After the Panama Papers were published, this is what Trudeau said:
“One of the things that we’ve seen around the world, and not just with the Panama Papers, but with the various concerns about the one per cent or the 0.1 per cent (of the wealthiest) not paying their fair share, is that there is an increasing desire for transparency and accountability and making sure that everyone is participating to a fair degree.”
The Trudeau government has committed $90 million a year to the Canadian Revenue Agency (CRA) to go after tax havens. That is a good first step.
But there are important things Trudeau needs to do additionally which he is not doing.
First of all, a tax gap study needs to be done to measure how much money is not being paid by individuals and corporations hiding money in tax havens.
Britain measures the tax gap. The U.K. has recovered more than $3.5 billion since 2010. Canada has handed out fines totaling $13.4 million since 2010. That is not a typo. That’s billion in the case of Britain and million in the Canadian case.
Between 2010 and 2015, 662 people in Canada were convicted for tax evasion or tax fraud overall, but only 49 had “money and other assets located offshore,” according to documents provided to the Toronto Star.
Because court records are public information, the Star requested the names of the convicted offshore tax evaders through Access to Information legislation. The documents released by the CRA, show 31 separate convictions for tax evasion with an “offshore component.”
Of the 31 cases revealed to the Star, the CRA provided names to just 13 cases. The rest of the case names and all of the case numbers were redacted, making it impossible to determine the identity of the unnamed offshore tax cheats.
Mr. Trudeau, why are you withholding information from the Canadian public. The public has the right to know the identities of those convicted of tax fraud. Court records are public information. Please release all information without redacting the case names. Also release information for all 49 cases. Why are you hiding information about the other 18 cases which had “money and other assets located offshore”?
Read the Toronto Star article for details about one of these “offshore component” cases.
Mr. Trudeau, when are you going to do an estimate of the tax gap due to the illegal abuse of tax havens? Canadians have a right to know. Give us a definite timeline when we can expect to see this estimate. There is an estimated $8 billion to be recovered. Why is this not a priority with your government.
Second, the Trudeau government has to prosecute KPMG for their role in facilitating tax evasion in the Isle of Man scheme. Court records indicate that at least 26 clients parked more than $130 million offshore in the KPMG scheme. The scheme involved gifting funds to and from shell companies in the Isle of Man, which sits between England and Ireland. You can read the details of one particular case involving Peter Cooper and his two adult sons in this CBC article
“It is clearly a case where it could lead to a criminal investigation, because obviously there were things that were done here that were not in line with reality,” Laval University tax professor Andre Lareau told CBC News during a trip to the Isle of Man this summer.
In civil court documents, CRA alleges that KPMG, as well as some of its wealthy clients, knowingly participated in a “grossly negligent” tax avoidance scheme that deliberately deprived the federal treasury of millions in unpaid taxes.
The tax planning product “is a sham and was intended to deceive the minister,” the CRA court filings allege.
Michael Hamersley, a former KPMG lawyer turned whistleblower in the U.S., also reviewed the documents filed in court in Canada.
His testimony helped the Internal Revenue Service convict three KPMG U.S. executives in a different tax shelter scheme in the mid-2000s. In that case, KPMG U.S. agreed to pay a fine of nearly half a billion dollars.
Hamersley said, “It’s exactly the type of behaviour that I saw in the U.S. at the time.”
“When your transaction and the tax results are dependent upon hiding the true facts, you start to cross into potential criminal liability,” Hamersley told CBC News.
Watch the CBC documentary about the Isle of Man scandal.