Monday, June 02, 2008

Five Canadian banks skirting their responsibilities

Canada's five largest banks have avoided $16 billion in tax over the last 15 years, according to new research from the University of Quebec at Montreal. As the research summary (in French) said:

"Tax deductions via bank subsidiaries situated in tax havens represents, for the last 15 years, 30 percent of the total (tax) charge on their revenues. According to them (from their annual reports), tax dodging practiced by Canadian banks in tax havens has been rising fast . . . in the last four years (2004-2007) tax avoidance by the five largest Canadian banks adds up to $6.5 billion, or 41% of the total avoidance of the last 15 years, representing 37% of the total tax charge on revenues over the past four years."

In 1993, the researchers noted, the five biggest banks avoided $302 million in tax havens; 15 years later, this loss of tax revenues corresponds to $2.4 billion in 2007 - a rise of 700 percent. The researchers recommend:

"ending generalised tax avoidance in tax havens by eliminating tax havens - something that would require a minimum of political will."

We agree. These sums are remarkable, especially in light of the fact this study only looks at five banks, and that banking represents a lower share of GDP than in several other countries.

(Note to French-speakers: in France the term évasion fiscale confusingly tends to mean tax avoidance, while the term fraude fiscale refers to tax evasion. We say "tends to mean" because this kind of language is often used rather carelessly.)


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