How much does Canada lose to tax abuse each year?

New analysis of OECD countries finds that Canada is far from the worst but it’s still losing billions of dollars

How much does Canada lose to tax abuse each year?
Steve Randall

None of us like it, but most of us pay the taxes due on our income each year. But some of the wealthiest people and biggest corporations don’t.

A new analysis of global tax abuse reveals the eyewatering sums of money that are lost by OECD member countries each year – a total of US$483 billion.

Of this, cross-border corporate tax abuse denies tax authorities $312 billion while wealthy individuals’ tax evasion makes up the other $171 billion.

These figures only represent the direct tax losses that can be seen by analysing self-reported data from corporations and banking data from governments – rather than indirect tax losses from tax abuse driving down global tax rates.

The stats are revealed in The State of Tax Justice 2021 report published by the Tax Justice Network, the Global Alliance for Tax Justice, and the global union federation Public Services International.

Tax Justice Network data scientist Miroslav Palanský said that the $483 billion lost to tax havens a year is the tip of the iceberg.

“It’s what we can see above the surface thanks to some recent progress on tax transparency, but we know there’s a lot more tax abuse below the surface costing magnitudes more in tax losses,” he said.

How much does Canada lose?

The report breaks down figures by country and shows that Canada loses more than $5 billion per year from tax abuse.

The figure is made up of $3.48bn in corporate tax abuse and $1.83bn in offshore tax evasion.

The total is the equivalent of 1.1% of Canada’s tax revenue or $146 for every member of the population.

However, it’s far from the worst with the global average tax revenue loss running at 2.9%.

The United States, by comparison, loses 3.1% of tax revenue to abuse, a staggering $113.5bn or $352 per member of its population.

Facilitating tax abuse

Canada ranks 19th on the report’s Global Financial Secrecy Index and is responsible for 1.3% of global financial secrecy.

The report calculates that Canada facilitates $19 billion in losses to other countries, made up of $18bn for enabling global corporate tax abuse and $734 million by enabling global private tax evasion.

To put that into context, it would be enough to vaccinate more than one billion people against COVID-19.

Canada also ranks among the worst half for vulnerability to illicit financial flows, with the Netherlands, the United States, and Switzerland the trading partners that are most responsible for this vulnerability.

The alliance behind the report wants the UN to have a role in global taxation.

“Tax can be our most powerful tool for tackling inequality, but instead it’s been made entirely optional for the superrich,” said Alex Cobham, chief executive at the Tax Justice Network. “We must reprogramme the global tax system to protect people’s wellbeing and livelihoods over the desires of the wealthiest, or the cruel inequalities exposed by the pandemic will be locked in for good.”

The full report is at: