Twenty-first Century “Canadian” Corporate Capitalism is Quite the Racket

Built with public subsidies, a Montréal firm can shift its ‘head office’ to a tax haven and workforce abroad, but Ottawa will continue to use its diplomatic, economic and military might to advance the company’s reactionary international interests.

As part of its coverage of the Panama Papers, the Toronto Star recently reported that Gildan Activewear paid only a 2.8% tax rate on more than $1.3 billion US in declared income the last five years and it’s unclear if any of the apparel company’s measly $38 million in tax was paid in Canada.

After benefiting from government subsidies and financial backing from Quebec’s Fonds de solidarité labour investment fund, Gildan opened a subsidiary in Barbados sixteen years ago to sidestep Canadian tax. The firm took advantage of a tax treaty that permits companies to repatriate profits from the small Caribbean nation, which has a 1.5% corporate tax rate, without being taxed in Canada.

Concurrently, “free” trade agreements have enabled Gildan to shift its (unionized) Canadian and US production to Honduras, Nicaragua, Dominican Republic and Haiti where it’s pursued aggressive anti-union “sweatshop” policies. Without a high-profile brand name (until recently) Gildan has focused on producing T-shirts and socks at the lowest cost possible. Any increase in the dismally low wages it pays in these countries is a threat to their ultra-low-cost production model, which competes with even lower wage jurisdictions in Cambodia and Bangladesh.  (more...)

Twenty-first Century “Canadian” Corporate Capitalism is Quite the Racket