Canadian Politician Lambasts Bermuda ‘Tax Cheats’

Each Canadian tax dollar that’s hidden in Bermuda is a dollar another Canadian must pay or a dollar that cannot be invested in Canada’s public services, the leader of Canada’s left-of-centre New Democratic Party [NDP] said yesterday [Nov.23].

Speaking in Ottawa, NDP Leader Jack Layton said Conservative Prime Minister Stephen Harper’s recently unveiled cuts to the Canada Revenue Agency’s enforcement branch will allow some wealthy Canadians and corporations to avoid paying billions in taxes each year by “burying” the money in offshore tax havens like Bermuda  – meaning average Canadians whill have to pick up the slack.

“It’s really hard to explain why the government would actually be cutting back on what amounts to the police officers that should be out looking after the biggest tax cheats, the wealthiest individuals who sock their money away in these little islands where they don’t have to pay any taxes,” said the NDP leader, who repeatedly cited Bermuda as the off-shore domicile of choice when it came to Canadian tax evaders.

The NDP is calling on the government to get tough on tax cheats and accused Prime Minister Stephen Harper of being lax with tax evaders despite strong talk about cracking down on crime.

“They claim to want to be tough on crime, well come on. Let’s get with it with the billionaires and those corporations that are milking the Canadian taxpayer,” Mr. Layton said. “Mr. Harper cannot keep standing by while the wealthy tax cheats and the biggest corporations that get involved in this essentially take tax dollars out of the pockets of hard-working Canadians. It’s not right.”

According to the NDP’s figures, Canadians have $80 billion invested in Bermuda, Barbados, and the Cayman Islands — many times those countries’ GDP — but only $18 billion in Britain, which isn’t a tax haven. The NDP is proposing three measures to crack down on tax cheats: finding out how big the tax evasion problem is with annual public estimates from the government, increasing the revenue agency’s enforcement budget to recover lost taxes, and mirroring the US policy of shifting the onus onto taxpayers to prove their offshore investments are legitimate.

“It’s unacceptable that a few super-rich individuals and corporations are allowed to avoid paying their taxes, unfairly putting a greater share of the tax burden onto honest taxpaying Canadians,” said Mr. Layton. “We need greater transparency, improved enforcement and tougher regulations to ensure tax fairness.”

“With billions of lost tax dollars at stake, the Harper government has to come clean on how big this problem really is,” said New Democrat Revenue critic Carol Hughes. “But instead of releasing transparent figures and increasing resources for recovering tax revenue, the Conservatives are actually cutting back on CRA investigators.”

New Democrats pointed out that investing in enhanced enforcement is common sense –- for every dollar invested in investigations, more than five dollars is recovered in taxes from wealthy tax cheats.

Earlier this year Bermuda signed a tax agreement with Canada. As a consequence, dividends of foreign affiliates resident in Bermuda  paid to their Canadian parent companies out of the active business income earned on the island will now be exempt from Canadian taxation. This will be provide a particular boost to Bermuda’s captive insurance industry, then-Finance Minister Paula Cox said: “Canadian companies are hugely involved in the captive, hedge fund and private equity areas of the inter- national business sector and more recently in the banking arena

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