British Prime Minister David Cameron, the summit host, has made tax compliance and combating tax evasion one of the three main themes of the G8 talks on June 17-18, as critics argue Canada lags behind its counterparts in fighting a mounting global problem.
Various estimates suggest somewhere between $20 trillion and $32 trillion in unreported financial wealth is socked away in tax havens.
Tax watchdog groups say Canada is resisting efforts by Cameron and G8 countries on a couple of measures that would further combat tax evasion, including identifying the true owners of offshore accounts and shell companies by disclosing what’s called beneficial ownership information.
The true owners of offshore accounts can often hide their identities through elaborate corporate structures and having someone else front a company on behalf of them.
Canadians for Tax Fairness, an advocacy group that’s part of a larger global network, says its sources also indicate Canada is fighting measures that would call for automatic tax information exchange agreements between countries that would help governments better track tax cheats.
The agreements would require governments to collect data from financial institutions on income from foreign sources and report it back to countries where the individual or company is located.
“What we’re hearing is Canada is playing spoiler again,” said Dennis Howlett , executive director of Canadians for Tax Fairness. “I’m hopeful in this case that Cameron can lean on Harper and not water down a very positive step forward. What is being proposed is really quite strong.”
Holding an offshore account is not illegal as long as the related income is reported.
Canadians for Tax Fairness says recent Statistics Canada data show Canadian money socked away in the top 12 global tax havens has hit a new record of $170 billion. The group says international tax havens alone are costing Canada at least $7.8 billion annually in lost revenue.
The Conservative government has announced a series of measures in recent months to fight tax evasion, including announcing a new “SWAT team” comprised of six to 10 federal officials to crack down on Canadians with accounts hidden in offshore tax havens.
Senior government officials said that Canada, “in broad terms,” is aligned with the United Kingdom on its efforts to fight tax evasion, but would not directly say whether the Canadian government is resisting some of the U.K. proposals.
“We’re broadly supportive of the agenda that Prime Minister Cameron has laid out,” said Andrew MacDougall, Harper’s director of communications. “We do support more action.”
As part of new measures announced in the federal budget, the Canada Revenue Agency will now pay rewards to whistleblowers, of up to 15 per cent of the federal tax collected, for information leading to tax assessments exceeding $100,000.
The government will also require banks and other institutions to report international electronic fund transfers of $10,000 or more.
“Our government has long recognized that international tax evasion is a serious issue, and we are dedicated to cracking down on those who attempt to cheat the system,” National Revenue Minister Gail Shea said in a statement.
But critics say the government’s actions to date on tax evasion are not nearly enough and that the Conservatives are simply trying to look busy ahead of the G8 summit.
“It’s going to be a very awkward meeting for the prime minister,” said Liberal Sen. Percy Downe, one of the leading voices in Parliament on combating tax evasion. “Once they found out about this (G8 meeting) they announced a few piecemeal initiatives.”
Canada was not part of an international tax evasion investigation recently announced by the United Kingdom, the United States and Australia, raising more questions about Ottawa’s efforts on the file.
The federal government, however, has been promised relevant information on any Canadian citizens involved in the probe.
“Our government has a close working relationship with our international partners and immediately secured a commitment that information relevant to Canada would be shared,” Shea added.
The three countries announced an investigation in May into offshore trusts and companies — in tax havens such as Singapore, the British Virgin Islands, Cayman Islands and Cook Islands — that were used to “conceal assets by wealthy individuals and companies.”
The investigation is believed to include information that overlaps with data obtained by the International Consortium of Investigative Journalists, including the CBC, which identified approximately 130,000 people worldwide, including what’s believed to be about 450 Canadians, with accounts in offshore tax havens.
The federal government has also been criticized for not calculating an estimated tax gap — the difference between what the government should be collecting in taxes and what it’s actually collecting — although other G8 countries like the U.S. and United Kingdom already publish an estimate.
Original Article
Source: canada.com
Author: Jason Fekete
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