Liberal budget loopholes allow Canada’s biggest businesses to evade billions in taxes annually
Did you know, 102 of Canada's biggest businesses evaded paying $62.9 billion in taxes in the past 6 years alone?
Today, non-partisan citizen advocacy organization, Democracy Watch, joins over 32,000 Canadians who have signed a petition calling on Finance Minister Bill Morneau to make key changes so that Canada's big businesses and banks pay their fare share of taxes.
A special report published in the Toronto Star details how Canadian big businesses, especially the big banks, have higher profits but pay a lower rate of taxes than ever before.
In 2016, big businesses paid only 22% of total taxes collected by governments — Canadians paid 78%. In contrast, in 1952 big businesses and Canadians paid the same amount in taxes.
“The Liberal budget again leaves loopholes and a too low tax rate that lets Canada’s big businesses and banks keep too much money for themselves, and key changes are needed to close the loopholes and match the average tax rate in G7 countries to ensure they pay their fair share of taxes,” said Duff Conacher, Co-founder of Democracy Watch. “As well, Canada’s big banks gouged their way to record profits again last year, and key changes are needed to stop the gouging and ensure they serve all customers fairly at fair prices.”
As the report says: “Canada’s largest corporations use complex techniques and tax loopholes to reduce their taxes significantly below the official corporate tax rate set by the government.”
The report also details how cutting Canada’s corporate tax rate by 16% from 1997 to 2016 has not increased corporate investment in machinery and equipment and in intellectual property like it was supposed to do. Investments by Canada’s big businesses in these areas are still below the 1997 level as a percentage of GDP.
Canada’s official corporate tax rate is now 26.6% but, on average, Canadian big businesses paid only 17.7% from 2011-2016 — one of the lowest rates of all G7 countries.
Canada’s Big Banks paid a tax rate of only 16% over the past 6 years — lower than banks in other G7 countries. They are the biggest tax evaders of all Canadian big businesses and, not surprisingly, also the most profitable. The Big 6 Banks alone made a record $45 billion in profits in 2018, their 8th year in a row of record profits.
Making Canada’s big businesses and banks pay their fair share in taxes will give governments at least $10 billion each year to spend on making hospitals, schools, housing, public transit and roads better, and on other things Canadians need, and billions more if the corporate tax rate is increased to the average rate in G7 countries.
The petition calls on Liberal Finance Minister Morneau to work with federal political parties to work together to make the following three key changes:
- Close all the loopholes that allow Canada’s big businesses and banks to evade paying taxes in Canada by pretending they make their money through companies they own in low-tax countries;
- Increase Canada’s business tax rate to match the average rate in G7 countries, and;
- Impose a special tax (like England and Australia have) on any Canadian business or bank that has excessively high profits like Canada’s Big Banks have had every year since 2010.
As the Star’s report also shows, most Canadians don’t benefit from excessive Big Bank profits because they don’t own shares in the banks. As the report says: “more than 80 per cent of Canadian stocks are owned (both directly and indirectly through pensions and mutual funds) by foreigners and the wealthiest households in the country.”
As well, the report reveals that Canada’s Big Banks donate to charities only 10% of what they avoid in taxes – only $2.1 billion donated compared to $23 billion in taxes avoided.
Changes need to be made to the Liberal budget as its loopholes and low tax rates enable Canada’s big businesses and banks keep too much money for themselves.