Document leak puts Liberals under fire again
Opposition claim hypocrisy on tax shelters
OTTAWA • Prime Minister Justin Trudeau is once again fighting off accusations of tax hypocrisy after his top fundraiser was named in a leaked trove of documents relating to offshore tax havens.
Under a barrage of opposition questions, Trudeau declined to comment on the case of Stephen Bronfman but promised the government is “fully committed to fighting tax avoidance and tax evasion” and said the Canada Revenue Agency “pursues all infringers.”
Bronfman, for his part, said his involvement with a trust in the Cayman Islands was limited to a single loan made decades ago. He said he has not used offshore trusts to avoid paying taxes.
“Stephen Bronfman is a proud Canadian and has always fully complied with all legal requirements, including with respect to taxes,” his statement said.
It’s yet another headache on the finance file for Trudeau, following controversies over his small business tax reforms, the CRA’s practices around employee benefits and disability tax credits and the personal financial arrangements of Finance Minister Bill Morneau.
The Bronfman news came out of the Paradise Papers, a massive batch of documents leaked to a German newspaper and shared within the International Consortium of Investigative Journalists, which in Canada includes the CBC and Toronto Star. The leak contained 13.4 million documents from law firms specializing in offshore accounts, the bulk of them from a firm called Appleby. It identifies more than 3,000 Canadian individuals and companies connected to offshore accounts.
Among the records is a register of investors in Madagascar Oil, which lists former prime minister Jean Chrétien as having received 100,000 stock options. Chretien says Madagascar Oil was a client of Heenan Blaikie, a now-defunct Canadian law firm. As a lawyer with the firm, Chretien said he did some work for Madagascar Oil but all fees were billed by and paid to the law firm itself.
“I never received any share options and I never had a bank account outside Canada,” Chretien said in a statement Monday. “Any news report that suggests I have or ever had or was associated in any way with any offshore account is false.” Neither the CRA nor any court has determined the Canadians did anything wrong.
The leak has made news around the world not only for shedding light on the financial affairs of the super-rich, but also for showing how tax havens can operate across borders to shelter income.
The revelation that Bronfman — a confidant of Trudeau who became the party’s top fundraiser — had loaned US$5.3 million to a Cayman Islands trust gave fresh fuel to the opposition parties, who are working to portray the Liberals as going soft on wealthy friends while cracking down on everyone else.
On Monday, Trudeau repeatedly pointed out that his government has raised taxes on the highest earners, reduced them for lower tax brackets, and pumped nearly a billion dollars into fighting tax evasion.
But Conservative finance critic Pierre Poilievre demanded to know who the tax collectors are being instructed to go after.
“Have they gone after the billionaire Bronfman family, or have they instead decided to go after people suffering with diabetes, or minimum wage-earning waitresses who enjoy a small chicken sandwich at the end of the shift, or small businesses and farmers?” he asked. “When will this high tax hypocrisy come to an end?”
The NDP’s Guy Caron said the Trudeau government has done nothing about offshore tax havens since the last leak of offshore documents, the Panama Papers.
“The stats the prime minister is quoting actually shows his government is doing a good job going after the small taxpayer, going after the ordinary Canadians, but they always let the big fish go,” he said.
The opposition also hammered Trudeau for bringing Bronfman to the 2016 state dinner in Washington, D.C., rather than someone such as Natural Resources Minister Jim Carr.
In his statement, Bronfman defended himself against any wrongdoing, saying his only involvement with the Cayman Islands trust was a “single loan made over a quarter century ago,” which was repaid in five months.
“Stephen Bronfman has never funded nor used offshore trusts,” the statement said. “His Canadian trusts have paid all taxes on all their income to the Canadian government.”
The trust Bronfman made the loan to is run by another well-connected family, the Kolbers. Retired senator Leo Kolber was a key Liberal fundraiser when another Trudeau ran the party, Justin’s father Pierre.
The document leak comes with terrible timing for the government, which just spent months fighting a pitched political battle over small business tax reforms. It ultimately scaled back many of the measures, particularly those that would have hurt farmers.
Then a series of stories came out about the CRA adopting stricter interpretations of its tax guidelines. The government had to publicly instruct the CRA to backtrack on taxing retail employee benefits, and it is still under fire over the CRA’s tightened rules for how people can qualify for a disability tax credit.
The Paradise Papers opens up a new avenue of attack for the opposition — particularly for the NDP, who have been the most vocal party about going after tax havens.
NDP MP Alexandre Boulerice said his party will be looking at its options to press the issue in parliamentary committees and perhaps call new expert testimony. “We have many tools that are available and we will explore everything,” he said.