An Alberta businessman is included in a massive online database of secret tax-haven names released to the public on Friday by the International Consortium of Investigative Journalists. David Ghermezian, the president of the West Edmonton Mall, is linked to a British Virgin Islands-registered company called Regal Mega Malls Development Corp, the CBC News reports.
Ghermezian’s inclusion on this list got me thinking about the pro-business Harper Conservatives and their undisguised determination to coddle tax havens and tax cheats.
The database, first leaked by the CBC and ICIJ in April, indicates that at least 130,000 people globally are using the secrecy afforded by tax havens in the British Virgin Islands and the Cook Islands in the South Pacific. It names shareholders and directors of offshore companies.
The database includes European banking dynast Élie de Rothschild, and corrupt democratically elected politicians. For example: Imee Marcos of the Philippine political dynasty, the current Georgian prime minister, and former president of Colombia. Then there are crooks, money-launderers and hardened Russian criminals who reportedly stole $230 million from that country’s treasury.
In the initial leak, the CBC determined that at least 550 Canadians were using tax havens. Ghermezian is one of them. But I’m not labeling him a crook. Because his profile doesn’t point in that direction. In fact, under Canadian law, it is perfectly legal to create an offshore company. As long as the entity is declared for tax purposes.
Still, Ghermezian’s presence on this list says something about the Harper government’s leadership on the issue of tax cheats using global tax havens. In fact, we should be worried sick.
Here are three reasons why:
First, in the last five months, media coverage of the tax haven issue has revealed that wealthy Canadians and large corporations are avoiding paying their fair share of taxes by stashing their money away in foreign tax havens.
Dennis Howlett, the Executive Director of Canadians for Tax Fairness, recently told a Parliamentary committee that Canada loses an estimated $7.8 billion to tax havens annually. In May, the organization analyzed foreign direct investment data released by Statistics Canada and concluded that Canadian money stashed in global tax havens now topped $170 Billion. That’s 10 percent of Canada’s $1.8 trillion GDP.
Second, our pursuit of tax cheats who use using tax havens are half-hearted at best. According to the CBC, Canada lags behind Australia, the US and UK. Britain and Australia have had a huge trove of secret offshore financial records for years. Australia has already red-flagged 65 people, and launched audits or criminal investigations against at least 35.
The Canada Revenue Agency is yet to get serious about tax cheats using tax havens. The agency was give about 1,900 names during big data leaks in 2007 and 2009. To date, not a single conviction. The new CRA unit dedicated to fighting international tax havens, recently announced by Revenue Minister Gail Shea, is a joke. It comprises only six to ten CRA experts.
Third, the Harper Conservatives seem determined to coddle individuals and corporations using tax havens. The latest federal budget cut CRA funding for measures aimed at clamping down on tax cheats and closing tax loopholes.
In fact, the Conservatives are determined to scuttle international efforts against tax evasion.
During his visit to the U.S. in May, British Prime Minister David Cameron made an unequivocal call to tackle “the scourge of tax evasion”.
“I’m an unashamedly pro-business politician, but as we open up our economies to get business growing, we need to make sure that all companies pay their taxes properly and enable citizens to hold their governments and businesses to account,” Cameron said. “Today we’ve agreed to tackle the scourge of tax evasion. We need to know who really owns a company, who profits from it, whether taxes are paid. And we need a new mechanism to track where multinationals make their money and where they pay their taxes so we can stop those that are manipulating the system unfairly.”
Cameron has made tax compliance and combating tax evasion a theme of the June 17-18 G8 meeting at Loch Erne, Northern Ireland. His proposal calls for the disclosure of the identities of the true owners of offshore companies, trusts and bank accounts. It calls for automatic tax information exchange agreements between countries. In short, Cameron’s proposal would help Canada better track tax cheats.
The unashamedly pro-business Harper Conservatives are reportedly resisting Cameron’s noble efforts.