People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016 after a leak of documents by so-called Panama Papers stoked anger over his wife owning a tax haven-based company with large claims on the country's collapsed banks. REUTERS/Stigtryggur JohannssonSTRINGER/Reuters
Say you've earned lots of money and prefer to share as little of it as possible with the government. You could go to Antigua, or a similar Caribbean country, and invest a few hundred grand in a property there, thus qualifying you for citizenship and perhaps even unfettered, visa-free access to Europe's Schengen Zone.
For a bit more, it's possible to become a resident of no-tax Monaco or low-tax Andorra, its regional competitor. There are also Cyprus, Malta, non-domiciled status in the United Kingdom, and of course Switzerland. Bloomberg News recently noted that the United States, of all places, is gaining popularity as a tax haven, too.
The options are many and of varying reputability, as the voluminous document leak known as the Panama Papers shows. Mostly, it's legal, but it can also be unscrupulous, devious and far from public-spirited.
Unfortunately for the beleaguered Canadian treasury, it's much harder to legislate against immorality than illegality. As long as one country decides its road to prosperity passes through favourable tax rules, well-heeled people will flock there.
The real problem is the absence of international will to stamp out the practice. Small wonder – the Panama data dump identifies dozens of current and former heads of state and their families.
It is right and just to rail against a system that allows a select few to hide their dough, while the many watch up to half their paycheque disappear at the source. We can and should take every step to counter tax evasion, and to minimize tax avoidance (possibly a greater evil). Perhaps those who give the Canada Revenue Agency a swerve shouldn't benefit from all the trappings of citizenship.
Of course, Canadian tax authorities must distinguish between legitimate foreign investments and shell-game transactions, and they do. The CRA did recently shut down a tax sham in the Isle of Man (at the cost of granting amnesty to 25 unidentified rich folks who used it).
As economic theory predicts, the drafting of any tax-code measure is an invitation for clever minds to find a way to skirt it. Yes, it's satisfying when people like Russian President Vladimir Putin and soccer superstar Lionel Messi are shamed publicly for their tax-dodging. The battle is worth fighting. But we should also remember it's a very hard one to win.