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Why Harper Should Get Tough on Tax Havens

06/17/2013 05:32 EDT | Updated 08/17/2013 05:12 EDT

On Sunday, just prior to the start of G8 meetings, Stephen Harper criticized and isolated Russia for its position on Syria, saying that "I don't think we should fool ourselves. This is the G7 plus one."

The prime minister's language shows his frustration -- a sentiment everyone shares. But this summit is an important opportunity to work with other countries and push Russia to change its position -- and the prime minister's comment will not be helpful in that effort.

It is also ironic -- from opposing attempts to crack down on tax havens to refusing to sign the Arms Trade Treaty, Prime Minister Harper has aligned himself most closely with President Putin.

Indeed, let's not fool ourselves -- on these issues and others, the group is the G6 plus two.

The ongoing G8 meeting is a chance for Canada to join other leading countries in demonstrating resolve and initiative on the toughest issues of the day.

A key theme to the summit is a clampdown on corporate and individual tax evasion, particularly through international tax havens.

Estimates suggest that between $20 trillion and $32 trillion in unreported financial wealth is socked away in tax havens around the world. This is a serious barrier to global economic growth.

Tax evasion is a particular threat to development in poorer countries. According to estimates, developing countries lose more than $100 billion per year due to tax avoidance and tax evasion -- three times the amount that they receive in aid.

Stemming the illicit flow of funds out of developing countries is thus perhaps the single greatest opportunity for development in many parts of the world.

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Top Offshore Tax Havens For Canadians

But governments in developing countries lack the financial and institutional resources needed to enforce tax laws. They have repeatedly called on wealthy countries to establish enforceable international regulations.

The summit is a unique opportunity for multilateral action. We must not squander that opportunity.

Unfortunately, we have already been told that the Conservatives are resisting efforts by G8 countries on a number of measures to combat tax evasion.

According to media reports, these measures include identifying the true owners of offshore accounts and shell companies by creating public registries of what's known as beneficial ownership information.

Canadian companies should be good global citizens paying their fair share of taxes in countries where they operate, not hiding behind tax shelters and shell companies.

Stephen Harper's decision to protect those who use international tax havens to evade paying their taxes is inexplicable and unacceptable.

After all, tax evasion is hurting the Canadian economy as well -- one estimate puts the cost at $7.8 billion per year, or slightly more than the amount the government will spend on infrastructure in First Nations communities over the next decade.

Yet the government will not even provide the Parliamentary Budget Officer with the data necessary to calculate an official figure. Meanwhile, the government missed an early opportunity to obtain detailed information about tax evaders, slashed the budget of the Canadian Revenue Agency, and tried to cover up its failures by inflating the number of prosecutions for offshore tax evasion.

The U.K. is also using its chairmanship of this year's summit to push for global rules requiring that resource-extracting companies report all payments they make to foreign governments. This would ensure that corporations are accountable at home for payments they make in exchange for deals overseas, and that foreign governments can be held accountable by their own public for the money they receive.

Corporate payment disclosure laws are already in effect in the United States, and European countries are close behind. New Democrats have repeatedly called for these measures to be adopted in Canada. As the most important resource economy in the G8, Canadian participation in these efforts is essential.

Canadians want our companies to be successful and responsible representatives of Canada, and Canadian companies want clear and consistent standards for international business. Enforced international regulations will create a level playing field for all companies, while ensuring environmental, labour, and human rights protection of which we can all be proud.

Last week, after having stonewalled on this issue for too long, Stephen Harper belatedly announced that the government will support the G8 efforts. This is a step in the right direction, but we need to see the details to ensure that the commitment will be implemented efficiently and effectively.

This is not the first time that international multilateral organizations have been seized by these important issues -- nor the first time that the Conservatives have played a spoiler role.

Sadly, this fits a pattern of behaviour. From climate change negotiations to an Arms Trade Treaty, the Conservative government has repeatedly undermined efforts to achieve multilateral consensus and action on important issues facing the world.

We should be working with our allies to go after tax havens and tax avoidance, to increase corporate accountability across sectors, and to earn back our reputation for responsible and accountable fiscal governance.

The world is moving towards transparency. I hope that Mr. Harper will get on board.