Friday, March 20, 2015

Would 7¢ fines deter improper acts of Canadians?

The National Energy Board penalized Enbridge Pipelines Inc. $16,000 in February and $264,000 in March 2015 for four separate incidents in western Canada. The Harper Government set the maximum penalty for corporations under the NEB Act at $100,000 per incident.

Is that penalty sufficiently onerous that a company is unlikely to offend? Not likely. In 2014, Enbridge had annual revenues of $38 billion, total assets of $73 billion and equity of $19 billion. Statistics Canada reports median annual income of Canadians is $27,600 and median net worth per individual is about $85,000.

So, comparing annual revenues, a fine of $100,000 to Enbridge is equivalent to a fine of 7¢ to a person with the median Canadian income. Looking at net assets, a fine of $100,000 to Enbridge is equivalent to a fine of 45¢ to a person at the Canadian median.

Finland is a nation that believes in both progressive taxation and progressive punishment. The Guardian Newspaper reported how the system works:
A millionaire businessman in Finland has been fined €54,000 ($73,000 CAN) for speeding. While the businessman’s fine may seem extortionate, it is part of a tradition of “progressive punishment” that stretches back over nine decades.

In Finland, speeding fines are linked to an offender’s income.

Reima Kuisla was driving at 103 km/h (64mph) in an 80 km/h zone. The fine was calculated based on the €6.5m earnings posted on his 2013 tax return.

This is not even the highest ever financial penalty received for speeding in the country. Back in 2002, a Nokia executive received a €116,000 ($158,000 CAN) fine for speeding on his Harley Davidson motorcycle.

Since 1921, some offences that require a non-custodial sentence in Finland have been punishable by “day-fines”. These are calculated on the basis an offender’s daily disposable income...
If the National Energy Board could impose fines against resource corporations equivalent to the impact a person with median income experiences when paying a $173 transit fare infraction ticket, the penalty for Enbridge would be $238,200,000. Instead the maximum fine allowed by government is 0.042% of that amount.

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  1. One point you left out: Enbridge deducts the $100,000 fine from income tax but regular citizen cannot deduct his or hers.

  2. Considering how much money companies like Enbridge and Kinder Morgan garner on a daily basis, I doubt that even a multi million dollar fines would hurt their bottom line.

    Enbridge currently transports 2.2 million barrels per day in Canada and KM around 300 thousand bpd in Canada.

  3. James King, VictoriaMarch 20, 2015 at 5:45 PM

    That's not what cra says Les....You cannot claim a deduction for any fine or penalty imposed by a government agency, regulatory body, court or other tribunal or by any other person having the statutory authority to levy fines and penalties. For example, CRA interest paid for late payments or insufficient instalments is not deductible for tax purposes.

  4. 7 cent equivalent to median income earner. That means that about 50 cents to the average Translink executive.

  5. If a senior gets caught with a dog off leash, in Vancouver, the fine is $250.00.

  6. Keep the dog on a leash - simple.



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