In separate interviews, representatives from London, United Kingdom-based groups Global Witness, Save the Children UK, and the London branch of Avaaz, as well as the Ottawa-based groups Canadians for Tax Fairness and the Halifax Initiative, have all pointed the finger at Canada for refusing to play ball in the lead-up to the G8 summit in Northern Ireland on June 17.
They say the country is attempting to scuttle a push for public disclosure of the true owners behind shell companies, known as beneficial ownership information, that has been championed over the last few months by UK Prime Minister David Cameron. Some are arguing Canada’s big banks are lobbying the government to resist the move.
“Canada is resisting the strong position that Cameron wants in the [G8] communiqué about beneficial ownership,” said Dennis Howlett, the executive director of Canadians for Tax Fairness.
“I understand that the Canadians are more reluctant than the British,” echoed Robert Palmer, a campaigner at Global Witness in a phone interview from London.
“Our understanding is the Canadians are not happy.”
Alex Wilks, campaign director at Avaaz, also said in an interview from London, that “Canada is the main blocker” for beneficial ownership. Avaaz launched a campaign against the move on May 28, and claims over 20,000 Canadians have already signed up.
Finance Canada dodged questions on whether it supports the effort. The department said it won’t comment on the status of G8 summit documents. The Canadian Bankers Association, meanwhile, said it hasn’t taken a position.
Both, however, made clear their support for tax transparency efforts in general, emphasizing support in the 2013 federal budget for corporate transparency, and for G8 efforts against tax evasion, which is illegal in Canada.
But Mr. Cameron’s push is about more than cracking down on illegal activity: he also wants to make it harder for big multinational companies to avoid paying what is considered their fair share of taxes, through schemes that set up complex chains of shell companies.
Feeling the pinch
The British prime minister is reeling from a major scandal that revealed that the country’s biggest firms are running thousands of subsidiaries in offshore tax havens. Google, for example, earned $18 billion in revenue from 2006 to 2011, according to a Reuters analysis, but paid just $16 million in British taxes, and has been hauled in front of the British parliament to explain.
“It’s a huge political issue in the UK at the moment, as it is in a lot of the European Union, especially with budgets that are being cut across the EU...and yet there’s a feeling that the companies and individuals aren’t paying their fair share,” said Mr. Palmer.
The US government has felt a similar tax bite from big multinationals. Apple, for example, paid only two per cent tax on $74 billion in income over the last two years, according to a US Senate investigation. Apple CEO Timothy Cook was also hauled in front of a US Senate subcommittee, which has been examining how companies stuff their cash in offshore locales.
Mr. Howlett’s group recently released Statistics Canada information showing that $170 billion, or close to 10 per cent of Canada’s GDP of $1.8 trillion, is stuffed into major tax havens. They say the Canadian and provincial governments lose at least $7.8 billion in taxes annually.
Mr. Cameron wants G8 nations to come to the table at the summit with action plans. In an April 24 letter to Herman Van Rompuy, president of the European Council, he wrote that “we must break through the walls of corporate secrecy.”
“A lack of knowledge about who ultimately controls, owns and profits from companies leads to aggressive tax avoidance, tax evasion, and money laundering, undermining tax bases and fuelling corruption across the world. Therefore, the G8 and EU must work together to ensure full transparency in beneficial ownership,” he wrote.
Nathan Skolski, a spokesperson for the British High Commission in Ottawa, said the mission had nothing to say at the moment about the issue.
Financial transparency advocates also see the move as essential to bolster developing countries’ abilities. They say the move is key because other transparency elements are dependent on its effective enforcement.
Peter Gillespie, global finance program officer at the Halifax Initiative, confirmed the group had also heard about Canada blocking the effort. They released an open letter to Prime Minister Stephen Harper on April 26, asking him to support Mr. Cameron’s agenda.
The Halifax Initiative letter points to research showing “the world’s 49 poorest countries lose at least $160 billion a year due to profit shifting by multinational companies.”
“What we’re trying to do is unlock billions for developing countries, who currently lose more than they receive in aid, due to offshore tax evasion,” said David McNair, the head of growth, equity, and livelihoods at Save The Children UK.
Mr. McNair said his group has been trying to push a number of G8 states to make a positive statement on the issue. He pointed to a World Bank study that showed out of more than 200 high-profile corruption cases, almost three-quarters involved anonymous shell companies.
But, “we understand that Canada is pretty opposed to this agenda,” he said.
Canadian efforts
The House finance committee tackled the issue of tax evasion and the use of tax havens, and released a report in April. The report does not mention specifically the establishment of a public registry, although it does recommend that the federal government “require all entities obliged to report under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to obtain information about the beneficial ownership of customers that are corporations, trusts or other entities.”
Finance Minister Jim Flaherty introduced a reward system in the 2013 budget, called the Stop International Tax Evasion Program, for those who rat out Canadians hiding money offshore, and companies that enter into tax schemes designed to lower tax bills. The government believes that will save $4.4 billion over five years.
He also said the government would consult Canadians on the issue of corporate transparency.
Finance Canada says many checks are now in place, such as identifying the beneficial owners of corporations under the Canadian anti-money laundering legal regime, and transparency measures under the Canada Business Corporations Act.
“Canada fully recognizes the global scale of the problem of misuse of corporate entities for illicit purposes,” wrote departmental spokesperson Suzanne Prebinski in an email.
“Canada strongly supports the efforts of the UK Presidency’s agenda for the Lough Erne Summit, and particularly welcomes the focus on tax, trade, and transparency which are central to this year’s G8 Summit. However, we do not comment on the status of summit documents.”
The NDP and Liberals both attached supplementary opinions to the committee report. The NDP, for example, suggested that witnesses from Finance Canada and the Canada Revenue Agency “testified that there has been no effort to measure the international tax gap on the part of the government.”
For its part, the banking association dismisses the accusation that it is lobbying for the deal to be rejected.
“There are legitimate reasons why financial institutions operate in offshore financial centres and that this does not mean that Canadian tax revenue is lost because of it. That is not related at all to beneficial ownership,” wrote CBA spokesperson Maura Drew-Lytle in an email.
“We are on record supporting the emphasis that G20 leaders have placed on tax transparency and the exchange of information as the best vehicle to combat tax evasion.”
But she added “the CBA has not taken a position on the call for a public registry of beneficial ownership information.”
While Finance Canada calls the shots in such matters, it would fall to officials in the Department of Foreign Affairs and International Trade to carry out the negotiating. Associate Deputy Minister of Foreign Affairs Peter Boehm was designated to be Canada’s G8 sherpa by the prime minister’s office on Dec. 14, 2012.
Sherpas represent governments at preparatory meetings leading up to international summits like the G8 and the G20.
Departmental expense reports that have been disclosed so far for 2013 show Mr. Boehm running up a $6,786.16 tab for airfare, accommodation, meals, and other expenses to travel to London in January, where G8 prep meetings were taking place.
Mr. Boehm was unavailable when reached by phone on June 3, and did not return phone calls or emails by press time. A spokesperson from DFAIT phoned to follow up on questions, but could not co-ordinate an interview on time.
The Canadian Chamber of Commerce and the Canadian Council of Chief Executives did not return requests for comment.
Original Article
Source: embassynews.ca
Author: Carl Meyer
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