The corporate tax rate in Canada, including federal and provincial taxes, averages 25 per cent. This is generous compared to the average American rate of 35 per cent, but in any case most corporations don't pay it. Of the TXS 60 (top 60 corporations on the Toronto stock exchange), through the period 2007-11 over half paid less than 10 per cent, thirteen paid less than five per cent and only four paid the full 25 per cent.
The Canadian Revenue Agency is currently in a legal battle with the uranium mining firm Cameco. Cameco set up a subsidiary in Switzerland, sold its uranium to the subsidiary for $10 a pound, and the subsidiary then sold it on the world market for prices as high as $100 a pound. (The price is currently $30.) All the uranium is mined in Canada, but by basing its revenues on the $10 figure the company avoided at least $850-million in Canadian taxes.
A quarter of Canadian direct foreign investment now goes to tax haven countries. This gambit is, of course, highly unfair to small and medium-sized Canadian firms who are unable to exploit tax havens but have to compete with international corporations that can and do.
The Canada Revenue Agency's pursuit of this issue has been hindered by the government's enthusiasm for staff cuts. The agency has suffered a loss of over 3,000 staff, the most of any department.
Our government, as a result, has no idea how many tax dollars it is missing. The Parliamentary Budget Officer would like to know (as would I), however the Canada Revenue Agency hasn't been much help, refusing to provide key information even though it isn't confidential.
In response to this, NDP MP Pierre Dionne Labelle has introduced a motion in the House of Commons calling on the government to:
a) study and measure Canadian tax losses to international tax havens and tax evasion, in order to determine the Canadian federal “tax gap”;This motion will be debated in the House on April 9th. If you, too, would like to know how much tax money we have to ante up because of corporate tax avoidance, you might ask your MP to support the motion. Or you can simply go here and have Canadians for Tax Fairness send a message for you.
b) order the Canada Revenue Agency to provide the Parliamentary Budget Officer with the information necessary to provide an independent estimate of the Canadian federal tax gap arising from tax evasion and tax avoidance through the use of tax havens;