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AdvantageBC fights back as NDP ends business tax refund scheme

Non-profit headed by former B.C. Liberal finance minister rallies its corporate members to save $25-million-a-year program

Members of the Advantage B.C. Business Centre — a non-profit business society formerly known as International Financial Centre B.C. The organization’s CEO, former B.C. finance minister Colin Hansen, sits second from left.

Courtesy AdvantageBC

Members of the Advantage B.C. Business Centre — a non-profit business society formerly known as International Financial Centre B.C. The organization’s CEO, former B.C. finance minister Colin Hansen, sits second from left.

A B.C. non-profit under scrutiny in the last election for hundreds of millions in tax refunds from the B.C. Liberal govermment to its members is mounting a campaign against the NDP's scrapping the scheme earlier this month.

Headed by ex-B.C. Liberal finance minister Colin Hansen, AdvantageBC International Business Centre is expected to release a report within days touting the benefits of the program, which was set up in the 1980s to encourage businesses based in B.C. not to move offshore and avoid taxes.

But under successive governments, its secret membership expanded to a wider and wider range of companies.

“Our government has ended the International Business Activity program,” confirmed finance minister Carole James when asked about the AdvantageBC arrangement. “The B.C. Liberal government maintained and expanded this program in the face of criticism.

“But as analysis from the Ministry of Finance has shown us, the program created very few jobs.”

She said the money would be “better invested in areas that matter to British Columbians, like education, health care and transit.”

Firms that joined got full B.C. tax refunds only available to members — estimated to cost taxpayers $25 million in lost revenues this fiscal year, according to the finance ministry — totalling at least $200 million since 2001.

But according to Finance figures obtained by Metro, 94 per cent of the tax breaks doled out went to just three types of business: securities trading, foreign currency exchange transactions, and factoring — an obscure but legal practice in which a firm can sell another company money owed to that firm, according to documents B.C. released on its website under a Freedom of Information request last December.

Factoring made up, on average, 39 per cent of refunds in the three years before 2008, when data was available. But details on jobs or revenue associated with factoring were censored in the documents.

In a Sept. 15 release, however, AdvantageBC said it was "shocked and disappointed" that the NDP's first legislation after coming to power — a budget update — immediately scrapped the refund arrangement.

“We are still working to prevent the cancellation of the program,” AdvantageBC stated, and suggested its members “voice your concern over the cancellation” of the program, in particular “three key individuals”: NDP finance minister Carole James, B.C. Liberal finance critic Shirley Bond, and Green leader Andrew Weaver — whose three MLAs play a kingmaker role in the NDP minority government.

Hansen could not be reached for comment Thursday, but in a May interview told Metro the program benefits B.C. by attracting investments — and rejected the criticism it created too few jobs here.

“It wasn’t about how many jobs would be created,” he said. “The principle was, if you want to build a reputation for international commerce, you have to have the financial services as the underpinning of that, the foundation.

“… To infer that somehow this is money the province is somehow giving up — it’s money the province wouldn’t ever have received.”

But with its member’s identities secret due to Finance taxpayer privacy rules, critics raised concerns about what they said was a lack of transparency despite the large price tag.

“AdvantageBC needs to be overhauled,” argued Dermod Travis, executive director of the government watchdog Integrity BC. “Originally, there was a valid reason for its creation.

“But somehow it morphed into the Frankenstein of tax breaks, and it lost what it was designed to do: to try to bring offshore money back into Canada.”

Travis doesn’t blame the non-profit for the arrangement, however.

“The failure really lay with the Ministry of Finance, than with AdvantageBC. The ministry cleary did not do adequate due dilligence on which groups were applying for these tax breaks.”

One, payment processor PacNet, was stripped of its decade-long membership earlier this year after it failed to pay its dues, Hansen revealed in May. But in 2016, the U.S. Treasury deemed PacNet a “significant transnational criminal organization,” adding it “has a lengthy history of money laundering by knowingly processing payments on behalf of a wide range of mail fraud schemes.”

AdvantageBC stated that although if B.C. kills its members' tax breaks "will challenge (its) revenue stream" — "as our core members contributed a small percentage of their (tax) refunds" — it "will continue" to "attract the attention of companies and investors around the world."

According to Travis, "Outsourcing the program to an independent organization was a mistake," he said, "and needs to be fixed if any part of the program is to go further."

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