ATTAC-Quebec, the Quebec Association for the Taxation of Financial Transactions for the Aid of Citizens, thanks you for this invitation to appear before the Standing Committee on Finance. ATTAC is a non-partisan association that is active in some 20 countries. Established in 2000, ATTAC-Quebec is interested in issues relating to financial globalization, particularly issues relating to the taxation of financial transactions, tax havens and free trade.
We are delighted with the attention that the Government of Canada has paid to tax fraud and tax havens. Since our association was established, it has felt that there is a major problem creating even more injustice and significant budget issues that honest tax-paying Canadians must compensate for.
We would like to highlight an OECD report entitled Addressing Base Erosion and Profit Sharing. The report shows just how much tax leakage weakens the proper operation of governments and, as a result, democracy.
A number of investigations in Europe have shown that large multinational enterprises like Google, Apple, Amazon, Microsoft and Starbucks did not pay their fair share of tax because of complex financial arrangements and the use of tax havens.
There is nothing to say that Canada is exempt from such practices because it has signed tax agreements similar to those signed in Europe. ATTAC-Quebec has often criticized the double taxation agreement between Canada and Barbados, which has resulted in direct investments by Canada in Barbados to the tune of $53.3 billion. This agreement favours price transfers, among other things. It enables companies to register their profits in Barbados and bring that money back into the country without paying tax to the Canadian government.
A similar agreement concluded last fall with Hong Kong now makes it possible to do the same thing in Asia. Given the importance of trade exchanges with that continent, it all leads us to believe that a similar agreement will encourage the same type of financial manipulations that will harm the interests of Canadians.
We are also concerned about tax information exchange agreements with Switzerland and a number of Caribbean countries. These agreements may seem attractive, but they remain ineffective and actually facilitate tax evasion. The conditions for obtaining information are too demanding. Information is given only if it is requested in a context with extensive and numerous exceptions, which makes it easy to have an information request denied.
To get such dysfunctional agreements, Canada gave up far too much. In exchange, the Canadian companies established in these tax havens benefit from a tax exemption on revenue. Other countries, such as the United States and Australia, have not concluded this kind of agreement. It seems clear to us that the tax agreements that Canada has signed significantly contribute to increasing tax evasion.
ATTAC-Quebec has the following recommendations. The Government of Canada must make fighting tax fraud and the use of tax havens a priority. It must fund studies to provide figures on tax evasion and avoidance amounts, and to update the accounting practices that enable tax leakage. It must also invest in the Canada Revenue Agency so that it can undertake the investigations needed against fraudsters and detrimental tax planning.
The Government of Canada must put an end to all negotiation of tax agreements under the current model, and it must also thoroughly review the current agreements so that they no longer encourage tax leakage. The Government of Canada must strongly support the fight against tax havens in its foreign policy.
It must also work with other countries that are undertaking a similar fight. It must make a priority of supporting the UN committee of experts on international cooperation in tax matters.
Lastly, the Government of Canada must redistribute the amounts that are eventually recovered through the fight against tax leakage in the public services and social programs that were the main victims of the government's drop in revenue.
Thank you for your attention.