How much fairness can Trudeau handle?
An editorial from the Hamilton Spectator, published Nov. 7:
If you were to be hoist with your own petard, you would be in trouble. The expression, popularized in large part by Shakespeare in Hamlet, means “to cause the bomb maker to be blown up with his own bomb,” a petard being an ancient form of explosive shell used to breach fortifications.
Figuratively, that is what is happening to Justin Trudeau with a Toronto Star/CBC investigation revealing two generations of Liberal fundraisers are linked in a complicated tax haven that saw $60 million (U.S.) protected from Canadian tax collectors. Even though the use of offshore tax havens by Canada’s ultra-wealthy is widespread and entirely legal, Trudeau and his government must be smarting today. Why?
Why does it matter that these are billionaires with Liberal ties? Previous governments, both Conservative and Liberal, had their own wealthy bagmen, who undoubtedly had their own strategies of sheltering their wealth from the Canada Revenue Agency. It’s a venerable tradition dating back to when offshore jurisdictions such as Bermuda and the Cayman Islands introduced low or even zero tax rates to attract investment. So the Liberals are no better, and no worse, than their predecessors.
But that, you see, is the problem. They promised to be different. Shortly after he was elected prime minister, Trudeau said: “Our government has long known – indeed we got elected – on a promise to make sure that people were paying their fair share of taxes. Tax avoidance, tax evasion is something we take very seriously.”
In fairness, Trudeau’s government is working at cracking down on tax evasion. The March budget allocated more than $400 million over five years to strengthen tax enforcement, while projecting an additional $2.5 billion in revenue from the efforts. According to a CRA statement late last week, the agency has nearly 1,000 audits and about 42 criminal investigations related to offshore accounts underway. This isn’t to say the activities unearthed in the investigation are illegal. The tax code allows for offshore protection provided administration of the activities in question is not in Canada.
But consider this from an ethical and economic perspective. Estimates are that Canada loses $6 billion to $7.8 billion to offshore activity every year. What if even half that stayed domestic and the revenue went into federal tax coffers? What kind of difference would that make in the lives of Canadians? Can it honestly be said that the ultrawealthy are paying their fair share, like the rest of us must?
That’s really the question. And it really is about – to borrow a catchphrase from the Liberals – ‘tax fairness’. But it may be a little more fairness than this government – like others before it – is prepared to commit to, given whose toes they would need to step on.