Personal Tax Avoidance and Canada’s Economic Recovery

Personal tax avoidance in Canada is a legal, highly secretive, no-risk, high return industry, played by affluent Canadians.  Its consequences have been brutal for large segments of Canadians over the past two decades, and detrimental to Canada’s economy.  That current and past governments protect our two-tier tax system that financially benefits Canada’s financial elite is an abdication of our government’s responsibility to serve Canadians.

It’s widely anticipated a federal election will be called sometime in 2021. 

Canadians should demand that all political parties address individual tax avoidance in their election platforms. Legalized personal tax avoidance violates a sacred principle that all Canadians pay taxes on income earned in Canada, as per Revenue Canada’s published tax schedules.  Most believe this is how our tax system works.  It is how it works for ‘average’ Canadians.  It’s not how it works for ‘entitled’ Canadians. 

Most are aware that corporate tax avoidance is complex, requires collaboration among countries and its solutions are long term.  Individual tax avoidance, by comparison is simple.  Affluent Canadians simply move money (income) to offshore tax havens to receive annual lucrative tax perks, year after year.  It’s like winning a lottery without having to buy a ticket.

Government legislation is the one and only fix for individual tax avoidance,; legislation that prohibits the use of offshore tax havens by individuals for the sole purpose of tax avoidance.  The simple legislation that is needed will only happen if enough people speak out to make individual tax avoidance a dominant election issue.

The numbers tell a story.  Lost government revenues due to individual tax avoidance are estimated to be between 5 and 8 billion dollars annually, or 25 to 40 billion dollars over five years.  At the lower amount of 5 billion dollars, this equates to 100,000 affluent Canadians receiving tax benefits of $50,000 each.  At the higher end (8 billion dollars), this equates to 100,000 affluent Canadians receiving $80,000 annually in tax benefits annually.

Both corporate and personal tax avoidance are damaging to Canada’s economy, and to the lifestyles of all Canadians.  For the upcoming election, let’s be simple and focus on individual tax avoidance.  Prior to the next federal election, Canadians need to demand that political parties address individual tax avoidance.

A number of non-profit organizations have advocated for major changes to Canada’s tax system, during the 2015 and 2019 elections. Typically recommendations from each organization were numerous, valid and all warranted consideration. None of the the recommendations presented generated public traction in the 2015 and 2019 election.

The Grassroots Coalition for Tax Reform believe that personal tax avoidance is the singular tax issue that will generate public traction in the next federal election.

The Reasons Why The Grassroots Coalition Need Your Support

  • No Political Will

Neither the Green Party, NDP, Liberal or Conservative parties support  government legislation that prohibits the use of offshore tax havens by affluent Canadians for the sole purpose of avoiding taxes.  This is based on the 2019 election platforms of these parties.  They all have their tax reforms in their respective platforms i.e. taxing the rich.  It was lip-service.  Some of the tax measures were credible.  All paled in their payback to Canadians, in both short and long-term, when compared with legislation that prohibits individual tax havens.

You won’t find any party (or candidate) that has anything good to say about  individual tax avoidance.  So they all say nothing, or when pressed, they divert discussion away from tax avoidance and talk about tax evasion, which is a different subject all together.

All politicians (with a few exceptions) have worked hard to keep individual tax avoidance secretive.  When the Panama Paper disclosures were published in 2016, it was a major embarrassment to the federal government.  The same holds true when the Paradise Paper disclosures were published in 2017.  

Of the thousands of Canadians identified in the Panama and Paradise,  few prominent individuals names have been published. Names of the vast majority have not been published for privacy reasons.  “It would be unfair to publish their names as they have not broken any of Canada’s laws.”

We can only assume why current and past governments favour Canada’s financial elite to the detriment of ‘average’ Canadians.  It could be that Canada’s financial elite are both powerful and influential?  Once you bestow a major financial perk to affluent, it’s  hard to take it away.  It could be that the Finance Department is all powerful with close connections to Bay Street’s financial community, specifically financial icons such as Price Waterhouse and Deloitte who want to maintain the status quo?  The reasons don’t really matter.  What matters is that it needs to change now.

  • No Allies From Unions, Tax Reform Advocates or The Establishment

It was surprising that Canada’s largest unions declined to support the call to advocate for tax reform that prohibited the use of tax haven’s to avoid payment of taxes in the 2015 and 2019 federal elections.

Canada’s major unions have their ‘brand’ to protect.  They engage in federal election in a conservative way by endorsing a specific party’s platform.  On an ongoing basis, they advocate for corporate tax reform.  They publicly advocate for corporate tax reform.  No major union addresses individual tax avoidance, especially during a federal election.

The Challenge of Making Individual Tax Avoidance A Dominant Election Issue

There are not a lot of dominant issues in a federal election.  It is only dominant issues that get media attention.  Political parties want to control what is, and what is not a dominant election issue.  We believe Canadians should tell political parties what the dominant election issues are and not vice versa.

The Grassroots Coalition for Tax Reform is too small to make individual tax avoidance a dominant issue in the next federal election.  The work needs to be done at the community level, small towns, big cities and in every province across Canada.  What the Grassroots Coalition can do is be a communications hub that connects those interested in making individual tax avoidance a dominant election issue.

Tax reform can only happen through individual and community action. We have preliminary strategies and well thought out action plans. We want these to evolve prior to the call for an election.  We invite those interested in being part of this effort to register on the site’s contact page. Tell us how you can contribute i.e., social media skills, organizers, planners in the Comments section of the Contact page.