Tax Avoidance Hurts Us All
November 1, 2021
It is unfair that most Canadians pay their fair share of taxes while some of the rich and famous do not, writes Peter Watson.
The world has just had another glimpse of how the privileged have avoided taxes.
This round of tax avoidance has been named the Pandora Papers. The International Consortium of Investigative Journalists obtained 11 million offshore files from 14 firms including financial services and legal.
Six hundred journalists in over 100 countries spent the last two years investigating various tax avoidance strategies. This is an embarrassment for countries to allow loopholes or to not have the determination or ability to collect taxes that are owed.
Plus, it sends a message to the billions of people in the world that pay their taxes that they are carrying the burden while the elite few have a different set of rules.
Canada as well as other countries could use extra tax revenues.
Two things could be done to alleviate tax avoidance. First, if taxes are being avoided because of loopholes, that does not make it illegal. The solution is to change the tax laws to remove the loopholes.
If tax avoidance is a result of fraud, including money laundering, then increase the priority of law enforcement to track down these cases. Increase penalties in order to discourage people to engage in fraud and other illegal activities.
Identify professional firms that facilitate any illegal type of tax avoidance activity. Consider stronger sanctions against these firms, including strong financial penalties, or force them to close down parts of their business or the entire business if warranted.
Punish any professionals that facilitates fraud.
Everyone should pay their fair share of taxes.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com