QUEBEC — Tax evasion and offshore havens are costing the Quebec treasury between $800 million and $2 billion a year, says a new report that calls for a crackdown, reports The Montreal Gazette.
But the report says the groups most reluctant to address the problem — some claim it does not exist — are the country’s banks and accounting firms where much of the money is sheltered.
Releasing a hard-hitting 60-page report with 38 recommendations Wednesday, the National Assembly’s public finances committee – made up of politicians of all stripes – called on the provincial government to step up to the plate and attack the problem seriously.
And what Quebec can’t do alone can be taken to a national level by lobbying the federal government, the report says, because it, too, is losing: between $8 billion and $15 billion a year.
“Doing nothing is not an option,” said Rousseau MNA Nicolas Marceau, representing the Parti Québécois on the committee.
“The public wants action on this,” added Montmorency MNA Raymond Bernier, a Liberal and chairman of the committee.
Starting its investigation back in 2015 and ending with hearings in 2016, the committee concluded something many know already: tax evasion and people and companies trying to hide revenues in offshore havens have become a kind of “cancer” on the world economy.
Quoting the International Monetary Fund, the report notes as much as 50 per cent of the world’s monetary capital goes to about 70 tax havens.
Statistics Canada estimated that in 2014 Canadians have about $300 billion parked in tax havens – this at the same time as provincial and federal governments struggle to balance the books owing to a lack of revenue.
Canada’s banks, financial institutions and accounting firms got a real pasting from the committee, which formally “deplores” their response to the committee’s work.
It notes banks and accounting firms told the committee that as far as they are concerned tax havens do not exist. They prefer the term “jurisdictions with weak tax policies.”
Just about everyone else heard by the committee concluded the abusive use of fiscal evasion tactics is an “indisputable fact and are largely responsible for a good part of government revenue shortfalls,” the report says.
Committee member Amir Khadir, representing Québec solidaire, said the committee was not duped by big banks.
“I was not frustrated, I was insulted,” Khadir said at a news conference flanked by committee members. “They took us for idiots.”
“I asked the vice-president of the Royal Bank why they have eight branches in Jersey Island,” added Beauce-Nord committee member André Spénard, representing the Coalition Avenir Québec. “(I was told) that’s for co-insurance between branches and between banks.”
Spénard went further noting Barbados – with its population of 285,000 citizens – harbours $80 billion in Canadian offshore funds. In the Cayman Islands – population 56,000 – the amount is $49 billion.
“Explain to me what $80 billion of Canadian investments are doing in Barbados if it is not to launder the money in a tax haven,” Spénard said.
The committee’s recommendations include:
The government should conduct a study on the economic impact of companies transferring profits or royalties (often referred to as a Google tax) to branches in countries with less stringent or non-existent taxation laws.
Create legislation to tax online purchases made with credit cards and laws protecting whistle-blowers who reveal tax evasion.
Have the government ask the Caisse de dépôt et placement du Québec to progressively reduce their investments in companies that dodge taxes.
The government should also eliminate suppliers found guilty of abusive tax evasion or avoidance or making abusive use of tax havens.
Officials in the Finance Department said later the government intends to explore all the suggestions the committee put forward.
Khadir, however, noted one good piece of news from their report, which he said is a sign attitudes are evolving.
The government’s traditional approach to the problem has been to go after the small fish, a hairdresser working in a basement, taxi drivers, the pizza delivery person.
The report goes the other way and says governments should leave the small fry in peace.