“It just doesn’t look good.” That’s the understated version of Conservative Leader Andrew Scheer’s lambasting of Prime Minister Justin Trudeau over the massive trove of leaked legal records that emerged over the weekend.
Stephen Bronfman, the federal Liberal Party’s chief fundraiser and a personal friend of the prime minister, was among the more than 3,000 Canadians individuals and entities named in the dump of some 13.4 million records dubbed the Paradise Papers.
The documents from a law firm paid to set up tax structures in low- and no-tax nations at the centre of an investigation by the International Consortium of Investigative Journalists (ICIJ) peels back the curtain on a complex web of offshore financial dealings well-hidden from public eyes for over five decades.
The Liberal Party links inside the Paradise Papers -- which also include former prime ministers Jean Chretien and Paul Martin -- follow weeks of relentless scrutiny by opposition MPs over Finance Minister Bill Morneau controversial ownership of shares in his family’s human resources firm, as well as months of backlash over the party’s proposals for tax reform.
Chretien and Bronfman both say reports suggesting they were involved in any tax avoidance scheme are false.
"Stephen Bronfman is a proud Canadian and has always fully complied with all legal requirements, including with respect to taxes," Bronfman said in a statement to The Canadian Press.
"Stephen Bronfman has never funded nor used offshore trusts. His Canadian trusts have paid all taxes on all their income to the Canadian government."
In another statement, Chretien called reports about him “false.”
"I never received any share options and I never had a bank account outside Canada," he said.
"Any news report that suggests I have or ever had or was associated in any way with any offshore account is false."
Martin was named due to his former ownership stake in CSL Group Inc., an international shipping firm now run by his sons. A spokesperson for Martin told the ICIJ that he “has not been involved in CSL in over a quarter century and is not in a position to comment on its operations.”
For Scheer, the Paradise Papers are further proof that the party’s promises to prioritize fiscal fairness amount to lip service paid to those forced to swallow a higher tax bill.
“Justin Trudeau has been demonizing a whole swath of the population, meanwhile the circles he runs in, his close friends, his wealthy buddies, are able to continue structuring themselves and their business so that they can pay less tax here in Canada,” he told CTV Power Play’s Don Martin.
Trudeau rose in the House of Commons on Monday to reaffirm his government’s commitment to combating tax evasion and tax avoidance, but stopped short of addressing any of the individuals named over the weekend.
“In regards to the Paradise Papers, the CRA is reviewing links to Canadian entities and will take every appropriate action,” he said. “I will let individuals comment on their own situation.”
Ongoing backlash to Morneau’s small business tax plan forced the Trudeau Liberals into damage control amid vocal opposition from farmers, accountants, doctors, lawyers, and shop owners who rely on their incorporated small businesses to reduce their tax burden.
Opposition MPs have repeatedly slammed the Liberals for suggesting some within those groups are not paying their fair share.
The news of approximately 2,700 well-heeled Canadian individuals, and 560 Canadian corporations, tied to the alleged transfer of assets to popular low-tax foreign jurisdictions like the Cayman Islands is not likely to sit well with those who could be impacted by the Liberal’s planned tax changes.
“The people who have the ability and the capacity to set up these kinds of accounts are not being touched,” Scheer said. “It just doesn’t look good. It just doesn’t look transparent. It does not look accountable.”
Jonathan Farrar, an expert in tax fairness who teaches at Ryerson University’s Ted Rogers School of Management told CTVNews.ca that such off shore arrangements are typically done for taxpayers earning within the top 0.1 per cent of income in Canada, meaning a minimum net worth of several million dollars.
Neither the Canada Revenue Agency, nor any court, has determined the Canadians named did anything outside the bounds of the law.
On Friday, the agency said it has invested $1 billion to ensure the integrity of Canada’s tax system, and noted that it has more than 990 audits and more than 42 criminal investigations related to offshore underway.
Public Services Minister Carla Qualtrough told CTV’s Power Play that Canadians should be satisfied with the return on that investment.
“Over the past two years we have taken significant steps towards making our tax system more fair, both internationally and domestically,” she said. “Our billion dollar investment has yielded $25 billion.”
Still, the freshly topical question of legal tax avoidance by way of offshore managed trusts is likely to complicate the already murky debate over tax reform in Ottawa, especially for a government who has made a more equal tax system a cornerstone of its policy platform since the campaign trail.
Asked why Conservative leaders did not act more aggressively to limit access to offshore tax shelters during their years in power, Scheer was somewhat short on answers.
“We did a lot. We signed all kinds of agreements with other jurisdiction to provide greater information sharing so that the CRA can have access to the data, the info, the hard facts,” he said. “I reject that premise.”
