Keep up the pressure on tax haven profiteers
Such a plan already exists, in fact. In April 2017, the Committee on Public Finance gave the National Assembly a report that was the outcome of two years of work: The tax havens phenomenon – observations, conclusions and recommendations (Rapport sur le phénomène du recours aux paradis fiscaux). The document, which was endorsed by all the political parties, set out 38 strong measures that could make Québec “a leader in fighting tax havens,” according to Érik Bouchard-Boulianne, an activist with the anti-tax-haven collective Échec aux paradis fiscaux.
The co-signers of a group that published an open letter in the press last July, including the APTS president, argued that Québec has to take action and not wait for the Canadian government to do something. They pointed out that agreements signed with countries like the Bahamas, Cayman Islands and Virgin Islands allow subsidiaries of Canadian corporations that have operations in these countries to send profits back to Canada without paying a cent in taxes.
Tax avoidance ploys like this are abusive and immoral, but they are not illegal.
This is why the Caisse de dépôt et placement du Québec (CDPQ) can invest in tax havens with the government’s blessing – something it hasn’t shied away from in recent years. If the measures proposed by the Public Finance Committee were implemented, the Caisse de dépôt and all the other corporations for which it sets a bad example would have to revise their strategy.
Some ideas for solutions
Here are a few examples of what the new government could do to fight tax evasion and aggressive tax avoidance that deprive the government of between $800 million and $2 billion annually:
- Refuse to sign government contracts with suppliers of products and services that use tax havens or that advise their clients to do so.
- Refuse to be associated with tax agreements between Canada and countries like Barbados or Luxembourg.
- Oblige the CDPQ to reduce its investments in corporations that engage in aggressive tax evasion.
- Tax any profits that are sheltered in tax havens, as is already the case in Australia, France and the United Kingdom.
- Change the rules to discourage the use of transfer pricing.
- Only grant tax credits for research and development to companies that stay in Québec.
Influenced by the consensus reached in the Committee on Public Finance, the out-going Liberal government implemented some of the recommendations, such as taxing on-line sales and remunerating whistle-blowers. These are signs of good faith, as the Échec aux paradis fiscaux collective has pointed out. Such measures will pay off, just as other tax recovery measures in previous years have done.
Tax havens are a complex phenomenon, but it would be wrong to view them as permanent and set in stone. It is already promising that Québec’s political parties have managed to agree on the issue. No doubt they’re increasingly aware of taxpayers’ growing refusal to let the wealthy get away with not paying their fair share. And all political parties have had a glimpse of what they could promise – and do – if these billions of dollars wound up in the government’s coffers instead of in off-shore accounts.
In recent months, the Échec aux paradis fiscaux collective, in which the APTS participates actively, has produced a number of information videos: