| This week, MPs on the House of Commons Finance Committee started four days of hearings to investigate the growing use of tax havens in Canada. The hearings will result in a report to the Minister of Finance about what Canada should be doing about this. It is a practice that’s robbing federal and provincial budgets of billions of dollars. |
C4TF’s Executive Director, Dennis Howlett attended Day One of the meeting - these are his notes:
“StatsCan may be reporting that $160 billion went to offshore tax havens in 2011 but to hear these guys talk about it - there isn’t much of a problem.
Canada Revenue Agency claimed that the hundreds of CRA staff layoffs from last year's budget cutbacks did not affect the capacity of the CRA to go after international tax avoidance and evasion.
Re-organization of the CRA makes it difficult to verify if this is the case. But what is clear is there are no new resources going to enforcement efforts, despite the fact that the amount of Canadian money going to tax havens is at an all-time high. One quarter of all Canadian direct foreign investment is directed to tax havens. And there are widespread reporting problems involved with the transfer pricing by large corporations - Starbucks, Amazon and Yahoo to name a few.
The witnesses refused to answer repeated questions from NDP Finance Critic Peggy Nash on how much revenue Canada is losing to tax havens. Even though the UK, the US and Australia have published official estimates of the tax gap, it is Canada's policy not to make any similar efforts to determine how much tax revenue is going missing, because there are too many assumptions involved.
Conservative MPs on the Finance Committee were optimistic about the multiple Tax Information Sharing Agreements that have been negotiated with a number of countries including some tax havens.
Analysts have pointed out the weaknesses of this system And Brian Ernewein, General Director of Tax Policy Branch at Finance did acknowledge that under these bilateral tax information sharing agreements, data is only supplied on request. He also admitted that it is a clunky process: Canada needs to supply details of an individual or company under suspicion and their bank accounts before they get the information. He did agree that automatic information exchange agreements which are now under discussion in the OECD and at the G20 would be “the next step”. Automatic information exchange is already in effect with the United States.
The next testimony is scheduled for Thursday, February 7. Among the witness will be Peter Gillespie from the http://www.halifaxinitiative.org/