Canada – A Mining Tax Haven
Mar 18th, 2014 by oliviaszostek
The country of Canada is noted to be home to 70-75% of the world’s mining companies. (Canadians for Tax Fairness, n.d; Wipond, 2013). Quebec researchers Alain Deneault and William Sacher set out to explore the question that had yet to be addressed here in Canada of why this may be true. In his 2010 book, Imperial Canada Inc, Deneault came to the conclusion that Canada successfully attracts so many multinational mining companies, due to its status as the top haven for transnational mining companies in the world.
Work in academia explain the tax havens through the idea of “international regimes.” Characterized as sets of principles, norms, rules, and decision-making procedures in which actors’ expectations come together in a given arena of international relations, international regimes are integral in increasing the probability of international player behaviour and providing a generalized set of rules (Eden & Kudrle, 2005). More specifically, “a tax regime exists to manage conflicts and interdependencies among nation states and multinational enterprises (MNEs)” and a renegade state is consequently a state who presents itself as an outlier from the practices specified of an international regime (Eden & Kudrle, 2005, p.100-101).
Because of Canada’s tax and governance characteristics surrounding the mining industry, it becomes an attractive home base for many mining companies around the world (details of Canada’s characteristics of what makes it a tax haven for mining can be explored in further detail in Deneault’s book, Imperial Canada Inc.). Literature expresses the recent outcry from affected countries of Canadian mining expansion and its shocking lack of worker and operating rights, and its scarce acknowledgment of environmental concerns associated with the industry (Gordon & Webber, 2008; McMahon & Remy, 2001; Seck, 1999). It is true that mining companies from Canada have taken note of this, and have made it apparent in the public that they have taken the initiative to begin exploring sustainable mining practices in light of the issues being raised (Veiga et al., 2001; Dashwood, 2007).
This winter semester brought Alain Deneault to UBC for a brief talk about his book, Imperial Canada Inc., and the challenges we face today within the Canadian Mining Industry in relation to governance and tax havens. I have never been exposed to the idea of tax havens prior to Deneault’s talk, and when I began researching it more I was shocked to discover that anywhere from 60-80 different countries are considered tax havens for specific sectors.
This topic concerned me, as I saw Deneault talk as I was entering an era of passion for energy policy. If I have learnt anything this semester, it is that to attack large scale global issues, like climate change, we will be needing large scale global cooperation. Implementing forward thinking international policies will be undermined if renegade states, such as Canada, continue to create sanctuaries for multinational companies that later feed into undesirable corporate practice.
References:
Canadians for Tax Fairness. (n.d.). Tax Havens and Mining Companies: The Canadian Connection. . Retrieved April 22, 2014, from http://www.taxfairness.ca/news/ottawa-book-launch-imperial-canada-inc-nov-8
Dashwood, H. S. (2007). Canadian mining companies and corporate social responsibility: Weighing the impact of global norms. Canadian Journal of Political Science, 40(01), 129-156.
Eden, L., & Kudrle, R. T. (2005). Tax Havens: Renegade States in the International Tax Regime?*. Law & Policy, 27(1), 100-127.
Gordon, T., & Webber, J. R. (2008). Imperialism and resistance: Canadian mining companies in Latin America. Third World Quarterly, 29(1), 63-87.
McMahon, G., & Remy, F. (Eds.). (2001). Large mines and the community: socioeconomic and environmental effects in Latin America, Canada, and Spain. Idrc.
Seck, S. L. (1999). Environmental harm in developing countries caused by subsidiaries of Canadian mining corporations: The interface of public and private International Law. Can. YB Int’l L., 37, 139.
Veiga, M. M., Scoble, M., & McAllister, M. L. (2001, August). Mining with communities. In Natural Resources Forum (Vol. 25, No. 3, pp. 191-202). Blackwell Publishing Ltd.
Wipond, R. (2013, February 1). Canada Mining Races to the Bottom. Focus Online. Retrieved April 22, 2014, from http://www.focusonline.ca/?q=node/503