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August 19, 2009

Canadian Legislators Join Growing List of Those Concerned about Panama’s Tax Policies

A “free trade” agreement (FTA) between Canada and Panama may be stalled or defeated in Canada’s Parliament due to concerns legislators have expressed about Panama’s status as a leading tax haven. Panama’s tax haven status was one of the concerns U.S. members of Congress cited when they called on Speaker Pelosi to “chart a new course on trade” and replace the NAFTA model that serves as the basis for the Panama FTA. 

Bloomberg News reports that Canadian legislators from all three opposition parties have signaled opposition to the agreement, citing Panama’s lax taxation policies. Peter Julian, spokesman for the New Democratic Party, has expressed skepticism about the agreement: “We’ll read the text and look at the impacts, but given the problems with the tax haven status of Panama, I have my doubts.” The Bloc Quebecois has expressed similar sentiments, and party spokesman Serge Cardin has said, “We at the Blog Quebecois have denounced tax havens many times…Now, we have a chance, through the free trade agreement, to tell a country, if you want to do business with us, some things must change.” 

The Organization for Economic Cooperation and Development (OECD) recently criticized Panama for failing to substantially implement reforms aimed at improving tax information sharing, despite having promised to do so back in 2002. Panama is one of only 13 countries – and the only current or prospective U.S. FTA partner – that is listed on all of the major tax-haven watchdog lists that also does not have U.S. tax transparency treaties. Canadian legislators should be commended for doing their homework on Panama’s taxation policies.  We can only hope that members of U.S. Congress will be as vigilant and conscientious. 

For more information on how the U.S.-Panama FTA grants corporations expansive new rights to challenge U.S. government anti-tax haven initiatives – and claim U.S. taxpayer-funded damages as compensation – see GTW’s report, entitled “Panama FTA Would Undermine U.S. Efforts to Stop Offshore Tax-Haven Abuse and Regulate Risky Financial Conduct.”

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