Canada is in danger of emerging from Monday’s G8 Summit as the global bad guy.
Prime Minister Stephen Harper has the opportunity to be the decisive voice that will enable the G8 to begin to clean up the international tax system. Yet rather than joining the U.K. and others to push for common-sense reforms to enable global co-operation and end tax abuse, our Prime Minister has so far refused to support proposed global rules on the disclosure of company ownership.
Other G8 countries want every country to put together a register of who owns each company, trust and foundation. The Harper government apparently does not.
Consistent and up-to-date information on beneficial ownership, and its availability to law-enforcement and tax authorities internationally, would help prevent a range of corrupt practices including bribery, the theft of public assets, money laundering, terrorism financing and tax evasion.
Canada’s taxpayers should be angry. Through a network of transactions between different jurisdictions, and by hiding behind shell companies, income and profits can be moved out of the reach of taxation and scrutiny.
But not only is Canada missing out on revenue, it is also missing out an opportunity to support developing countries beyond handing over aid dollars. Aid is important, but it is even more important that developing countries are able to collect taxes. Tax not only provides essential finance, it also underpins the social contract between the citizen and the state – an essential ingredient in the evolution of responsible, accountable government.
Developing countries are estimated to lose more than $100-billion a year from tax avoidance and tax evasion. This is more than they get in aid, and it could well be much more.
With African citizens signaling that their top priorities are jobs, strong economies and the end of poverty, it is fitting that Canada and the rest of the G8 support global reforms to reduce bribery and corruption and help stem the hemorrhaging of vital tax revenues from African economies. This is especially true at a time when countries like Canada are reducing aid transfers.
The Prime Minister deserves considerable praise for his announcement on June 12 that Canada will introduce new mandatory reporting standards for Canadian companies working in oil, gas and mining of the payments they make to foreign governments. Half of the world’s mining is done by Canadian companies, so this is a major step forward in preventing the curse of corruption in countries whose natural-resource wealth too often fuels theft and conflict rather than development.
Having taken this step to bring transparency to payments for natural resources, Canada should join other G8 leaders who want to prevent illegal tax evasion by opening the books on company ownership.
The Harper government’s opposition these reforms is particularly startling in view of its recent commitment to a more integrated development policy, exemplified by integration of Canada’s development agency with the department of Foreign Affairs and International Trade. With responsibility for these issues falling to officials from the Ministry of Finance and the newly-minted Department of Foreign Affairs, Trade and Development, Canada has an ideal opportunity to demonstrate its commitment to a more coherent development policy by supporting this push to reign in tax evasion. The Canadian government rightly wants to help developing countries to move beyond aid: this is the kind of common-sense initiative that would help.
Global cooperation is needed to make it possible for tax and other authorities to find out who is behind companies registered abroad. Ideally, this information should be available publicly so that independent institutions can ensure that the rules are being properly enforced. Canadians will be horrified to learn that they are in danger of being on the wrong side of history in this debate. Canada is rightly proud of its values of fairness, transparency and accountability, not only at home but also abroad. For the sake of these values and the opportunity to make a major difference in tackling poverty around the world, Canada should support proposed new global rules on the disclosure of company ownership, helping to clean up the system for both developed and developing countries alike.
Our country should get back to being the global good guy.
James Haga is the director of policy and advocacy for Engineers Without Borders Canada.
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