Canada should follow example of Denmark, France to crack down on tax havens

"We can’t expect Canadians to bear the brunt of this cost while allowing corporations to collect federal funding without contributing to our nation’s recovery"  —  Toby Sanger, Executive Director  of Canadians for Tax Fairness

Ottawa (28 April 2020) — Last week, Canadian for Tax Fairness urged the federal government to follow the example of France, Denmark and Poland and crack down on tax havens. All 3 countries have announced that they will refuse to let companies using tax havens have COVID-19 aid.

The Canadian government needs to follow their example to ensure that public funds that are meant to keep the Canadian economy going don’t end up in tax havens.

Canada loses at least $8 billion a year due to corporations using tax havens

“Canada loses at least $8 billion a year to corporate offshore tax dodging. While we need to deliver supports to workers who have been affected, Canada should take steps to ensure federal funding doesn’t pad the profits of companies and corporate executives that have avoided paying their fair share,” said Toby Sanger, Executive Director of Canadians for Tax Fairness.

Share buybacks and dividends prohibited

France and Denmark will also introduce rules to prevent corporations that receive funding from engaging in share buybacks and issuing dividends. Canada should follow suit to make sure support goes to those who need it, and not to wealthy shareholders and executives.

Ensure federal government spending benefits Canadians

Canadians for Tax Fairness has urged the federal government to take the following measures:

  • Deny funding to corporations that abuse tax havens to avoid Canadian taxes, or to numbered and anonymous companies that don’t reveal their real owners
  • Require large corporations that receive funding to publicly disclose their finances on a country by country basis
  • Publicly report details on all federal funds dispersed
  • Prohibit corporate stock buybacks, executive bonuses, golden parachutes and shareholder dividend payouts for at least one year for corporations receiving funding
  • Consider measures such as an excess profits tax to recover funds from companies that ultimately don’t need this funding
  • Proceed with measures to stop multinational corporations and wealthy individuals from exploiting tax havens to avoid Canadian taxes

“The financial toll of COVID-19 will be significant. We can’t expect Canadians to bear the brunt of this cost while allowing corporations to collect federal funding without contributing to our nation’s recovery,” said Sanger. “Earlier this month, Canada quietly marked the four-year anniversary of the Panama Papers without a single conviction. Clearly, our government can do more to bring our tax dollars home.”

Federal Liberals refuse to exclude companies using tax havens

The federal Liberals have refused to exclude companies using tax havens from receiving federal funding. Both the NDP and Bloc Quebecois have called on the federal Liberals to recognize the problem with providing public funding companies that use tax havens to avoid paying their share.