Big Oil Pays Less – You and I Pay More!

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Joe Oliver, Minister of Finance in Harper Government caves oil interests and drops efforts to stop corporate tax evasion

Joe Oliver, Minister of Finance in Harper Government,  caves to oil interests and drops efforts to stop corporate tax evasion

The Harper Government has quietly shelved its plans to crack down on so-called tax “treaty shopping” by large multinational corporations.

As recently as a year ago, the Conservatives were railing against the rampant “abuse” of international tax treaties by companies seeking to duck Canadian taxes. Back in 2013, then-finance minister Jim Flaherty lambasted these aggressive corporate tax-avoidance schemes, saying closing these corporate tax loopholes would “keep taxes low for Canadian families – families who work hard, play by the rules and pay their taxes.”

But due to intense lobbying from resource companies (read big oil) and their tax advisers, the Harperites have apparently given up on closing these loopholes.

The problem with caving in to these powerful, non-Canadian corporations is that by not taxing corporations at the legal tax rate, individual Canadians must bear a disproportionate share of the country’s tax load. Unlike huge multi-national companies, hard-working Canadians can’t use complex offshore tax structures.

Tax treaty shopping is hugely attractive for these large companies. A foreign corporation can conveniently funnel income through a shell company in a lower-tax jurisdiction that has a tax treaty with Canada, such as Luxemburg, the Netherlands or Barbados.

The result can mean huge savings for these companies. Instead of paying a Canadian withholding tax of 25 per cent on income generated here, a clever multi-national can reduce its tax rate to as little as 5 per cent. On profits of tens or hundreds of millions of dollars a year, the savings to the these corporations – and the resulting losses to federal and provincial governments – can be enormous.

As is often the case with tax avoidance schemes, big oil has been leading the charge. As a result of their success, all other Canadian taxpayers – you and I – will be subsidizing the inflated profits of offshore oil sands investors.

This simply isn’t fair and we should expect our provincial government to fight this latest Harper cave-in to corporate interests. After all, the Ontario government is losing hundreds of millions of dollars because these huge companies refuse to pay their fair share.

Barrie McKenna of the Globe has a really informative article on this late breaking story. Sure, the details can get a little complicated. But the bottom line is real simple: when big oil and other multi-nationals don’t pay their fair share, you and I pay more!

http://www.theglobeandmail.com/report-on-business/international-business/corporations-vs-canada-the-threat-of-treaty-shopping/article20593830/#dashboard/follows/

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