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On May 27, Kevin Arseneau, Member of the Legislative Assembly for Kent North, tabled a motion in the New Brunswick Legislature calling on the government to ban financial assistance to any companies that are known to use tax havens and implement a publicly-accessible beneficial ownership registry by the end of the year.
A month ago, Arseneau said he was not impressed by what he called “spam” from a J.D. Irving Ltd. representative about their toilet paper donation to shelters and transition houses in New Brunswick.
On April 27, Chris MacDonald, J.D Irving’s Director of Government Relations, wrote to all New Brunswick MLAs to tell them the toilet paper the company is “donating to shelters and transition houses is made 100% here in New Brunswick.”
“Even the box the tissue comes in is made in New Brunswick. The process to produce tissue starts with the planting of seedlings and eventually ends with the creation of parent rolls of tissue (these are very large rolls weighing 5 tonnes, measuring 7 feet in diameter and 17 feet in height) at our tissue mill in Saint John. These parent rolls are then converted to end-user consumer products at our facility in Dieppe,” wrote MacDonald.
About one hour later, Arseneau, Green MLA for Kent North, responded to MacDonald: “Beyond the opportunistic aspect of this public relations effort, your charity hardly masks the harm done by the shameless use of tax havens by the companies you control.”
“Very few New Brunswickers would need your charity if you had preferred to pay your taxes on your corporate profits in Canada, rather than in Bermuda and elsewhere. Be aware that toilet paper does not erase the traces of dirty money passing through tax havens,” continued Arseneau.
Arseneau noted in this letter to J.D. Irving that since the 1970s, “millions (if not billions) of dollars that should stay here have gone to these tax havens.”
In response to the criticisms that J.D. Irving pay their fair share of taxes, Mary Keith, J.D. Irving’s Vice-President of Communications, said: “As regards to your statement regarding tax havens, the fact is the J.D. Irving, Limited group of companies are owned and controlled by entities and Canadian citizens resident in Atlantic Canada and pay all taxes due and owing in Canada.”
Arseneau hopes to change some of the rules that allow companies to avoid contributing to public coffers. “New Brunswick is a province that has a lot of wealth, enough wealth to pay for our needs, but that wealth is being funnelled out of the province by large corporations using tax havens. We need to ensure that everyone is paying their fair share,” said Arseneau.
“Most of the legislation regarding taxation is federal and that is harder for us to change, one thing we can do here in New Brunswick is refuse to give any additional financial assistance to companies that shield their income in offshore accounts,” continued Arseneau.
Arseneau’s motion proposes to ban financial assistance to companies that benefit from property tax breaks, wage subsidies, business development funds or any other source of government revenue or tax breaks.
In the 1970s, K.C. Irving pioneered a corporate tax avoidance scheme when he moved to Bermuda and opened tax-free accounts to shelter the profits of his companies that were operating in New Brunswick.
Alain Deneault is a scholar and writer on tax havens, including Offshore: Tax Havens and the Rule of Global Crime. In his book, Legalizing Theft: A Short Guide to Tax Havens, Deneault calls tax havens “places where capital finds itself at ease in acting outside all legal constraint.”
Last November, when New Brunswick’s Liberal Party Leader Kevin Vickers suggested that New Brunswick become a tax haven like Ireland, Deneault responded: “tax havens are a scourge that explain the difficulty that Western jurisdictions, such as New Brunswick, have in properly funding public services.”
“Canadian businesses funnel tens of billions of dollars into tax havens to avoid paying their fair share of taxes, and at the same time federal and provincial governments, allowing themselves to be strangled by debt, must either cut services or charge fees for them, moving the tax burden onto the middle class and small and medium businesses,” stated Deneault.
According to Deneault, European Commissioner for Competition Margrethe Vestager has denounced Ireland’s tax haven as a form of legislative abuse.
Arseneau agrees with Deneault that the missing revenues from corporate tax avoidance are causing New Brunswick’s public services and programs to suffer. “By arranging to pay as little tax as possible, you are removing bread from the mouths of children, the elderly, the workers, the most vulnerable and, finally, all of our society,” wrote Arseneau to MacDonald.
Arseneau is not the only provincial government representative raising concerns over corporate tax dodging. Arseneau’s Green colleague in the Legislative Assembly, Megan Mitton, is also denouncing tax havens.
“We have corporations and the extremely wealthy who are actually in some cases profiting from the pandemic, and we have corporations who are registered in tax havens and they’re going to be able to access bailout money here in Canada,” said the Memramcook-Tantramar MLA to the audience at an online Green Party panel discussion on April 28.
Mitton argued that the federal government should follow other countries in not allowing such corporations to receive emergency funds. Denmark, Poland, Scotland and Wales have said they will not provide COVID-19 bail-out funds to corporations that shelter their profits in tax havens outside their countries.
Meanwhile, J.D. Irving is running ads of images of front line workers during the COVID-19 pandemic that say “today, we are prouder than ever to call ourselves Canadian.”
According to Deneault in Legalizing Theft, governments are losing billions from tax avoidance by multinational corporations and wealthy individuals: “that shortfall means that event if they were inclined to pay for hospitals, schools, cultural centres, transit systems, accessible legal institutions, and other social services, they cannot afford to do so.”
The reduction of government revenue due to COVID-19 is already leading the city of Saint John, location of the J.D. Irving and Irving Oil headquarters, and other jurisdictions to propose austerity measures, but there are provincial New Brunswick representatives preferring tighter tax rules.
“Believe me, if COVID-19 taught me anything, it is that it is necessary to attack the virus of generalized tax avoidance. Without tighter tax rules, the post-crisis economic recovery will be difficult and will be on the backs of ordinary people, for the benefit of the better off,” stated Arseneau.
“Unless you want to be tax justice champions, don’t send me spam,” Arseneau ended his letter to the J.D. Irving representative.
Tracy Glynn is an editorial board member of the NB Media Co-op.