The Professional Institute of Public Service of Canada (PIPSC) is calling on the government to allocate sufficient time and resources to its tax professionals in a bid to enforce tax laws on individuals and corporations that have been using tax-havens.
Following the recent revelations in the Pandora Papers exposé by the International Consortium of Investigative Journalists (ICIJ), it was found that massive amounts of wealth were being hidden through shell companies and trusts set up in different parts of the world. The monies would then be used in the purchases of various high-end assets including mansions and yachts.
Universite Laval’s law professor Andre Lareau notes that this raises issues related to tax evasion and tax avoidance. While the first is illegal, the second is a blurrier concept where one might seek to minimize their tax burden in ways that though not technically illegal, were not in the spirit of the law.
Holding cash in offshore accounts is by no means illegal, however, the offshore financial system has often been used to hide wealth from tax and law enforcement authorities. According to University of Toronto economics professor Michael Smart, this can make it difficult for the Canada Revenue Agency (CRA) to uncover just how much tax should be paid at home on monies flowing through this system. The anonymity provided by these offshore jurisdictions has allowed many to avoid making proper declarations to tax authorities.
PIPSC president Debi Daviau has called on the recently re-elected Liberal government to fulfil its pledge to invest up to $1 billion a year in the CRA to boost its tax collection efforts. She affirmed that tax professionals were as fed up as voters with the issue of the wealthy exploiting tax loopholes to channel money to tax havens. Her union represents an estimated 60,000 public service professionals, of which about 12,000 members are forensic accountants, auditors, and other tax professionals at the CRA.
Several destinations were highlighted as being tax havens, including small island countries like Panama, the British Virgin Islands, and Cyprus. Some states in the US have also been noted for having weak financial transparency laws that have also made them a popular choice, including South Dakota, Nevada and Delaware. While Canada was not identified as a tax shelter, it did feature as a hub through which illicit financial flows occurred. Some prominent Canadians mentioned in connection with the tax havens include Corporate House’s Fred Sharp, figure skater Elvis Stojko, and F1 racing driver Jacques Villeneuve.
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