1980 treaty with tiny Barbados paved way for billions to legally flow offshore
Canadian companies have flocked to Barbados with their cash for decades in order to legally avoid paying Canadian taxes. (The Associated Press)
Bill S-2 aimed to ratify a series of taxation treaties between Canada and countries like Spain, Korea, Austria and Italy. Also on the list: the tiny Caribbean island country of Barbados, population 250,000.
A fresh-faced Bob Rae, the federal NDP’s finance critic at the time, rose in the House of Commons in December 1980 to warn about tax treaties Canada was signing. (CPAC)
“The government is entering into these tax treaties without being fully aware of the impact they will have on domestic taxation in Canada,” Rae said. “Money that is income and is not being taxed at the corporate level, on which the government receives no revenue, has the unfortunate effect of increasing the load of taxation on the average citizen.”
His protestations didn’t stop the bill. After another hour of tepid debate, with a quick murmur of assent from the Liberal and Conservative MPs, the House passed it and it was signed into law the next week.
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