Former Prime Minister Stephen Harper signed a trade deal with Panama in 2010, which encourages tax evasion by Canadian companies, according to experts.
Todd Tucker, research director at Public Citizen’s Global Trade Watch, warned Parliamentarians that the Canada-Panama Free Trade Agreement could have a detrimental impact on government’s ability to protect the integrity of Canada’s taxation regime.
“The pact would give new rights to the government of Panama and the hundreds of thousands of offshore corporations to challenge Canadian anti-tax haven measures outside of the Canadian judicial system,” Tucker told the House of Commons Standing Committee on International Trade.
“The Canada-Panama trade deal would worsen the tax haven problem,” he added. “As the OECD has noted, having a trade agreement without first tackling Panama’s financial secrecy practices could incentivize even more offshore tax dodging.”
The NDP also criticized the pact for the same reasons.
“The agreement is bad news not just for labour, but for every Canadian because Panama is an offshore tax haven for companies that want to evade their Canadian tax obligations,” Chris Charlton, the then-NDP MP for Hamilton Mountain, ON, told the House of Commons. “A free trade agreement between Canada and Panama would be a bonanza for big business while leaving individual Canadian taxpayers with an ever-increasing burden for picking up the costs of federal government programs.”
“The amount of money invested in tax havens in the world globally at the moment is at an all-time high,” Don Davies, NDP MP for Vancouver Kingsway, BC, said. “In 2011, almost 25% of Canada’s investment was invested in the world’s top 12 tax havens.”
“According to a Tax Justice Network report from 2011, Canada loses an estimated $80 billion per year to all forms of tax evasion,” he added. “The government does not have a system for estimating and publishing the amount of lost revenues due to offshore non-compliance.”
“We are dealing with a noted tax haven, one of the most notorious drug laundering centres in the world,” he added. “The U.S. Congress said it would not be safe or prudent to sign a free trade agreement with such a country until it first had a tax exchange information agreement in place. However, in this House, the government is asking parliamentarians to go ahead and give a most favourable nation status free trade agreement that would allow money and investment to flow with very little barrier between our two countries, when we do not have a tax exchange information agreement in place, but one might happen in the future. That is imprudent. That is irresponsible.”
International Consortium of Investigative Journalists started releasing Sunday the so called “Panama Papers”, comprising 11.5 million leaked confidential documents created by the Panamanian offshore law firm Mossack Fonseca providing detailed information on more than 214,000 offshore companies, and the identities of shareholders and directors, and revealing the scale of tax evasion carried out by international politicians, business leaders and celebrities.
The 2.6-terabyte dump contains details of 783 Canadians and 347 Canadian corporations, including the Royal Bank of Canada.
Concluded on August 11, 2009 by Harper and the then-Panamanian President Ricardo Martinelli and signed on May 14, 2010, the pact came into force on April 1, 2013.
[Photo Credit: FAO]
