The massive leak of documents from the Mossack Fonseca law firm in Panama City is a treasure trove of information on the offshore financial dealings of the rich and famous.

The massive leak of documents from the Mossack Fonseca law firm in Panama City is a treasure trove of information on the offshore financial dealings of the rich and famous.
Photo Credit: Arnulfo Franco/AP Photo

Canada is urged to crack down on tax evasion

The Canadian government says it plans to find out how much money Canada is losing through tax evasion but a senator says he’ll believe it when he sees it. The issue was raised after a leak of 11.5 million records from a Panamanian law firm were said to reveal the use of tax havens by the rich and famous.

Canada’s public broadcaster, CBC, and the Toronto Star were part of a large consortium of media which sorted through the documents. They reported that the Royal Bank of Canada (RBC) set up about 370 shell corporations. The bank said it works within the legal and regulatory framework of the countries within which it operates.

Economist Toby Sanger says Canadian corporate investment in tax havens has gone up dramatically.
Economist Toby Sanger says Canadian corporate investment in tax havens has gone up dramatically. © Toby Sanger/Statistics Canada Cansim Table 376-0038

Demands for information unmet

Senator Percy Downe has repeatedly asked the Canada Revenue Agency for information about the difference between what Canadians should pay in tax and what they actually do pay. The parliamentary budget officer too has asked for information about this so-called “tax gap” to no avail.

Toby Sanger, an economist with Canadians for Tax Fairness, says there is much the government could and should do: “The largest thing is transparency and accountability—so automatic exchange of information–, country-by-country reporting of financial information by corporations. There seems to be some progress on that.
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“We’ve been promised that in the past but progress hasn’t necessarily been made,” says Sanger.

The Royal Bank of Canada denies any wrongdoing after being named in the ‘Panama Papers.’ That massive leak of data reveals how banks set up shell companies which shielded the identities of the wealthy.
The Royal Bank of Canada denies any wrongdoing after being named in the ‘Panama Papers.’ That massive leak of data reveals how banks set up shell companies which shielded the identities of the wealthy. © Reuters

‘We need to have the political will’

“We need to increase enforcement and we need to have the political will to actually go after abusers,” he adds. Sanger raises the issue of several wealthy clients of the KPMG accounting firm who were involved in offshore tax avoidance who were offered amnesty by the Canada Revenue Agency. Several groups, politicians and other called for public hearings into why that decision was made.

Canada had a change of government in October 2015 and Sanger says the public should put pressure on politicians to crack down on tax evasion.

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