TAX, SOCIETY & CULTURE

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Burgers & Mosquera on Corporate Tax, BEPS, and Developing Countries

Published Sep 06, 2017 - Follow author Allison Christians: - Permalink

Irene Burgers (University of Groningen - Faculty of Economics and Business) and  Irma Mosquera Valderrama (IBFD) recently posted Corporate Taxation and BEPS: A Fair Slice for Developing Countries?, which explores the link between perceptions of fairness in the allocation of international tax revenues and buy-in to the BEPS framework by developing countries. Here is the abstract:
The aim of this article is to examine the differences in perception of ‘fairness’ between developing and developed countries, which influence developing countries’ willingness to embrace the Base Erosion and Profit Shifting (BEPS) proposals and to recommend as to how to overcome these differences. The article provides an introduction to the background of the OECD’s BEPS initiatives (Action Plan, Low Income Countries Report, Multilateral Framework, Inclusive Framework) and the concerns of developing countries about their ability to implement BEPS (Section 1); a non-exhaustive overview of the shortcomings of the BEPS Project and its Action Plan in respect of developing countries (Section 2); arguments on why developing countries might perceive fairness in relation to corporate income taxes differently from developed countries (Section 3); and recommendations for international organisations, governments and academic researchers on where fairness in respect of developing countries should be more properly addressed (Section 4). 
This is an important analysis because it is clear that the meaningful participation of non-OECD countries in the development of international tax norms going forward is both difficult and imperative in terms of both legitimacy and effectiveness of the evolving international tax order.

Tagged as: BEPS development fairness scholarship tax competition tax policy

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Fleming Peroni & Shay on Corporate Tax, Credits, and even Customary International Law

Published Nov 24, 2016 - Follow author Allison Christians: - Permalink



Fleming Peroni & Shay recently posted a new article, of interest as it renews the authors' case, in the wake of BEPS, for both worldwide corporate taxation without deferral (a controversial proposal to say the least) and the foreign tax credit as an appropriate mechanism to allocate tax among home and host countries. As the abstract below indicates, the argument in favour of tax creditability is contra Dan Shaviro, who has argued for foreign taxes to be deductible rather than creditable. The FP&S argument in favour of full current taxation without deferral is contra almost everyone, so it's fun to see FP&S make it, especially in the face of what appears to be a rapidly rising tide of sentiment going in the opposite direction. 

My own view is that a switch to deductibility would increases pressure on capital importing countries to reduce their source-based taxes (a deduction does not fully offset the foreign tax, so it would make such taxes more costly to US firms as compared to fully creditable foreign taxes), and therefore transfer revenues from poor to rich countries. Deferral already places tremendous tax competition pressure on host countries, while ending it might enable some countries (to which US capital is a major source of inbound investment) to increase their source-based taxation (as explained in this paper). Therefore I was happy to see this FP&S paper give additional support to the beleaguered tax credit while still recognizing that there is such a thing as giving too much credit.

I was also intrigued to see FP&S begin their paper by picking up Reuven Avi-Yonah's premise that taxation on the basis of residence and source is customary international law. That is not only a relatively unusual argument to find in a US-authorized tax paper, but it is a potentially controversial perspective, which I am exploring in a paper of my own (making the international law case against citizenship based taxation). So, thank you Fleming, Peroni and Shay, for the additional citation support for my arguments.

It is also worth noting that FP&S include in this paper a defense of the corporate income tax in the form of footnote 200, which spans more than a page in tiny but useful print. It summarizes the main points regarding why corporate tax is necessary as a backstop to individual income taxation, citing to the main arguments for and against, thus serving as a valuable micro treatise on the subject.  

Finally, I note that FP&S only give the FTC two cheers instead of three because they feel that it conflicts with the principle of ability to pay, an argument I have not seen before and that gives me pause. Their argument is that foreign taxes are a cost to individuals attendant to investing abroad, and that crediting these taxes is too generous from the perspective of fairness, that a deduction would sufficiently account for the cost in terms of measuring ability to pay. I can understand that argument where the FTC is itself too generous, allowing cross-crediting and not restricting its application to double taxation. But I do not understand that argument applied to an FTC that restricts itself to a dollar for dollar credit of actual taxes paid, which I believe is the argument being advanced here. That's something to think about a little more.

In any event, abstract below and paper at the link above. Well worth a read.
 Reform of the U.S. international income  taxation system has been a hotly debated topic for many  years. The  principal competing alternatives are a territorial or  exemption system and a worldwide  system.   For reasons  summarized  in  this  Article, we favor worldwide taxation if it is real worldwide  taxation; that  is, a nondeferred U.S. tax is imposed  on all foreign income  of U.S.  residents at  the  time the  income is earned.  However,  this approach  is not  acceptable unless  the resulting double  taxation  is alleviated.    The longstanding U.S. approach for  handling the international  double taxation  problem is a foreign tax credit limited to the U.S. levy  on the taxpayer’s  foreign  income.   Indeed,  the foreign tax credit  is an essential element of the case  for worldwide taxation.  Moreover, territorial systems often apply worldwide taxation with a foreign tax credit to all income of resident individuals as well as the passive income and tax haven income of resident corporations.  Thus, the foreign tax credit also is an important feature of many territorial systems. The foreign tax credit has been subjected to sharp criticisms though, and Professor Daniel Shaviro has recently proposed replacing the credit with a combination of a deduction for foreign taxes and a reduced U.S. tax rate on foreign income.  
In this Article, we respond to the criticisms and argue that the foreign tax credit is a robust and effective device.  Furthermore, we respectfully explain why Professor Shaviro’s proposal is not an adequate substitute.  We also explore an overlooked aspect of the foreign tax credit—its role as an allocator of the international tax base between residence and source countries—and we explain the credit’s effectiveness in carrying out this role.  Nevertheless, we point out that the credit merits only two cheers because it goes beyond the requirements of the ability-to-pay principle that underlies use of an income base for imposing tax (instead of a consumption base). Ultimately, the credit is the preferred approach for mitigating international double taxation of income.
 

Tagged as: ability to pay corporate tax fairness foreign tax credit international law scholarship tax policy US

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Canada "Tax Gap" Study Released

Published Jul 05, 2016 - Follow author Allison Christians: - Permalink

The Government of Canada has released its first study of the "tax gap," which the Government defines as "the difference between the tax that would be paid if all obligations were fully met in all instances, and the tax actually paid and collected." The Canada Revenue Agency (CRA) has not completed a study of the income tax, but has released this paper on the concept and methodology. It has presented a report for GST/HST (Canada's VAT), estimating the tax gap to average about 5.6% per year over the period 2000-2014. For 2014, this produced an estimated tax gap of about $4.9 billion:



This study has been undertaken after many calls from academics and nongovernment organizations, including Canadians for Tax Fairness, which according to the CRA will be involved in consultations regarding the ongoing study. Canadians for Tax Fairness estimate that Canada loses $7.8 billion in income tax revenues to "tax haven" use, a number they constructed using Statistics Canada's foreign direct investment data.

The Government acknowledges that there is no reliable method for measuring the tax gap, and that the exercise is one in speculation based on imperfect information:
There are a number of challenges facing tax administrations undertaking tax gap estimation. The key challenge is access to the comprehensive and good-quality data necessary to produce estimates. A significant proportion of the tax gap involves unreported or under-reported income and assets and economic activity that are deliberately hidden from the government. As a result, many countries that publish tax gap estimates highlight their uncertainty.
Expect more to come from this exercise as the tax gap study is a key component of the Government's pledge to spend $444 million over five years "to enhance [CRA] efforts to crack down on tax evasion and combat tax avoidance."

Tagged as: budget Canada compliance CRA evasion governance

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Global Justice Post-2015

Published Oct 31, 2015 - Follow author Allison Christians: - Permalink

The Global Justice Program at Yale University is currently hosting a conference exploring the post-2015 agenda for human rights and global justice. List of speakers and topics:

Day One: October 30 
Panel 1: Global Tax Fairness: Allison Christians, Manuel Montes, Erika Siu; Chair: Zorka Milin)  
Amartya Sen Prize Contest Ceremony 
Panel 2: Illicit financial flows, human rights and the post-2015 agenda - Discussion of Independent Expert’s Report: Juan Pablo Bohoslavsky, Nicholas Lusiani, Léonce Ndikumana, Esther Shubert; Chair: Tom Cardamon 
Panel 3: Addis, Post-2015, and future efforts against Illicit Financial Flows: Tom Cardamone, Steven Dean, Gail Hurley and Jakob Schwab; Chair: Laura Biron 
Day Two: October 31  
Statement of the Health Impact Fund (HIF) and mini-HIF, including discussion: Aidan Hollis, Thomas Pogge; Chair: Alex Sayegh  
Panel 4: Mini-HIF: Piloting the Health Impact Fund: Laura Biron, Aidan Hollis, Peter Maybarduk, Thomas Pogge, Jeffrey Sachs, Richard Wilder; Chair: Tendayi Bloom
Concluding Session on the Health Impact Fund  
Panel 5: Individual Deprivation Measure, Poverty Measurement: Sharon Bessell, Thomas Pogge, Scott Wisor; Chair: Yuan Yuan. 
Day Three: November 1  
Panel 6: Oslo Principles on Climate Change Obligations: Thomas Pogge, Jaap Spier, Kira Vinke; Chair: Shmulik Nili 
Panel 7: Sustainable Development Goals (Daniel Esty, Thomas Pogge, Jeffrey Sachs; Chair: Corinna Mieth.
I presented yesterday on the topic of "Global Tax Fairness." I discussed the connection between taxation and human rights, highlighting the challenges for the realization of rights and justice that are posed by tax competition and exploring whether and how systemic change is possible. I have a couple of works in progress on the topic and will post drafts when ready.

In the meantime, I'm experimenting with making my powerpoint presentations available online (along with other resources in the future). You can view a list here: see pull down menu entitled "resources". Comments and suggestions are welcome.




Tagged as: conference human rights justice tax policy

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ICYMI: Call for papers; Conference on Taxation and Citizenship

Published Feb 19, 2015 - Follow author Allison Christians: - Permalink

Together with Reuven Avi-Yonah, I am seeking paper proposals for a Citizenship and Taxation Symposium, to be held at the University of Michigan Law School, Ann Arbor, Michigan, on Friday, October 9, 2015. The call for papers closes on February 28.

This symposium will focus on ongoing developments regarding the unique US practice of taxing citizens who live permanently overseas. With the adoption of regimes such as the expatriation tax added by IRC § 877A and the Foreign Account Tax Compliance Act (FATCA), the taxation of non-residents with US person status now has serious and tangible implications. 

Symposium Background 

 Like most countries, the United States claims the right to tax on a worldwide basis all of the people resident in its territory regardless of their legal status. But virtually alone in the world, the United States also claims worldwide fiscal jurisdiction over its citizens whether or not those persons are or ever have been resident within the territory. The legal claim over citizens dates to the first national income tax and has been continued through the present, but enforcement has always been an abstract ideal rather than a viable program. This status quo has dramatically changed as an unexpected side effect of the adoption of the Foreign Account Tax Compliance Act (FATCA) in 2010. By introducing an unprecedented regime for global third party reporting, FATCA enables the IRS to enforce citizenship taxation on a worldwide basis for the first time in the history of the income tax. As will becomes ability, the normative foundations of citizenship taxation are coming under intense scrutiny. 

To explore these issues, the symposium presenters will offer different perspectives on the meaning, feasibility, efficiency, and fairness of the U.S. practice of citizenship taxation, and will comment on the practical and policy effects of new legislative developments. We invite proposals that consider U.S. citizenship-based taxation from a historical, economic, social, political, institutional, or philosophical perspective. We welcome proposals from junior scholars and from scholars within and outside the United States.

 Symposium Participants 

 In addition to the conveners, the symposium will feature a panel of distinguished speakers, including:

  • Wei Cui, University of British Columbia School of Law 
  • Tessa Davis, University of South Carolina Law School 
  • Michael Kirsch, Notre Dame Law School 
  • Patrick Martin, Procopio, Cory, Hargreaves & Savitch LLP 
  • Ruth Mason, University of Virginia Law School
  • Saul Templeton, University of Calgary Faculty of Law 
  • Phil West, Steptoe & Johnson 
  • Ed Zelinsky, Cardozo School of Law 
Guide for Proposals
  • Deadline for proposals: February 28, 2015.
  • Paper proposals must be between 300–500 words in length and should be accompanied by a CV.
  • Successful applicants will be notified by the end of March 2015. 
  • Proposals should be submitted by email to Reuven Avi-Yonah and Allison Christians
  • Successful applicants must submit a working draft of their paper by September 8, 2015 for circulation among conference participants. 
  • additional info and updates on the symposium will available here.

Tagged as: citizenship conference scholarship tax policy u.s.

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Responses to Questions on Canada's Adoption of FATCA IGA

Published Jan 29, 2015 - Follow author Allison Christians: - Permalink

Back in November I noted that MP Ted Hsu presented an order paper question (OPQ 816) on the topic of the unusual process surrounding Canada's adoption of an intergovernmental agreement on FATCA. He asked a series of detailed questions about the treaty tabling and ratification process, and today he got his answers, the substance of which I have reproduced below; you can find the full document here.

I note that there is a common answer to many of the questions: "Information pertaining to Memorandums to Cabinet which are less than 20 years old is considered a cabinet confidence and details of these are excluded from disclosure under the principles of the Access to Information Act." Therefore, most of the answers are: you will find out in 20 years.

Though the government continues to claim that it "followed the treaty tabling policy" and that it made procedural exceptions deliberately, according to stated procedures, and out of urgent need, the facts and the nonexistence of key documents declare otherwise.

Bottom line: if there is a treaty policy in Canada, it is that a sitting government can bind the nation to any agreement of any sort with no parliamentary oversight of any kind and with no transparency, and if that agreement violates existing laws and rights, then it will be up to those whose rights have been violated to mount legal action to assert those laws and get their rights restored. This is not just a matter of some arcane technical procedure. It is fundamentally a problem of access to justice. Law is not free. It is, in fact, quite expensive.

I note that all the answers below are from the Minister of Foreign Affairs except with respect to three answers from Finance, which are indicated in brackets.

ORDER/ADDRESS OF THE HOUSE OF COMMONS
No. Q-816
By Mr. Hsu (Kingston and the Islands) 
Date November 24, 2014 

With regard to the Agreement Between the Government of Canada and the Government of the United States of America to Improve International Tax Compliance through Enhanced Exchange of Information under the Convention Between the United States of America and Canada with Respect to Taxes on Income and on Capital (the Agreement), the government's Policy on Tabling of Treaties in Parliament (the Policy), and the statement of Peter Van Loan, Government House Leader, in the House on Monday, April 28, 2014, that "in this case, the fact is that the government, the cabinet, actually did grant such an exemption to the tabling policy. As such, the very words of the policy, the
requirements of the policy, have been followed. The processes for obtaining the exemption were obtained. As a result, the requirement that it be tabled in the House 21 days in advance of the legislation being introduced is not necessary and the policy is fully complied with" (the Statement):

(a) was an exemption to the government's Policy granted with respect to the Agreement;
Yes.
(b) what is the difference between an "exemption" and an "exception" in terms of the Policy;
Either term could be used in the context of the Policy.
(c) if the word "exception" is substituted for “exemption" is the Statement accurate;
Either term could be used in the context of the Policy.
(d) on what basis was the Statement made;
The Statement was made because the Agreement was granted an exemption to the normal treaty tabling process under the Policy.
(e) how was the Government House Leader informed of the exemption or exception being granted to the Policy;
The Department of Foreign Affairs, Trade and Development (the "Department") has no information on how the Government House Leader was informed,
(f) what documents or memos were created regarding this exemption or exception and what are their access or control numbers;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act
(g) who was involved in this decision to grant an exemption or exception and at what stage were they involved;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act
(h) what was the process, step-by-step, by which this Agreement was granted an exemption or exception;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act
(i) who reviewed the decision to grant an exemption or exception, (i) when, (ii) why, (iii) how;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
 (j) does the Policy apply to the Agreement, and how;
Yes. The Agreement was granted an exemption to the normal treaty tabling process under the Policy,
(k) between what departments does correspondence exist-regarding the tabling of the Agreement under the Policy and what are the file numbers for these documents;
There is some correspondence between the Department, and the Department of Finance. There are no file numbers for the correspondence,
(l) on what date was the Agreement concluded;
[Finance] The Agreement was signed and made public on February 5, 2014.
(m) on what date was the Agreement tabled in Parliament;
In the context of the Policy, "If an exception is granted, the Minister of Foreign Affairs will inform the House of Commons that Canada has agreed to be bound by the instrument at the earliest opportunity following the ratification." (6.3b of the Policy), The Agreement was publicly tabled on September 15, 2014 by the Parliamentary Secretary to the Minister of Foreign Affairs as per Standing Order 32.2. That was the earliest opportunity for the Government to inform the House that Canada had agreed to be bound by the Agreement following its ratification - also the first sitting day of the House after the summer Parliamentary recess.
(n) on what date was the Agreement ratified;
Canada ratified the Agreement on June 27, 2014.
(o) when was the House made aware of the text of the Agreement;
In the context of the Policy, "If an exception is granted, the Minister of Foreign Affairs will inform the House of Commons that Canada has agreed to be bound by the instrument at the earliest opportunity following the ratification." (6.3b of the Policy)". The Agreement was publicly tabled on September 15, 2014 by the Parliamentary Secretary to the Minister of Foreign Affairs as per Standing Order 32.2. That was the earliest opportunity for the Government to inform the House that Canada had agreed to be bound by the Agreement following its ratification - also the first sitting day of the House after the summer Parliamentary recess. Additionally, the text of the Agreement was set out in Schedule 3 to Bill C-31, the Economic Action Plan 2014 Act, No. 1, which was introduced in the House of Commons on March 28, 2014.
(p) how was the House made aware of the text of the Agreement;
[Finance] Legislative proposals to implement the Agreement with the U.S., including related amendments to the Income Tax Act, were set out in Part 5 of the Economic Action Plan 2014 Act, No. 1 (Bill C-31 ). The text of the Agreement was provided in Schedule 3 of Bill C-31. Bill C-31 was introduced in the House of Commons on March 28, 2014.
In the context of the Policy, the text of the Agreement was publicly tabled in accordance with the Policy on September 15, 2014. Additionally, the text of the Agreement was set out in Schedule 3 to Bill C-31, the Economic Action Plan 2014 Act, No. 1, which was introduced in the House of Commons on March 28, 2014.
(q) when was the House made aware of the granting of an exemption or exception to the Policy in the case of the Agreement;
The House was first informed of the exemption through the Statement by the Government House Leader on April 28, 2014. In the context of the Policy, the House was made aware of the granting of an exemption when the Agreement was publicly tabled in accordance with the Policy on September 15, 2014.
(r) how was the House made aware of the granting of an exemption or exception to the Policy in the case of the Agreement;
The House was first informed of the exemption through the Statement by the Government House Leader on March 28, 2014. In the context of the Policy, the House was made aware of the granting of an exemption in the Explanatory Memorandum which accompanied the Agreement when it was publicly tabled on September 15, 2014.
(s) when and by what means is the House usually informed that an exception has been granted to the Policy;
In the context of the Policy, the House is usually made aware of the granting of an exemption to the normal treaty tabling process under the Policy in the Explanatory Memorandum which accompanies the treaty when it is tabled publicly.
(t) in the absence of the point of order prompting the Government House Leader's response, how and when would the House have been informed of the exemption;
In the context of the Policy, the House would have been made aware of the granting of an exemption to the normal treaty tabling process under the Policy in the Explanatory Memorandum which accompanies the treaty when it is tabled publicly.
(u) what steps and measures are in place to ensure that Parliament is informed of exceptions being granted to the Policy;
The Policy states: "If an exception is granted, the Minister of Foreign Affairs will inform the House of Commons that Canada has agreed to be bound by the instrument at the earliest opportunity following the ratification."
(v) what steps are in place to ensure that Canadians are informed when exceptions have been granted;
Informing Parliament publicly, as described under (u), is effective as a means of informing Canadians.
(w) what steps and measures are in place to ensure that Parliament is informed of exemptions being granted to the Policy;
The Policy states: "If an exception is granted, the Minister of Foreign Affairs will inform the House of Commons that Canada has agreed to be bound by the instrument at the earliest opportunity following the ratification."
(x) what steps are in place to ensure that Canadians are informed when exemptions have been granted;
Informing Parliament publicly, as described under (w), is effective as a means of informing Canadians.
(y) what does "urgent" mean in the context of the Policy;
The term "urgent" is not defined in the Policy.
(z) how was the ratification of the Agreement determined to be urgent;
The U.S. Foreign Account Tax Compliance Act ("FATCA") was enacted by the U.S. in March 2010. FATCA requires non-U.S. financial institutions to report to the IRS accounts held by U.S. persons. Absent the Agreement, obligations for Canadian financial institutions to comply with FATCA would have been unilaterally and automatically imposed on them by the U.S. as of July 1, 2014. These obligations would have forced Canadian financial institutions to choose between (a) entering into an agreement with the IRS that would require them to report directly to the IRS on accounts held by U.S. residents and U.S. citizens, which would raise concerns about consistency with Canadian privacy laws; or (b) being subject to the 30 percent FATCA withholding tax on certain U.S.-source payments for not complying with FATCA.
The Agreement takes into account the objectives and provisions of the FATCA, while supporting Canada's objectives for improving the integrity and fairness of the Canadian tax system. The Agreement addresses the Canadian concerns about FATCA described above, as well as others. It was realized that observing the Policy's requirement of waiting 21 sitting days would have made meeting the U.S. FATCA deadline of July 1, 2014, unachievable. As a result, the ratification of the Agreement was determined to be urgent, and a request for an exemption to the normal treaty tabling process under the Policy was granted.
(aa) who made the determination in (z), (i) how, (ii) on the basis of what information, (iii) with what authority, (iv) under what criteria;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(bb) how was the decision in (z) reviewed, (i) by whom, (ii) how, (iii) when, (iv) by what criteria;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(cc) who are or were the lead ministers with respect to the Agreement in terms of the Policy and how was this determined;
The Minister of Finance is the lead Minister with respect to the Agreement. The Minister of Foreign Affairs is responsible for tabling treaties under the Policy.
(dd) when and how did the Minister of Foreign Affairs and the lead ministers seek approval from the Prime Minister for an exemption to the treaty tabling process;
Approval from the Prime Minister was sought. Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(ee) when was the approval in (dd) granted and how;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(ff) what correspondence is available -with file and control number- to corroborate the information provided in response to (dd) and (ee);
Approval from the Prime Minister was sought. Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(gg) was a “joint-letter that clearly articulates the rationale to proceed with the ratification, without tabling in the House of Commons" created;
No.
 (hh) with respect to the letter in (gg), (i) who created this letter, (ii) when is it dated, (iii) how can it be obtained, (iv) who has access to it, (v) to whom is it addressed;
No such letter was created.
(ii) was the letter drafted in consultation with the Treaty Section of the Department of Foreign Affairs and International Trade and the relevant Secretariat in the Privy Council Office;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(jj) what documentation exists - with file or control number for each document - to corroborate the information provided in response to (ii);
No such document exists.
(kk) who is responsible for retention and access of such joint letters;
There are no special provisions for retention and access of such joint letters. Joint letters would be subject to the normal retention and access legislation, regulations, and guidelines for the Government of Canada.
(ll) with respect to the Agreement, were the responsible ministers and the Minister of Foreign Affairs aware early on of the need to request an exemption to the treaty process prior to obtaining Cabinet authority to sign a treaty;
Yes.
 (mm) how is "early on" defined for purposes of the Policy;
The term "early on" is not defined in the Policy.
 (nn) how is "aware" defined for purposes of this provision in the Policy;
The term "aware" is not defined in the Policy.
(oo) was a request made in a Memorandum to Cabinet, seeking policy approval for the Agreement;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(pp) what Memorandums to Cabinet exist relative to this agreement, (i) what are their dates, (ii) are they subject to privilege, (iii) who made them, (iv) what are their record or control numbers;
The Department of Finance will respond to this question and sub-questions. Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act
[Finance] Information pertaining to Memorandums to Cabinet which are less than 20 years old is considered a cabinet confidence and details of these are excluded from disclosure under the principles of the Access to Information Act.
(qq) which document in (pp) can be said to "clearly articulate the rationale for the exception to the treaty tabling process";
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(rr) what is the rationale for the exception to the treaty tabling process with respect to the Agreement;
The response in (z) outlines the rationale for requesting an exemption to the normal treaty tabling process under the Policy.
(ss) who determines the rationale per the Policy;
The rationale was prepared through consultations by officials on behalf of the Minister of Finance, the Minister of Foreign Affairs, and the Minister of National Revenue.
(tt) what is an acceptable rationale per the Policy;
There is no definition of “acceptable rationale” under the Policy.
(uu) how is rationale defined in terms of the Policy;
The term "rationale" is not defined in the Policy.
(vv) is there a minimal level of sufficiency for a rationale per the Policy and if so what is it;
There is no definition of a "minimal level of sufficiency" for a rationale under the Policy.
(ww) when was the exception granted;
Information pertaining to Memorandums to Cabinet which are less than 20 years old are considered cabinet confidences and details of these are excluded from disclosure under the principles of the Access to Information Act.
(xx) did the Minister of Foreign Affairs "inform the House of Commons that Canada has agreed to be bound by the instrument at the earliest opportunity following the ratification" per the Policy;
Yes. The Agreement was publicly tabled on September 15, 2014 by the Parliamentary Secretary to the Minister of Foreign Affairs as per Standing Order 32.2.
(yy) when did the actions in (xx) occur and how;
The Agreement was publicly tabled on September 15, 2014, which was the first sitting day of Parliament after the Agreement was ratified.
(zz) in 2014, how many exemptions or exceptions were granted under the Policy before the Agreement;
In 2014, there were two exemptions granted under the Policy. The first was concerning the Agreement. The second was concerning the Canada-Korea Free Trade Agreement.
(aaa) in 2014, was the Agreement's rationale for exception unique;
Yes. The ratification of the Agreement was determined to be urgent, and a request for an exemption to the normal treaty tabling process under the Policy was granted.
(bbb) in 2014, was the Agreement the only item determined to be urgent in terms of the Policy;
In 2014, the Agreement was one of two items determined to be urgent in the context of the Policy.
(ccc) is the Government House Leader always informed of exceptions and exemptions under the Policy and, if so, how;
The Department has no information on how the Government House Leader would be informed of exemptions to the normal treaty tabling process under the Policy. There are no special provisions under the Policy to inform the Government House Leader of exemptions.
(ddd) is the House always informed of exceptions or exemptions under the Policy and, if so, how;
In the context of the Policy, "If an exception is granted, the Minister of Foreign Affairs will inform the House of Commons that Canada has agreed to be bound by the instrument at the earliest opportunity following the ratification." (6.3b of the Policy).
 (eee) how early could the Agreement have been tabled in Parliament;
It was realized early on that observing the Policy's requirement of waiting 21 sitting days would have made meeting the FATCA deadline of July 1, 2014, unachievable. As a result, the ratification of the Agreement was determined to be urgent, and a request for an exemption to the normal treaty tabling process under the Policy was sought, and subsequently granted. Since an exemption to the normal treaty tabling process under the Policy was granted, the Agreement was to be tabled at the earliest opportunity following ratification. This was done as early as it could have been when the Agreement was tabled, in accordance with the Policy on September 15, 2014. It should be noted that the text of the Agreement was also set out in Schedule 3 to Bill C-31, the Economic Action Plan 2014 Act, No. 1, which was introduced in the House of Commons on March 28, 2014.
(fff) how was the date in (eee) determined;
Since an exemption to the normal treaty tabling process under the Policy was granted, the Agreement was to be tabled at the earliest opportunity following ratification. This was done as early as it could have been when the Agreement was tabled, in accordance with the Policy on September 15, 2014. It should be noted that the text of the Agreement was also set out in Schedule 3 to Bill C-31, the Economic Action Plan 2014 Act, No. 1, which was introduced in the House of Commons on March 28, 2014.
(ggg) if the Agreement could have been tabled earlier in Parliament than the date in (o), (i) why was it not, (ii) what decisions were made in this regard, (iii) who made these decisions, (iv) how, (v) on what basis; and
Since an exemption to the normal treaty tabling process under the Policy was granted, the Agreement was to be tabled at the earliest opportunity following ratification. This was done as early as it could have been when the Agreement was tabled, in accordance with the Policy on September 15, 2014. It should be noted that the text of the Agreement was also set out in Schedule 3 to Bill C-31, the Economic Action Plan 2014 Act, No. 1, which was introduced in the House of Commons on March 28, 2014.
(hhh) if the Statement could have been made sooner in the House than Monday, April 28, 2014, (i) why was it not, (ii) what decisions were made in this regard, (iii) who made these decisions, (iv) how, (v) on what basis?
The Department has no information on this question.

Reply by the Offices of the Prime Minister and the Privy Council
With regard to the Agreement, the Privy Council Office has no information in relation to part (ii) regarding a letter drafted in consultation with the Treaty Section of the Department of Foreign Affairs and International Trade.




Tagged as: Canada FATCA rule of law treaties u.s.

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Canadian government unveils Re-election Tax Credit

Published Nov 05, 2014 - Follow author Allison Christians: - Permalink

The Canadian government announced a new package of "family" tax cuts/credits last week, with an income splitting scheme and modifications to child care benefits and expense deductions. These are, of course, really just re-election tax credits--announced at what the CBC describes as a "campaign-style event." Earlier this year, at the Tax Justice & Human Rights Symposium I hosted at McGill, Jonathan Rhys Kesselman explained the distributional impacts of the type of cuts announced by the government. He had to embargo his presentation so it's unfortunately not among those now viewable at the McGill Tax channel, but fortunately his paper is now available [pdf here], and the Vancouver Sun has a story: Detailed analysis exposes more income-splitting flaws.

Kesselman's main arguments are:

  • restricting the measure to couples with children is inconsistent with the purported fairness rationale of taxing couples at the same rates as singles
  • families with the greatest need will get no benefits at all
  • families don't have to demonstrate or undertake any actual child care obligations in order to get the benefits
  • the policy will decrease the after-tax value of a family's second earner (because earnings are effectively taxed at the higher-earner's marginal rate) 

He ends by suggesting a number of alternative ways the government could spend money to support families in need without introducing these distortions.

It does feel frustrating that everywhere one looks, politicians just seem have no shame about trying to buy their next elections, and populations seem all too willing to be bought so long as you tell them it's for the "hard working" among us. The question is, whom does the Harper government define as hard-working? With this announcement, the message is: you are only a hard-working family, and therefore deserving of tax cuts, if you
  • have a child under 18;
  • with two parents;
  • one of whom earns a lot;
  • and who earns a lot more than the other.
If this doesn't describe your family, then it seems you are not working hard enough.

Tagged as: Canada justice tax policy TJHR

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Fixing Global Tax Disorder: Multilateralism vs. U.S.-Led Effort

Published Oct 15, 2014 - Follow author Allison Christians: - Permalink

Tax Analysts has a write-up [gated] of the international panel from last week's conference on Reforming Entity Taxation, in Boston. Excerpts:
"What we have now is a mess," Robert Peroni, a professor at the University of Texas School of Law, said October 10, referring to the international tax system. 
... A discussion of how to go about cleaning up that mess pitted multilateralism against a U.S.-first approach. Panelists appeared to share the realpolitik view that whatever course is followed, dominant actors have called the shots for decades and will probably continue to do so. 
According to Allison Christians of McGill University Faculty of Law, the problems addressed by the conference's panel on international taxation are not much different from those faced by four academics more than 90 years ago when asked by the League of Nations to study the question of how to share the world's income tax base. Christians said the crucial issue now is the failure to tax income as opposed to double taxation, which worried policymakers then. 
"If you gave international tax a grade over 90 years, it would be an F," Christians said. 
"We will not take fairness seriously on the international stage." 
Christians said that powerful countries too often end up calling the shots, much to the detriment of a fair and orderly international tax system. "When we turn to power, we sacrifice both efficiency and equity . . . and administrability as well," she said. 
Christians was especially critical of the U.S. for using the Foreign Account Tax Compliance Act to expose underpayment of U.S. personal income taxes while cautioning that the OECD's base erosion and profit-shifting initiative could negatively affect U.S. multinationals. 
"FATCA leverages U.S. control over the global financial system, thereby forcing the populations and governments of poorer countries to direct precious tax administration and regulatory compliance resources toward the enforcement of the U.S. tax system over their own," Christians said. "Yet the U.S. has not used this same leverage to respond to base erosion. U.S. lawmakers have not seen as great a good in stopping tax avoidance by U.S.-based corporations as they have in stopping tax evasion by U.S. individuals." 
...While advocating multilateralism, Christians admitted that there is a significant risk in changing course that could prove detrimental to U.S. interests. She said that it might be in the best interest of the U.S. to act while it still has policy flexibility to shape a future international tax regime in which it might not play as dominant a role.
"Someday there might be a global power shift," Christians said. "We might wish we built a structure when we had a chance." [I believe i said an "appropriate" governance structure"] 
Christians' co-panelists placed less emphasis on multilateralism. ... Peroni said that what the world needs now is a "real worldwide" income tax regime rather than a territorial system. "Territorial undermines fair allocation of burden, and should only be enacted if its efficiency and simplification benefits outweigh its costs in terms of fairness," he said. 
Peroni said competitiveness should be defined not in terms of improving the after-tax profits of already successful U.S. multinationals, but in terms of citizens' living standards. He stressed the importance of fairness -- both actual and perceived -- in any reforms to the federal income tax and warned that simplification would probably be given short shrift. 
"Significant simplification in the international corporate tax area may be difficult to achieve because the transactions involved are often inherently quite complex and, therefore, the tax rules dealing with such transactions are likely to have a certain degree of unavoidable complexity," Peroni said. 
Peroni said that calls for formulary apportionment of international income could result in U.S. multinationals moving operations and jobs to low-tax foreign countries.

...Martin Sullivan of Tax Analysts said that U.S. moves to curb tax shelters by stressing  economic substance can often have a similar effect. "It is so ingrained that deals without economic substance have to be bad," Sullivan said. Comparing the paper companies often set up in Bermuda with real operations established in low-tax Ireland, Sullivan wondered why Ireland is considered better from a U.S. point of view. "Would it be better if there were 40,000 factories in Bermuda?" he asked.  
... The panelists weren't optimistic about the prospects for international tax reform. Peroni said "no sensible president" would push for reform during his or her first term. "If a president is not reelected, this could go on forever," he said. "You might be able to do a few antiabuse provisions . . . but that's a Band-Aid on the problem," Peroni said.
Christians emphasized the central role and responsibility of the U.S. should the world opt for a multilateral approach. "With great power comes great responsibility," she said.

Tagged as: conference corporate tax MNCs tax policy

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Today at McGill Law: Final Day of Tax Justice and Human Rights Research Collaboration Symposium #TJHR

Published Jun 20, 2014 - Follow author Allison Christians: - Permalink

Today is the third and last action-packed day of  conversation among students, academic researchers, and tax justice advocates and activists on the topic of tax justice and human rights. It has been a fascinating and enlightening experience so far. You can continue to follow the proceedings and make comments on twitter at #TJHR. Program and speaker info here.

Here is the final day's lineup:
Time
Topic
Location
08:30 – 09:00
Registration & Arrival Tea/Coffee
Atrium
09:00 – 10:30
6. Reducing Inequality: Tax Avoidance and Capital Flight
Ofer Sitbon (PhD candidate, College of Law & Business, Tel Aviv), Moderator
James Henry (Senior Economic Advisor, Tax Justice Network),Kleptocracy and Human Rights
Steven Cohen (Professor, Georgetown University Law Center), Does Swiss Bank Secrecy Violate International Human Rights?
Brigitte Alepin (Partner, Agora Fiscalité), The Foundation
Steven Dean (Professor, Brooklyn Law School), A Tax Regime to Catalyze Social Enterprise Crowdfunding
Lee Sheppard (Journalist, Tax Analysts), John Christensen (Director, Tax Justice Network), discussants
Moot Court (room 100)
10:30 – 10:45
Refreshment Break
Atrium
10:45 – 12:00
7. Reducing Inequality: Tax Avoidance and Progressive Taxation
Neil Buchanan (Professor, George Washington University Law School), moderator
Chris Odinet (Associate Professor of Law, Southern University Law Center), Taxing Property Owners
Jean-Pierre Vidal (Associate Professor, Dept of Accountancy, HEC Montreal), Ethics in Taxation: what is it, and why should a tax specialist care?
Niko Lusiani, (Senior Researcher, Center for Economic and Social Rights), A Post-2015 Fiscal Revolution: Human Rights in the Struggle to Finance Sustainable Development
James Henry (Senior Economic Advisor, Tax Justice Network), Attiya Waris (Senior Lecturer, Faculty of Law, Univ. of Nairobi), discussants
Moot Court (room 100)
12:15 – 14:00
Lunch, Keynote Speaker Attiya Waris (Senior Lecturer, Faculty of Law, University of Nairobi)
 Thomson House
14:00 – 15:30
8. Justice in Labour and Capital Migration
Samuel Singer (Associate, Stikeman Elliott), Moderator
Aldo Caliari (Director, Rethinking Bretton Woods Project), Unleashing the Potential of Human Rights Standards to Demand Tax Justice
Lynne Latulippe (Professor, University of Sherbrooke), Tax Competition and Paradigm Shift in International Law
Krishen Mehta (Senior Advisor, Tax Justice Network, New York), Can Developing Countries Attract Investment and Still Get a Fair Deal on Tax Justice?
Henry Ordower (Professor, Saint Louis University), Retreat from Progressive Taxation in the Swedish Welfare State: Does Immigration Matter?
John Christensen (Director, Tax Justice Network), Neil Buchanan(Professor, George Washington University Law School), discussants
Moot Court (room 100)
15:30 – 15:45
Refreshment Break
Atrium
15:45 – 17:00
9. Environmental Tax Justice
Jessica Magonet (BCL/LLB candidate, McGill Faculty of Law), Moderator
Toby Sanger (Senior Economist, Canadian Union of Public Employees), Tax Justice and Climate Change
Tracey Roberts (Visiting Assistant Professor, Seattle University School of Law), Tax – A Better Mechanism to Protect Rights in the Global Commons
- Rodolfo Salassa Boix (Professor, National University of Cordoba),Distribution of Ecological Costs Through Environmental Taxes
Stéphane Dion (MP for Saint Laurent-Cartierville), Jim Henry (Professor, Saint Louis University), discussants
Moot Court (room 100)
17:00 – 18:00
10. Roundtable on Tax Justice Campaigns and CSO Actions
Imad Sabi (Head of Global Partners Program, Oxfam Novib), Moderator
Dennis Howlett (Executive Director, Canadians for Tax Fairness)
Duncan Wigan (Researcher, Copenhagen Business School)
Victoria Harnett (Campaigns & Communications Advisor, Aid & Development Finance at Oxfam International)
Moot Court (room 100)
18:00 – 18:15
Wrap Up and Closing Remarks, Allison Christians (Stikeman Chair in Tax Law, McGill Faculty of Law)
Moot Court (room 100)
18:15 – 20:00
Closing Cocktail
 Atrium

Tagged as: conference human rights justice McGill scholarship tax policy

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Today at McGill Law: Day Two of Tax Justice and Human Rights Research Collaboration Symposium #TJHR

Published Jun 19, 2014 - Follow author Allison Christians: - Permalink

The conversation among students, academic researchers, and tax justice advocates and activists on the topic of tax justice and human rights continues at McGill today. You can follow the proceedings and make comments on twitter at #TJHR. Program and speaker info here.

Here is the day's lineup:
Time
Topic
Location
08:30 – 09:00
Registration & Arrival Tea/Coffee
Atrium
09:00 – 09:15
Welcome remarksAllison Christians (Stikeman Chair in Tax Law, McGill Faculty of Law); Dennis Howlett (Executive Director, Canadians for Tax Fairness); John Christensen (Director, Tax Justice Network); and Jean Symes (Program and Policy Analyst, Inter Pares)
Moot Court (room 100)
09:15 – 10:00
1. Setting the Stage
William Stephenson (Editor in Chief, McGill Law Journal), Moderator
Kim Brooks (Dean and Weldon Professor of Law at the Schulich School of Law at Dalhouse University), Why Justice Matters for Tax Policy
Ignacio Saiz (Executive Director, Center for Human Rights in Economic Policy), The Evolving Norms and Standards of Human Rights
Allison Christians (Stikeman Chair in Tax, McGill Faculty of Law), Who Has Rights, What Rights, and Against Whom?
Moot Court (room 100)
10:00 – 11:15
2. Human Rights and Tax Justice Reports
Aldo Caliari (Director, Rethinking Bretton Woods Project), Moderator
Lloyd Lipsett (President and Rapporteur, International Bar Association Task Force on Illicit Financial Flows, Poverty and Human Rights): IBA Human Rights Institute Task Force on Illicit Financial Flows, Poverty and Human Rights Report
Kate Donald (Adviser to the UN Special Rapporteur on Extreme Poverty and Human Rights), UNHRC Report
Adrienne Margolis (Founder and Editor, Lawyers 4 Better Business), L4BB Report
David Quentin (Senior Adviser, Tax Justice Network), and Shirley Pouget(Senior Program Lawyer, Int. Bar Assoc. Human Rights Institute), discussants
Moot Court (room 100)
11:15 – 11:30
Refreshment Break
Atrium
11:30 – 12:45
3. Gender and Fiscal Justice
Liz Nelson (Partnership Development and Resources Coordinator, Tax Justice Network), Moderator
Annick Provencher (Professor, Faculty of Law, Université de Montréal),From the Invisible Hand to the Invisible Woman
Rhys Kesselman (Professor, School of Public Policy, Simon Fraser University), Income Splitting and Alternatives for Family Tax Cuts in Canada
Kathleen Lahey (Professor, Queen's University Law School), Sex Equality and Tax Justice: Gender Impact of Tax, Benefit, and Other Fiscal Policies
Kate Donald (Adviser to the UN Special Rapporteur on Extreme Poverty and Human Rights), Attiya Waris (Senior Lectrurer, Faculty of Law, Univ. of Nairobi), discussants
Moot Court (room 100)
12:45 – 14:15
Lunch, Keynote Speaker Thomas Pogge (Leitner Professor of Philosophy and International Affairs, Yale University) VIA SKYPE
Thomson House
14:15 – 15:45
4. Fiscal Justice: Regional Challenges and Initiatives
May Hen (Master's candidate, Simon Fraser University), Moderator
Savior Mwambwa (Policy and Advocacy Manager, Tax Justice Network - Africa), The Reform of the Global Tax System: Keys Issues and Lessons from Africa
André Mendes Moreira (Associate Professor of Tax Law - Federal University of Minas Gerais), Indirect Taxes and Tax Justice
Misabel Machado Derzi (Professor of Tax Law, the Federal University of Minas Gerais), Guerre fiscale, Bourse Famille et Silence
Renaud Fossard (Latindad), Latin American Countries: Local Issues and International Influences
Lyne Latulippe (Professor, University of Sherbrooke), John Christensen (Director, Tax Justice Network), discussants
Moot Court (room 100)
16:45 – 16:00
Refreshment Break
Atrium
16:00 – 17:30
5. Reducing Inequality: International Corporate Tax Reform
Jo Marie Griesgraber (Executive Director, New Rules for Global Finance Coalition), Moderator
Erika Siu (Tax Research Consultant, International Centre for Taxation and Development), BEPS Monitoring Group Activities: An Update
Michael Knoll (Theodore K. Warner Professor of Law, University of Pennsylvania Law School), Competitive Neutrality and the EU Model
Lee Sheppard (Journalist, Tax Analysts), OECD Initiative on BEPS
Robert Fox (Executive Director, Oxfam Canada), Business Among Friends: Why corporate tax dodgers are not yet losing sleep over global tax reform 
Samuel Singer (Associate, Stikeman Elliott), discussant
Moot Court (room 100)
17:30 – 17:45
Announcements
Moot Court (room 100)
17:45 – 18:30
Refreshment Break: Atrium


Breakout Session: IBAHRI Update on Tax and the Millennium Development Goals, Moot Court (room 100)

Tagged as: conference fairness human rights justice McGill scholarship tax policy

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