“Are Tax Havens robbing the government of P3 revenue?”

“Are Tax Havens robbing the government of P3 revenue?”

Posted on January 3, 2013 by

There are a couple of people who I really admire and follow with regards to their work on  P3′s in the province, among other items of concern. One is Erik Andersen , who in the embedded link talks about the potential for BC reaching our own fiscal cliff, and Keith Reynolds, who has written more about P3 projects than anyone else.

For newer readers, Public-private partnerships are a method of financing and building a project whereby a private corporation – usually a team of them – is selected to build a government project, and  also finances it all up front.

The government then pays that private partner back over a long period of time, along with very lucrative payments and interest, and that make P3′s  a very popular investment vehicle for many investment funds – the Sea to Sky highway project has been sold once already  to a new investor : http://lailayuile.com/2010/12/22/sea-to-sky-highway-changes-hands-as-macquaries-essential-asset-partnerships-sells-100-of-their-stake-in-the-project/

While the Liberal government has greatly endorsed the use of this manner of financing and building many projects, in particular highways and bridges, critics including myself have great concern over the amount of debt that it obligates the province to re-pay. The province doesnt actually consider it debt though, and it is not reported as debt, but rather ” contractual obligations” .   I’ve compared it to your mortgage, which is also a contractual obligation… but if you tried to tell a credit card company it wasnt debt, they would laugh at you.

It is debt, under another name, and those P3 payments over time, over multiple projects, have nearly bankrupted other countries and many countries have now stopped using this method because of the burden it places on the government over time, in paying back those debts.

Now Keith Reynolds has brought forth another strong concern – the  new owners of two P3 projects in BC are companies that are located in countries that are tax havens… and this may have a strong impact on the amount of taxes they should be paying to our province.

Here is an excerpt:

If P3 infrastructure is operated by the government or its agencies, then the operator does not pay taxes to the federal or provincial governments.  But a private sector operator does pay taxes and these taxes are factored into the equation that decides whether or not to use a P3.

But what happens if the tax revenue predicted from the P3 project doesn’t materialize? That means the province does not get the expected revenue, which is a big deal in cash strapped British Columbia. It also means that the comparison used to decide whether to use a P3 to do the project publicly was biased against public operation because of overly optimistic revenue expectations from the P3.

One of the ways companies cut their taxes is by moving their headquarters to tax havens.  Instead of claiming their profits in the country where they actually deliver services profits are claimed in the tax haven and taxes are paid at much lower rates.

Here in British Columbia there is complete silence on the issue from both the government and the media. The Ministry of Finance in response to a Freedom of Information request asking about the impact of tax havens and P3s said “although a thorough search was conducted, no responsive records were located. Your file is now closed.”

In a nutshell, the public private partnerships are already creating a sizable debt load in this province and when projects are flipped, losing valuable tax revenue to offset that debt is a huge liability.

But I’m pretty sure the government doesn’t want you to know, or understand any of it …. and that’s why you have to read the full post here http://www.policynote.ca/are-tax-havens-robbing-the-government-of-revenue-from-p3s-nobody-seems-to-care/

I’m more than willing to answer any questions you have, as I am sure Keith is, to help you understand why this is such an important issue for the financial future of our province.

Then, go and read the top post of 2012 on this site: http://lailayuile.com/2013/01/02/the-top-post-of-2012-on-lailayuile-com-how-money-and-corruption-are-ruining-the-land-originally-posted-june-19th-2012/

 

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COMMENT:

Ah yes..the good old creative accounting…(sorta like Banks…where ” debt ” is an ” asset “).

IMHO, we in BC seemed to do quite well before, financing projects with tax dollars for the last several decades.  We did have the Coquihalla Highway, but that’s a whole other story .

There were tolls on other structures…ie Oak Street Bridge, Massey Tunnel,  Lions Gate Bridge…but once they were paid off, the tolls were removed (within 5 years).

We built the Alex Fraser Bridge without tolls.

In my view, P3’s are  a major scam, moreso as outlined in the article above.

I personally do not see an overwhelming need for these new bridges. They were simply shoved down our throats. The Port Mann bridge is younger than I am. It is Public Property. Yet , it is my understanding that the deal cut by Gov’t for this P3 is that the old Port Mann bridge MUST be demolished, even if it has a life span of 30-50 more years.

QUOTE

It is debt, under another name, and those P3 payments over time, over multiple projects, have nearly bankrupted other countries and many countries have now stopped using this method because of the burden it places on the government over time, in paying back those debts.

Seems to be one way to define Canada…they think they are unique and thus what has historically happened elsewhere won’t happen here. Keep in mind the “stacking up of debt”….

QUOTE:

In a nutshell, the public private partnerships are already creating a sizable debt load in this province and when projects are flipped, losing valuable tax revenue to offset that debt is a huge liability.

Haven’t we learned our lesson about flipping ? This would imply the P3 partner has made a tidy profit selling the paperwork ? Does this not imply that an extra profit is made over and above IF the project was taxpayer funded?  Who owns it now?, what could be the consequences ? Why didn’t  the gov’t sign a deal which stated that the paperwork could not be flipped and thus not  re-assigned….and that the P3 partner must either maintain a head office in BC, or some such wording that the applicable taxes or their equivalent be paid or deducted from the contract.

In essence we have Billions of dollars of dubious projects imposed on the BC Citizens being used like “Monopoly Pieces” with no cost containment, or tax “revenue” avoidance. That spells disaster.

I would submit that if one did a little digging, one would in all probability  find many parties in Gov’t (ie elected or civil servants) that are tied to these P3 Companies. Once something stinks , extrapolate it into much more than meets the eye…..corruption knows no bounds.  They are left laughing all the way to the (offshore)bank …….and we in BC are left holding the bag being royally shafted.

Finally, the STACKING UP ON DEBT seem to be the key.  This does NOT at all appear to be a “coincidence”, IMHO it is a strategic move.  By doing this, it is effectively bankrupting the Province. Do you not find it strange that all these mega projects come up all at once, within  a few years of each other ? Once it is bankrupt, the ” private sector carpetbaggers ” come in and pluck public assets for pennies on the dollar.  This is why TRUE History is so important. This same basic “War” tactic occurred for hundreds of years. Much of “War” is based on profiteering and looting.In modern times, they are not using military weapons per se, but devices of mass economic destruction.

 

I use the term” WAR” because IMHO we are being attacked…we are being looted and losing our sovereignty, we are being stamped -on,  chewed- up and spit- out.

Again ….if they wipe out the middle class …….and what is left is a (2) Class Communistic system..(i)the” have not” debt slaves and(ii) the Elite.

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