Take physic, pomp

Silver Wheaton (SLW) now on the hook for up to $575m in back tax

As your humble scribe waits patiently for a modern jet aeroplane that’s decided to be three and a half hours late this evening (we thank the airline company for the complementary “evening meal”, a chicken sandwich and a coffee), news arrives as to how the Canadian tax people (CRA), already after Silver Wheaton to the tune of $265m in back tax from the 2005-2010 period, are now after SLW for a potential $310m extra for taxes in the 2011-2013 period.

Which gets me thinking about tax. SLW’s set-up, the reason it says it doesn’t have any bill to pay, is that it runs all its revenue through its wholly owned subsidiary in the Cayman Islands. As it’s zero percent income tax there, we’re all good and right, right? Not so says the CRA, these tricky fools are pulling a fast one on us all and they should pay tax on their earnings just like any other Maple Leaf waving corporation. They need to pay their fair share. It’s not fair otherwise. They’re depriving the good honest Canadian taxpayers of funding for (etc)

Well, maybe. And I found myself dwelling on that idea of ‘fair’, of equality or even justice. Because as far as I can see on this issue what SLW did when setting up its corporate structure wasn’t particularly fair in terms of paying its wedge to Canada, but it was perfectly legal and inside the law.

And since when does the law need to be just or fair? The law is the law! Yes it changes over time as society’s concept of what’s just changes, but justice is the leading edge and law drags along later on its coattails. So would it be “fair” to suddenly back-tax SLW just because it was smarter than the average bear and found a perfectly legal way of not paying a large amount of tax?

And pay to whom? Hey 575 large is a lot of money, write me a cheque for that size and I’ll probably remember the day for a long time. I might even buy you a beer to say thanks. But half a billion in the coffers of a national government, the world’s least efficient entity no matter which country is in question, doesn’t even move a dial. It’s “three hospitals” you say? Phooey, it isn’t even one, it’s money down the same drain that took the cash to build the other 50 hospitals that never happened (and never will).

The tax loop that SLW has taken advantage of may be eventually closed, that’s another story. But it strikes me as utterly unfair that the CRA is on its back for trying to be the best capitalists they can be. It’s the nature of the corporate beast, after all. Fair? Since when did capitalism give a shit about “fair”? Gimme a freakin’break.

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