Big Corporations Dodging $10 Billion in Taxes Every Year
A new report from the Toronto Star has found that Canada’s largest corporations are using loopholes to dodge billions in taxes every year.
The report found that in an average year the 102 largest companies avoided paying $10.5 per year in taxes by taking advantage of loopholes.
Canada’s corporate tax rate in 2016 was 26.5% — already relatively low in the developed world — but the largest corporations on average paid only 15.4% in tax.
Yet these big corporations have never been more profitable. Last year, the five big Canadian banks raked in $44.1 billion in profit — up 60% over the past 5 years. Over the same period of time, the tax rate paid by these banks dropped by around the same amount.
Were the Federal government to curtail corporate tax dodging, it could fund numerous critical services including national pharmacare, free tuition for university and college students, or hiring tens of thousands of new doctors and nurses.
Fortunately, closing tax loopholes is not as complicated as many people think. There are a number of policies the government could adopt to immediately crack down on tax dodging:
- Eliminating the Stock Option Deduction. This loophole costs $670 million ever year, and allows rich executives to avoid half the taxes on compensation they receive in the form of stock options. Over 90% of the benefits of this loophole go to the richest 1%.
- Capital Gains Deduction. This loophole is used by corporations and rich individuals to avoid half the tax on “capital gains” — any income they make from investments. While workers pay tax on 100% of their income, this loophole allows big corporations to avoid paying tax on half of much of their profits.
- The “Box Seat” Deduction. This loophole allows corporations to deduct “entertainment expenses”, like buying box seats at hockey games, from the taxes they pay. Osgoode Tax Law professor Neil Brooks has said of this loophole: “There is more tax fraud taking place at one Blue Jays baseball game than all the welfare fraud in Ontario in a whole year.” Eliminating the Box Seat deduction would save $400 million each year.
These are just a few of the steps that could be taken to reduce corporate tax dodging. Tackling the use of offshore tax havens is another important step that will require additional measures.
With corporations paying less and less of their share every year, we must act to close down tax loopholes and demand they pay for the government and public services that make their businesses possible. If you agree, add your name to our petition to demand the Federal government close corporate tax loopholes.