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The Lax Approach To Corporate Tax Havens Is Failing Canadians

12/02/2015 04:13 EST | Updated 12/02/2016 05:12 EST
Andy Sacks via Getty Images
Man with briefcase silhouetted in open door of bank vault

Despite the dauntingly long 15-week campaign bonanza, Trudeau and Mulcair always found the fervor to lock horns on each other's tax plans.

They both agreed that there were adjustments needed, but differed on who should be paying more. for Trudeau, it was the one per cent; for Mulcair, the corporations. Fortunately for the corporations, Trudeau bucked Mulcair off the mountain and won an unflinching majority, in part, with his "tax cut for the middle class" pledge.

Well, things would have been fortunate for the corporations regardless: a ton of them aren't even paying taxes to begin with.

Yes, in that barn-burner of an election, a crucial tax policy issue was forgotten -- that truant, tax-dodging corporations are still reveling in their dastardly tax havens, despite earning record-high profits and record-low corporate taxes. And there was not even a whisper about cracking down and retrieving the money owed -- not even from Mulcair, who had only pledged a small 2.5 per cent hike on corporate taxes.

Have the politicians gotten soft?

Not exactly. We've almost always been soft on business. Canadian "welfare capitalism" has been around since the 19th century -- think John A. Macdonald's National Policy, which helped line the pockets of commercial interests through the production of the Canadian-Pacific Railway. James Ondrick argued in his fantastic thesis paper "The Erosion of Elite Accommodation" that elite interests -- especially business groups -- have enjoyed a very privileged treatment from the feds, and Canadians have accepted this practice as "legitimate."

We've accepted that well-positioned corporate interests are a part of the "public policy process," Ondrick argues. We respond to these political machinations not with protest, but with one gigantic, seismic nod.

Canada even has the lowest corporate tax rate in the G7.

So, maybe the question is, "have the politicians gone too soft?"

The Canadians for Tax Fairness (CTF) estimated that companies operating in Canada in 2014 held over $199 billion in "assets" -- unpaid taxes -- in havens like Barbados and the Cayman Islands. A grilling Oxfam report found that Canada is one of the biggest "losers" of corporate tax revenue. The "winner" countries are the ones with low-to-none corporate income tax, such as Bermuda, as well as the super-rich.

"Stock option" provisions in lieu of taxation translated into bolstering profits for CEOs of companies like Potash, Scotiabank, Enbridge and TD Bank.

Meanwhile in Ontario, the province's hospital restructuring has caused "code gridlock" across the province, the Ontario Health Coalition says, meaning hospital beds are full, surgeries are being cancelled, emergency departments are overflowing and services are being translated into home-care.

The reasoning? "Efficiencies," otherwise known as "money."

Ninety-four First Nation communities are under boil water advisories across the country. Canada's aggregate student debt is some of the highest in the world. The reason is lack of money: money that could be retrieved by the feds and the provinces cracking down on corporations.

For Trudeau, trawling in the money owed coupled with his new income tax bracket could form a strong revenue backbone. It'd essentially be a tough synthesis of the NDP and Liberal plans without stepping outside his governmental mandate.

Giving the Canadian Revenue Agency (CRA) some power to pry into corporate pocketbooks would be a great start, as would be creating anti-avoidance legislation like the kind being explored in the U.K.

It would surely take some moxie, but for good reason. The not-so-new cash could also be injected into crumbling municipal infrastructure, underfunded healthcare facilities, improved settlement services for soon-to-be arriving Syrian refugees, or perhaps the very ambitious platform Trudeau is now charged with implementing. An easy $199 billion more bones in the federal coffers might ease the stress of doing so.

If not for the revenue, the government should crack down on principle: Canadian taxpayers have been pulling their weight since the first income tax was levied in 1917. Corporations should be, too.

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