What do recent revelations about Panama, the Isle of Man and other taxdodging schemes say about the accounting profession? Accountant and business ethics professor Paul Dunn says it is time for the accounting industry to take a good long look at itself - what it is now and what it could be.
Canada is a good place to incorporate an anonymous shell company. The Panama Papers leak revealed that this is exactly how Mossack Fonseca marketed Canada to its clients, reinforcing a recent academic study that found that Canada was one of the easiest countries in which to register a company without proper identification.
In a pre-emptive move, Royal Bank of Canada has agreed to give the Canada Revenue Agency records on hundreds of its clients revealed in the Panama Papers. The files stretch out over 40 years of RBC’s involvement in Panama.
This is good news – but here’s a backstory to consider: It wasn’t a decision RBC took simply because it was the right thing to do. The Canada Revenue Agency went to the Federal Court with a motion to get those files. CRA argued that it needed to investigate whether the 429 offshore companies RBC set up or handled in Panama through Mossack Fonseca had been used to evade tax. It also came days before the International Consortium of Investigative Journalists releases a list of Canadian offshore companies registered in Panama, as well as the names of shareholders and directors.
Up until now, he has been very quiet. But today, in this guest blog, the Panama Papers whistleblower known as John Dow has an explanation for why he did it - and how. He urges the rest of us to pay attention - not just to the headlines - but to how democracy's checks and balances have failed to stop this from happening This is not an individual crime, he explains. It is the result of a broken system. And John Doe urges us to act.
If you read one thing today, make it this.
First there was public outrage over the covert activities and entitled attitudes revealed in the Panama Papers. Now there is an added sense of betrayal that governments and regulatory agencies let this happen on their watch.
Is it collusion, corruption or just plain incompetence? That answer will likely play out over time. But we need a public demand for accountability. Canadians need a plan to make sure that our leaders understand what we have known for a while - the tax system is neither fair nor doing its job. Here's a short list of where citizens needs to keep up the pressure.
Some politicians and tax experts argue that prosecuting big-time tax cheats is too complicated and expensive. That makes no sense, argues former senior finance department official, Alan Freeman. "We live in a democracy, and our tax system is part of it — the means by which we make sure that the cost of government is shared fairly by citizens. But the system is only legitimate if it is rules-based and plays no favorites. If we want Canadians to respect the law, accountants and lawyers who cook up schemes to defraud the government should be hauled before the courts and thrown in jail if necessary."
Canada has joined the 21st century in the fight against tax dodging.
Politicians say that tackling tax haven abuse takes time. But what if, in the meantime, the government used its purchasing power to encourage better behaviour from its larger suppliers? What if governments refused to pay hard-earned taxpayer dollars to corporations that set up small offices in tax havens in a cynical attempt to play the tax game? What if government drew the line in the tax haven sand and stood up for what tax fairness really means?
Canadians for Tax Fairness goes to North Bay February 11 to attend a screening of the award-winning tax haven documentary The Price We Pay. The explosion in tax haven use by Canadian multinationals and wealthy individuals is robbing Canada of needed revenues - so the evening is not about something that is happening somewhere far away. Dennis Howlett explains.
Canadians for Tax Fairness' executive director Dennis Howlett reviews a new book on tax havens that is a good read and provides a solid background.
