“The reason KPMG is promoting privatization is the same reason it's helping wealthy individuals use tax havens: tax havens increase its profits at the public’s expense.” — James Clancy, NUPGE National President
Ottawa (14 Sept. 2015) — Last week’s news that KPMG is helping wealthy Canadians avoid paying their fair share in taxes by using a KPMG scheme based on the Isle of Man was bad enough. But what’s worse is that’s only one way KPMG boosts its profits at the public’s expense.
In addition to helping the wealthy avoid paying their share, KPMG is also getting lucrative fees for helping privatize public services.
“For low- and middle-income Canadians, tax avoidance by the wealthy and privatizing public services have the same result: the average person pays more so a few wealthy individuals can get even wealthier,” said James Clancy, National President of the National Union of Public and General Employees Union (NUPGE).
KPMG tax scheme helped wealthy avoid taxes
KPMG’s tax avoidance scheme was targeted at people with at least $10 million in assets. It promised people that by setting up an offshore company on the Isle of Man (a tax haven located between Britain and Ireland), they wouldn’t have to pay any tax on their investment income. In exchange, KPMG collected a commission equal to 15 per cent of the taxes their clients avoided.
It is very clear KPMG knew what they were doing was wrong. News stories report that KPMG instructed its staff to keep information on the scheme confidential. In the one example where some information is public, the offshore company was not even registered in the names of the people who control it.
KPMG also a key player in the privatization industry
Expensive consultants’ reports are a feature of most types of privatization and that’s where KPMG makes much of its money.
KPMG was one of the consulting firms that helped come up with the proposal to sell Hydro One in Ontario. While privatizing Hydro One means higher electricity prices for average Ontarians, for KPMG it meant a lucrative contract.
“Value for Money reports to justify the use of P3 privatization schemes are another example of how KPMG profits from privatization," said Clancy. "Even though Auditors General in three provinces have found P3 privatization schemes cost more than public procurement, KPMG still manages to produce reports claiming P3s are a good deal."
KPMG's privatization lobby is good for business — Big Business
In fact, KPMG makes so much money from selling off public services that they lobby hard for more sell offs. At the international level it sponsors things like the “Privatisation Barometer.”
In Canada, KPMG belongs to pro-privatization lobby groups like Canadian Council for Public-Private Partnerships and helps fund reports promoting privatization, like the one released by the Ontario Chamber of Commerce last year. Locally, it holds seminars encouraging non-profit groups to get involved in new forms of privatization like Social Impact Bonds.
“The reason KPMG is promoting privatization is the same reason it's helping wealthy individuals use tax havens,” said Clancy. “Tax havens increase its profits at the public’s expense.”
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 360,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE