OTTAWA: The Canadian government promises a multi-front fight against tax evasion amid widespread frustration following the leak of offshore account details in the so-called Panama Papers.
Finance Minister Bill Morneau promised Thursday to make it an issue at home and abroad — first at this week’s international summit in Washington, and later with his provincial counterparts.
A massive data leak illustrating rampant use of multibillion-dollar offshore accounts has become a hot topic at the annual global financial conferences, the populist anger spilling into these high-powered meetings.
“We’re going to be a really strong voice around doing this,” Morneau said. “I’m also going to go back to Canada and talk about what we can do, above and beyond what we’ve already committed.”
Morneau said he’d push countries at the meetings to sign on to bank-reporting standards being promoted by international organizations — which most key countries have adopted but not Panama.
He also said he’ll raise the issue with the provinces. Transparency advocates say it’s easy for tax cheats to create companies within Canada without ever proving their identity — a problem they say is worse with provincially registered companies.
The provinces will be ready for that discussion, Morneau said: “We need to put it on the agenda, to try and address any gaps, if there are any gaps … But to the extent that we don’t know who owns something — we should.”
A prominent tax transparency group welcomed recent government moves, but said lots more can be done. The federal government has just increased the budget for tax inspectors at the Canada Revenue Agency.
Canadians for Tax Fairness estimates that overseas tax-avoidance schemes — be they legal, illegal or somewhere in between — cost the federal and provincial treasuries $8 billion per year.
That’s about two per cent of government budgets, said the group’s executive director. Dennis Howlett said wealthy countries also need to start taking action at home, including certain U.S. states like Delaware.
In Canada, he said, that means doing a better job verifying the identity of company founders. He said there’s very little scrutiny in that regard and it’s worse with companies registered provincially.
“Canada lags behind all other developed countries,” said Howlett, whose group is supported by unions and financial experts. “They don’t bother to really check who the ultimate owner is.”
