British Columbia

Is B.C. an international financial hub or corporate tax haven?

Critics are calling the International Business Activity program unaccountable due to a lack of public information on which companies are participating and how much it is costing British Colombians.

Number of jobs, economic benefits of International Business Activity program unclear, say critics

British Columbia's 30-year-old International Business Activity program is being called 'unaccountable' by critics and The New York Times.

The IBA provides tax breaks of up to 100 per cent on provincial corporate income tax to international financial organizations and on specific activities such as the distribution of film or digital media.

Those breaks have totaled about $140 million dollars since 2008, according to Dermod Travis, executive director of IntegrityBC, a non-partisan organization that says it exists to build trust between citizens and elected officials. 

"That amount is contained every year in the provincial budget as an estimate of the cost. What I haven't been able to locate in the public accounts is what the the actual final figure came in at," Travis told host of CBC's On the Coast, Stephen Quinn.

Former Liberal finance minister Colin Hansen said the $140 million would never have come to B.C. in the first place if it weren't for the IBA and the program has put Vancouver on the map as an international financial hub.

As finance minister in 2010, Hansen helped expand the IBA to include a broader range of business activities in the program, including digital media distribution.

Hansen is now the president and CEO of AdvantageBC, an organization which acts as a liaison to international businesses that might qualify for the break.

Companies that wish to participate in the IBA must first become members of AdvantageBC, a non-governmental organization not subject to British Columbia's Freedom of Information and Protection of Privacy Act.

"We will reach out and identify companies around the world that are expanding their activities," he said, crediting AdvantageBC with attracting enough global financial companies to establish Vancouver as a global financial centre.

Decade-old data

The government claims the program has created somewhere between 1,300 and 1,500 jobs based on a report compiled by MMK Consulting, with data from 2001 to 2009.

Those numbers are being called into question because there are no publicly available records or data to show how successful the program has been not only in attracting new business, but retaining it.

"Have companies come to B.C. to take advantage of this program and the minute all of the benefits ran out for them, they moved on to the next tax haven?" said Travis.

The IBA allows for breaks of 100 per cent on specific business activities for the first two years, and the exemption is lowered to 25 per cent over five years.

According to AdvantageBC's website, companies must incorporate in Canada and establish permanent operations in B.C. to qualify for the program.

There is no publicly available list of participating companies, though Hansen says many are listed on the AdvantageBC website.

Hansen confirmed PacNet Services Ltd. was formerly a core member of AdvantageBC. The payment processing company was labelled a "significant transnational criminal organization" by the United States Treasury Department in 2016. 

A similar program exists in Quebec to provide incentives to businesses to come to Montreal. Travis calls the two programs "night and day."

"In Montreal I can see an accountability process. I can see links from the organization (which is called Finance Montreal) to both the local and provincial governments," he said.

"I think British Columbians would like to know a bit more about something that we invested $140 million into since 2008, to make certain that we're getting a good bang for our buck."

With files from CBC Radio One's On the Coast