More Canadian money flowing into tax havens, despite gov't efforts
In this Aug. 3, 2012 photo, the Ugland House, the registered office for thousands of global companies, stands in George Town on Grand Cayman Island. (AP / David McFadden)
The Canadian Press
Published Friday, May 2, 2014 11:20AM EDT
OTTAWA -- Canadians' use of tax havens for both legal and illegal purposes appears to be growing despite government efforts to curtail the practice, says a new paper from a tax avoidance watchdog.
Canadians for Tax Fairness says new data shows the use of 10 offshore tax havens by Canadian firms and individuals rose to $170 billion last year, up $15 billion from the year before.
The data shows that Canadian money is flowing into tax havens at a faster rate than investment into non-tax haven countries.
The $170 billion figure almost certainly under-represents the problem, says executive director Dennis Howlett, since Statistics Canada has stopped tracking how much money is being stashed away in the Bahamas, which in 2010 held about $14.5 billion in Canadian money.
As well, Howlett notes the figures only show money being reported and would not capture illegal activities.
The group estimates federal and provincial governments are losing out on close to $8 billion in revenues from the reported use of tax havens alone.
The federal government has joined other advanced nations in efforts to cut down on tax avoidance and cheating, but Howlett says Ottawa hasn't matched its rhetoric with action. He notes that Revenue Canada has seen deep cuts in staffing over the past few years as part of the government's public service cutbacks.
The numbers show that about 40 per cent of all Canadian direct foreign investment is held by the finance and insurance industry and that the money flow is mostly into three offshore countries -- Barbados, the Cayman Islands and Luxembourg.