PUBLISH AN OFFICIAL ESTIMATE
We know tax havens are a problem, we're just not sure just how big the problem really is.
Multiple reports estimate the size of the problem in the range of tens of trillions of dollars world-wide (and those are just the conservative estimates); we think the real number is somewhere between 21 and 32 trillion dollars. Unofficial estimates suggest Canada's federal and provincial tiers of government are losing at least $80 billion each year, although it's likely this is an incomplete picture of the true size of the problem.
Canada needs an official estimate to get a hold on the direct impact of tax havens on government revenue and the Canadian economy. The US, UK, EU and many other countries have already done this, yet Canada has not. This estimate should identify domestic tax avoidance / evasion practices and measure the size and impact of offshoring on Canada. It should report on the cost to both federal and provincial treasuries. Clarifying the size of the problem will spur more action to curb offshoring and collect lost tax revenue that can be put back to work for Canadians.
DOUBLE DOWN ON ENFORCEMENT
As the saying goes: When the cat's away, the mice will play.
As of May 2012, the Canada Revenue Agency had only 510 international auditors assigned to investigate and enforce compliance with laws already on the books. But in July 2012, the government issued 400 layoff notices to CRA auditors.
These layoffs threaten to undermine CRA's capacity to curb tax evasion & avoidance (and it sends a message that if you cheat on your taxes, it's highly unlikely you'll get caught). Understaffing has forced CRA to ignore large companies and millionaires and instead go after "low-hanging fruit, such as small businesses and the self-employed" — nickels and dimes compared to the billions being funelled out of the country by corporations and the super wealthy. Canada needs to not only maintain the number of auditors, but increase them. When the government increased CRA's international enforcement budget by $30 million in 2005, the CRA managed to bring home an additional $2.5 billion in revenue. That's an investment that pays for itself.
COUNTRY BY COUNTRY REPORTING
Under country by country reporting, the multinationals would have to break their information down by country of operation – including in each tax haven – so that citizens and authorities can see what the corporations are doing in their countries.
Learn more about country by country reporting.
AUTOMATIC INFORMATION EXCHANGE
Developing countries – and rich ones – must get the information they need to tax their wealthiest citizens properly.
Learn more about automatic information exchange.
DISCLOSE WHO THE REAL OWNERS OF COMPANIES ARE
Ensuring that every human who has a stake in a corporate structure – a’true beneficial’ owner – has his or her identify available on a searchable, low-cost public register. And we should slap severe sanctions on those havens that don’t shape up.
Learn more about disclosure of the true beneficial owners of companies.
HOLD ACCOUNTANTS ACCOUNTABLE
We can bring hard penalties against the pinstripe intermediaries who help the tax evaders. The IMF and other bodies dealing with money-laundering must officially make tax evasion a money-laundering offence.
Learn more about making ‘wilful blindness’ a criminal offence.
PUSH THE G20 + UNITED NATIONS TO TAKE ACTION
The UN Committee of Experts on International Cooperation in Tax Matters is an important venue where tax havens are discussed at the global level. Canada should support upgrading this Committee into an intergovernmental body. It would be a better place than the OECD as it is more representative because it includes developing countries as well. The G20 took some promising actions shortly after it was established as a leader's summit after the 2008 global economic crisis, but has stalled in its efforts to deal with tax havens. Canada should push for renewed efforts on this important issue.