$170 billion stashed overseas.
from the National Union of Public and General Employees
Canadian money stashed in the top 12 global tax havens has topped $170 billion, according to data on foreign direct investment released recently by Statistics Canada.
The amount deposited in the top three havens–Barbados, Cayman Islands and Luxembourg–has more than doubled since 2005.
"That is $109 billion hidden away, untaxed, while the rest of us pay our share on every cent we earn," says Dennis Houlett, executive director of Canadians for Tax Fairness.
Howlett points out that a one per cent withholding tax on the money held in tax havens could generate $1.7 billion a year.
"The scale of the problem gets larger every year," he said. "Ten per cent of Canada's $1.8 trillion GDP is sitting offshore while we struggle with questionable austerity measures. If that money was invested in Canada instead of socked away in tax havens, we could have much stronger economic growth."
Federal and provincial governments lose $7.8 billion in revenues each year because of tax havens, he said
Canada lags behind other countries such as the UK, US and Australia in going after tax cheats using tax havens. While Britain and Australia have had access to a huge base of secret offshore financial records for years, the Canada Revenue Agency has only recently requested access, perhaps largely due to the data obtained last month by the International Consortium of Investigative Journalists, broadcast by the CBC.
Revenue Minister Gail Shea has announced the creation of a new CRA unit dedicated to pursing international tax evasion.
However, said Howlett, with only six to ten people on the CRA team, it will take a long time to go through the list of over 400 Canadians with offshore accounts, particularly given the complicated nature of international tax evasion cases.
Howlett urged the CRA to reverse the 3,000 jobs cut at the agency.
“Howlett points out that a one per cent withholding tax on the money held in tax havens could generate $1.7 billion a year.”
Canada's tax compliance rate is currently average for OECD countries, said Howlett, but that could be eroded if the government doesn't pursue compliance more aggressively. Solutions, he said, would also require international cooperation, a topic up for consideration at this year's G8 and G20 summits.
About National Union of Public and General Employees
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good.
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