade, but, like Stephen Harper’s omnibus bills that contained lots of hidden, usually objectionable, legislation, the TPP is only partly concerned with trade.

Justin Trudeau seems intent on ignoring Canadians concerns over increased corporate powers as well as the relatively toothless and unequal protections the TPP offers for workers’ rights and the environment‎.

He misleads Canadians by characterizing those who are opposed to the “hidden” aspects of the TPP (and the Comprehensive Economic and Trade Agreement, or CETA) as being “anti-trade.”

In this respect, he is simply following in Stephen Harper’s shoes, albeit with a sunnier disposition, placing corporate interests above those of the Canadian people.

Terry Kushnier, Scarborough

What is missing in this news report is that most people, in fact most Americans as well as Canadians, are not against the enhancement of international trade. They are against the dispute settlement mechanism (ISDS) that is included in most trade agreements, which requires dispute settlement by non-governmental arbitration panels.

Historically these are loaded toward corporations that sue sovereign governments, which are legislating on behalf of their citizens. Abuse of this system abounds, for example tobacco companies suing Uruguay for loss of income due to anti-smoking campaigns. They lost that one in the end but the inhibition of social (and environmental and labour) programs, and the cost to governments in worrying about and fighting such “disputes” so that corporations can do international business unfettered, is inexcusable. Much of the opposition to recent draft trade agreements such as CETA by social democratic countries in Europe is for this reason.

Roger H. Green, Brighton

Apparently, Justin Trudeau is going to continue the foolish initiative of Stephen Harper and grant investor protection rights to powerful corporations in order to sign CETA, the Canada-Europe trade deal. These rights would allow foreign companies to sue the Canadian taxpayers for billions of dollars if our elected Parliament passes laws regarding, for example, the environment, health or financial regulations, that adversely effect their bottom lines.

What twisted ideology would inspire any thoughtful politician to undermine our democracy in this way? That Justin would even consider this trade-off is proof that corporations already possess too much power. And these are the same corporations that protect billions of dollars through tax avoidance and evasion.

Stop this madness. Mr. Trudeau, please refuse to sign any trade deal that would erode our sovereign rights.

Cliff Lelievre, Burlington

In addition to the above letters, there is a wealth of information readily available demonstrating the folly of embracing deals that elevate corporations over citizens. What happens next is up to all of us.

Contempt Of The Electorate?

Tom, a friend of mine, posted the following on Facebook yesterday:

Kind of tired of all the polemical posturing in the latest election. However, can anyone provide one instance in history -- at least, since the advent of the Industrial Revolution -- where, corporate or business tax cuts, the basis of trickle down economic policy, have been primarily responsible for an upsurge in hiring or the oxymoronic fictional concept of job creation.

I replied:

Tom, you are asking a question that the media refuse to ask. Considering who owns most of the media in this country, this is perhaps not so surprising.

To which Tom replied:

I think that's partially true, Lorne. However, how come politicians and supporters of those on the other side [of the] argument don't keep asking the question and insist upon an answer. I've been looking for such an historical antecedent and can't find anything.

I wrote back:

A good question. Perhaps it reflects their belief that the attention span of the average citizen is short, and boring them with facts is counter productive? Sound bites do seem to rule the day.

Tom makes an excellent point about the dearth of questions asked about the right's underlying premises. Indeed, the Liberals have only gone so far as to ridicule the accuracy of the job-creation numbers Ontario Progressive Conservative leader Tim Hudak claims will ensue from both his gutting of public service jobs and reduction in corporate tax rates. Nowhere is his philosophical foundation questioned.

Kim Campbell, in her short career as Canada's first woman prime minister, once infamously observed that political campaigns are not the time to discuss policy. She was much pilloried for that comment, but perhaps it was simply an oblique expression of disdain for the very people whose support politicians seek on their road to power. That contempt seems to be more and more the default position of those who lead us or aspire to.

In his column this morning, Martin Regg Cohn laments the fact that Tim Hudak will not be taking part in the Ontario leaders' debate in Thunder Bay, attributing crass political calculation to his boycott, and not the 'scheduling conflict' Team Hudak claims.

Cohn calls his decision a disrespect for democracy, and yet I have long given up on such debates, reflecting, as they do, the very contempt that is the subject of this post. Far too frequently, instead of engaging in the thrust and parry a real debate entails, politicos are all too content either to simply rework their stump speeches into their responses or answer the questions they wished had been asked, rather than the actual queries. Avoidance and obfuscation seem to rule the day, and the journalists moderating the panels rarely seem to hold them to account.

How we arrived at this sad state is not an easy question to answer, but undoubtedly the pernicious influence of the Harper regime and its worship of ignorance is a factor.

Two brief letters in today's Star make this point:

Gutting Statistics Canada is a pound-foolish strategy, Opinion May 19

Anyone with brains could see that gutting Statistics Canada would be a disaster for future governing of this country. To me, it represented one of the first major steps of Stephen Harper’s “secret agenda” of remaking this country into his little fiefdom of conservative domination into the future ruled by ideology not evidence-backed policies.

It will be the ruination of this once small but proud country.

Ann Goodin, Burlington

I don’t think money is the main motivator behind gutting StatsCan, although it’s a great excuse. It’s been obvious for years that the Conservatives don’t like pesky facts getting in the way of their ideology.

They’ve also figured out how to data mine us so they have info we’ll never see (those pesky facts again).

Ellen Bates, Toronto

That is not to see that any of us gets a free pass when it comes to embracing ignorance. Far too many have stopped taking the political process seriously, seeing it more as a source of soap-operish entertainment than as fundamental to the health of our country. Anyone who doubts that need only refer to the antics of a Rob Ford and the tenor of so many reactions to them. Or ask yourself this: What comes to mind when you think of Maxime Bernier and the misplaced government documents?

I will end what has been perhaps a bit of a meandering post with one final letter from today's Star. During this Ontario election campaign, both Mr. Hudak and Ms. Horwath have made much about our hydro rates. It is taken as undeniable that we pay some of the world's highest rates thanks to Liberal incompetence and corruption. Here are the facts:

Business shifts election focus to power prices, May 15

Most people realise that just because a politician (or party rep) says something, it doesn’t mean it’s true. The latest scuttlebutt is the “sky-high” prices we pay for electricity in Ontario making us uncompetitive and putting a strain on working families.

Let’s face it: nobody wants to pay more for anything, but before voting for political parties who are promising to lower your hydro rates, consider the fact that electricity prices in Ontario are actually not high at all.

Hydro Quebec routinely surveys electricity rates for consumers/small business and large industrial customers across North America. In 2013 it may surprise many people to know that at a kw/h price of $0.1248, Toronto has lower hydro rates than Calgary, Edmonton, Regina, Halifax, Charlottetown, and St John’s. In addition, it has much lower rates than Boston (0.165), Detroit (0.1554), New York (0.2175), and San Francisco (0.2294).

If one looks further abroad, a 2011 comparison of electricity rates (all in U.S. dollars per kw/h) world wide indicates that after adjusting for relative purchasing power, Canada has the lowest rates in the entire world. Not adjusting for purchasing power, we have the fourth lowest rates in the world at $0.10, just above India and China at $0.08 each and tied with Mexico and South Africa.

The average price in the U.S. in 2011 was actually $0.12, more than we pay in Toronto. The top five? Denmark: $0.41, Germany: $0.35, Spain: $0.30, Australia: $0.29, and Italy: $0.28. Even Brazil has higher rates at $0.17.

Ontario has a massive electricity grid to maintain relative to its population. Part of this cost is offset by relatively cheap hydro electric power and the artificially low cost we pay for nuclear power, but maintenance on a system this large requires substantial and on-going investment.

Before voting for a party promising to cut prices, ask yourself this question: Who is going to pay for them?

Rob Graham, Toronto