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The Fight to Stop Offshore Havens Is Worth the Price

On Friday March 3, 2017 the CBC’s the fifth estate aired a telling documentary entitled “KPMG and Tax Havens for the Rich: The Untouchables.”

The documentary exposed a scheme designed by the accounting firm KPMG that exploited weaknesses in the Canadian tax system and resulted in millions of dollars being diverted from vital public services and into the pockets of wealthy individuals.

The vehicle for this was a scheme where participants made “gifts” to corporations located in the Isle of Man – a well-known tax haven. By classifying this transfer of funds a gift, the money and subsequent returns were sheltered from taxation. In reality these participants knew that these “gifts” were anything but. They were given assurances that their investment was safe and would be returned to them in the future as another “gift”.

In addition to depriving public services of much-needed resources, these types of revelations compromise the integrity of the tax system as a whole. Average Canadians pay their fair share and we expect wealthy individuals and corporations to be held to the same standard.

Wealthy individuals and powerful corporations have the resources and incentives to find loopholes and exploit them. These actors operate in an environment where secrecy and complexity provide natural advantages and the CRA is continually required to play catch up.

Making matters worse, at the time that the KPMG scheme was being exposed, the CRA was being asked to cope with hundreds of millions of dollars in annual cuts. Included in these were cuts to vital enforcement units such as Criminal Investigations, Special Enforcement, Offshore Tax Evasion and Aggressive Tax Planning.

PIPSC members are in favour of a major overhaul of Canada’s tax and secrecy laws in order to prevent aggressive tax avoidance and evasion. When looking for solutions, PIPSC members are on the front lines and should be the first group asked for input.

Now is the time for the Government of Canada to continue its reinvestment in the Canada Revenue Agency. Spending that was slashed by the previous government has yet to be fully restored under the new one. PIPSC members at CRA represent the best defence against unethical behaviour. This is a group of highly skilled accountants and technical experts who are committed to making sure billionaires and corporations have to abide by the same rules as the rest of us. The math is very simple, the more anti-tax-evasion capacity you have, the more bad guys you’re going to catch.

Further investments in the next federal budget would more than pay for themselves in the return of lost revenue.

 

Publish Date: 07-MAR-2017 11:00 AM