Senator lobbies for budget to address billions kept in tax havens

Imagine if Canada’s Finance Minister Jim Flaherty could erase the deficit without cutting programs or jobs.

Theoretically, he could if the government recovered billions of dollars in taxes owed that are stashed by millionaires and corporations in havens overseas.

Liberal Senator Percy Downe has been lobbying for the federal government to provide the Canadian Revenue Agency with the resources needed to fight the problem.

Flaherty has hinted that Downe’s efforts to get this issue on the Tory agenda may pay off in Thursday’s budget.

Downe points to two specific offshore locations where tax cheats have been caught with little consequences.

In Liechtenstein, a whistleblower reported 106 Canadians with over $100 million in assets. In Switzerland, there are 1,785 Canadians who keep an unknown amount of money. The CRA doesn’t even know how much revenue it loses each year, although other countries do.

“I think it’s $30 trillion, at least, in bank accounts in 50 tax havens all over the world, so there has to be that political will,” said Gail Dugas from Canadians for Tax Fairness.

Political will is building internationally. Public outrage in the UK over multinational giants Starbucks, Amazon and Google paying very little tax resulted in a grilling before a parliamentary committee.

British Prime Minister David Cameron has put the issue of tax havens on the agenda at the next G8 meeting.

In Canada, some groups already have some ideas about how to get around expensive lawyers and accountants who help tax evaders.

“If you want to hold money there and bypass the system, which is technically legal… you’re going to have to pay one per cent withholding tax,” said David MacDonald from the Canadian Centre for Policy Alternatives.

The revenue agency says 44 tax cheaters were convicted between 2006 and 2012, resulting in $7 million in fines. But without enough resources to go after the big money, an internal audit found the CRA is more likely to go after the smaller cases.