The CBC released a huge leak of offshore financial information received by the Washington, D.C.-based International Consortium of Investigative Journalists, a non-profit group that has shared the records with CBC News and media outlets in 35 other countries. It is thought to be one of the biggest ever leaks of financial data.
There are over 400 Canadian names on the list of offshore investors. One of them is Tony Merchant of Regina, who is the husband of Liberal Senator Pana Merchant. CBC will be revealing more names of Canadians with offshore accounts in the coming days.
This revelation provides far more details on exactly how the rich use offshore accounts to hide money from tax authorities by shifting money around the globe. Unlike previous leaks which were just lists of names and account numbers, this leak includes copies of email instructions, legal documents and other details on how the tax haven system operates.
But this leak is just the tip of the ice berg. Data comes from some of the smaller tax havens such as the Cook Islands, which are not the major destination of Canadian offshore investment.
Canadians for Tax Fairness estimates that Canada is losing tens of billions of dollars each year. Both federal and provincial governments are losing revenue. The Parliamentary Budget Office has been trying to produce a tax gap estimate of how much revenue is being lost but was being blocked by the government's refusal to release information from the Canada Revenue Agency. We hope that the increased media attention to this issue will put pressure on the government to cooperate with the PBO.
It is hard to see how the Canada Revenue Agency will have the capacity needed to investigate all the hundreds of Canadians who have been revealed as having offshore accounts. The CRA has just had their budget cut by $60 million in the last federal budget. And their international enforcement division is already severely understaffed.
The government needs to boost the capacity of the CRA to go after tax cheats using tax havens. Let's hope the increased media attention on this issue will pressure the government to take stronger action and boost CRA resources.
Tackling tax havens will require international action. British Prime Minister Cameron has said tax havens will be a major agenda item at the upcoming G8 Summit he is hosting in June. The OECD is stepping up its efforts to develop more effective rules to ensure multinational corporations pay their fair share of taxes. And the UN Tax Committee is working on better tax treaty frameworks to curb tax haven abuses. Canada needs to step up its international engagement and support efforts to tackle this global problem.