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What should be done about offshore tax havens?

Governments around the world are investigating possible wrongdoing by politicians, billionaires and other powerful people after a huge leak of documents from a Panamanian law firm that specializes in setting up offshore companies. What should be done about offshore tax havens?

Panama Papers reveal offshore financial dealings of world's rich and famous

Should governments take action against jurisdictions and institutions that peddle offshore secrecy? (Kacper Pempel/Reuters illustration)

Governments around the world are investigating possible wrongdoing by politicians, billionaires and other powerful people after a huge leak of documents from a Panamanian law firm that specializes in setting up offshore companies.

There's nothing illegal about such structures, nor should society want to make them so, says Allison Christians, a law professor and the Stikeman chair in tax law at McGill University in Montreal.

"We wouldn't want to have laws like that," she said in an interview with CBC's The Exchange on Monday. "You want to be able to have international businesses and be a part of the global community."

But economist and author Gabriel Zucman said the findings "show how deeply ingrained harmful practices and criminality are in the offshore world." Zucman said the release of the leaked documents should prompt governments to seek "concrete sanctions" against jurisdictions and institutions that peddle offshore secrecy.

What should be done about offshore tax havens?

Readers let us know in the latest CBC Forum — a live, hosted discussion about topics of national interest.

(Please note that user names are not necessarily the names of commenters. Some comments have been altered to correct spelling and to conform to CBC style. Click on the user name to see the full comment in the blog format.)

"I expect the new federal government (Trudeau Liberals) to demonstrate tough action: tougher laws; a hard line on no deal-making; and litigate and impose crushing penalties. Demonstrate they are protecting the middle class and those seeking to join it." — Stephen Glass

"Simplify tax laws and make it that any income earned in Canada is taxed as a Canadian company or Canadian citizen. Breaking tax laws should also have harsh punishments. It is laughable that you get a 'deal' if you get caught, and part of getting caught requires lengthy legal battles that just soak up our resources just to show they are guilty." — Bob

"The setting up of a tax haven may not be illegal, but it does provide a way for certain individuals without a social conscience to avoid paying legitimate taxes. The responsibility for paying into government coffers then falls squarely on the shoulders of those individuals and businesses who do not try to avoid their obligations. It may not always be illegal but it is always immoral and unethical." — RayM

"There are already long-standing laws against tax evasion.… There are increasing amounts of enforcement under new international agreements, and apparently these documents also show a sharp drop in business in the last few years. Also, anyone foolish enough to still attempt evasion now has to deal with a disgruntled employee walking off with all the documents on a hard drive. The days of offshore companies being used for tax evasion are coming to an end." — Steve_7

"Begin the process of making Canada a tax haven. There is and always will be loopholes in any system. Have the loopholes point towards Canada." — K Louis

"You could have more favourable tax laws in place so people and companies would invest here instead of offshore. But that would require a shift in mentality in Canada on the left that I just don't think is possible. Too many people and politicians see that kind of thing as 'pandering to corporations' instead of seeing it as a way to keep money, jobs and a more diversified economy here in Canada." — off the post

"I do not think we should penalize external jurisdictions for having lower taxes. It is their choice and we made ours. As for our own citizens, as long as what they are doing is lawful they should be left alone." — Tomasz Rakowski

"Offshore centres provide a legitimate means to compete on one hand and illegitimate means to evade taxes on the other. There are good offshore centres with very high standards and there are shady ones. Like any system it can be taken advantage of positively and negatively. Those who have broken the laws should be punished. Those who abide by the law should be allowed to continue to compete." — Canuck 1

You can read the complete discussion below.

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With files from Reuters

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