Canada says it supports G8 efforts to curb tax evasion
June 16th, 2013 - 10:46pm
By Jason Fekete, Postmedia News
DUBLIN, Ireland — Prime Minister Stephen Harper says he supports the G8’s efforts to combat international tax evasion, but is cautioning his government must first consult with the provinces on some of the key proposals such as publishing the true owners of offshore accounts.
British Prime Minister David Cameron, host of the G8 summit that runs Monday and Tuesday in Northern Ireland, has been championing his so-called three Ts agenda for the G8 meetings: trade, transparency and taxes.
Cameron has been calling on G8 partners, including Canada, to take more aggressive action to combat international tax evasion — a problem for both developed and developing countries.
He is pushing his G8 counterparts to improve the transparency of company ownership through mechanisms such as establishing a public registry of beneficial ownership that would list the true owners of offshore accounts and shell companies.
Cameron told British media on Sunday that every G8 country will sign on to an action plan on beneficial ownership, although it appears there’s no consensus that the information should be provided in central public registries.
The British prime minister said he hopes “the whole world will move towards public registers of beneficial ownership.” However, it’s believed a handful of countries — including Canada — have raised concerns about creating a public registry.
Harper said Canada has no reservations “in principle” with measures being proposed by Cameron and other G8 countries, including on beneficial ownership.
“We’re very supportive of all three Ts of Prime Minister Cameron’s agenda. You know, tax evasion, there’s no upside in tax evasion. It’s bad policy, it’s bad politics and governments lose revenue that governments should be getting,” Harper told reporters Sunday in Dublin, following a bilateral meeting with Irish Prime Minister Enda Kenny.
“The only reservation we will obviously express is that in terms of implementation in Canada, we’re going to have to consult with our provinces because we’re a federal state and they have taxation powers,” added Harper, who took two questions from Canadian reporters.
“This is a very important initiative by Prime Minister Cameron. It is important that we do it and that we do it together because when we’re dealing with tax evasion, we’re dealing with problems that cross borders. Even the most powerful governments in the world can’t deal with these things by themselves so I look forward to being part of the declaration and to making progress on this as we leave the summit.”
Currently, the true owners of offshore accounts can often hide their identities through elaborate corporate structures and having someone else front a company on behalf of them.
Several international tax groups and aid organizations have been criticizing the federal government in recent weeks over what they say is Canada resisting efforts to establish a public registry that would publish beneficial ownership information.
Various groups say Canada appears to have also been fighting measures that would require automatic tax information exchange agreements between countries, which would help governments better track tax cheats.
The agreements would require governments to collect data from financial institutions on income from foreign sources and report it back to countries where the individual or company is located.
Holding an offshore account or company is not illegal and doesn’t necessarily indicate wrongdoing as long as the related income is reported.
NDP national revenue critic Murray Rankin said the government is failing Canadians on the file by cutting thousands of jobs at the Canada Revenue Agency and now “becoming an international obstacle to tackling tax havens.”
“It’s inexplicable why Stephen Harper has chosen to protect the interests of those who use illegal tax havens to evade paying their fair share,” Rankin said in a statement.
“The G8 summit is a chance for Canada to step up on the world stage and finally take action.”
Canadians for Tax Fairness, a domestic advocacy group, says recent Statistics Canada data show Canadians have stashed a staggering $170 billion in the top 12 global tax havens around the world.
The watchdog group figures international tax havens are costing the federal and provincial governments at least $7.8 billion annually in lost revenue.
Documents recently tabled in Parliament show only 44 Canadians were convicted of offshore tax evasion between April 2006, shortly after the Harper government took office, and March 2012.
The Conservative government has announced a series of measures in recent months to fight tax evasion, including announcing a new “SWAT team” of six to 10 federal officials to crack down on Canadians with accounts hidden in offshore tax havens.
The Canada Revenue Agency will also pay rewards to whistleblowers, of up to 15 per cent of the federal tax collected, for information leading to tax assessments exceeding $100,000. The government will also require banks and other institutions to report international electronic fund transfers of $10,000 or more.
Canada was not part of a sweeping international tax evasion investigation recently announced by the United Kingdom, the United States and Australia.
However, the federal government has been promised, and is already receiving, relevant information on any Canadian citizens involved in the probe.