Northvolt Six, a tax justice issue?

Pretending the climate emergency, governments persist in rolling out the red carpet for multinationals without leaving room for constructive social dialogue on our energy future. The State, by investing in the “battery sector”, deprives itself of the means to carry out a large-scale social and ecological transition.

For the Swedish company Northvolt to establish itself in Quebec, a range of incentives were put in place by the federal and provincial governments. Indeed, the investments injected into Northvolt are impressive: $1.34 billion from the federal government and $1.37 billion from the provincial government, not to mention the production subsidies announced to the tune of $4.6 billion. This suggests a total of 7.3 billion in state participation in the mega-factory project.

These investments, put into perspective with the sums invested in Ontario for the Stellantis and Volkswagen factories ($28.2 billion), show quite clearly the favorable reception given to multinationals wishing to build electric battery factories in the territory. canadian.

In addition, a bilateral treaty signed in 1999 with Luxembourg could well facilitate tax avoidance operations for the Swedish giant. According to an IRIS publication (2023), approximately 5% of Northvolt is owned by a company established in Luxembourg. However, Luxembourg is a “tax avoidance hub”, meaning that by declaring their profits in Luxembourg, multinationals are able to benefit from an almost zero tax rate. Under these conditions, why publicly finance a company that could try to avoid taxes?

The authors point out in this regard that the granting of subsidies to companies which strive to contribute as little as possible to the public treasury is not new. One of the most convincing examples is that of Bombardier: between 2015 and 2016, the company received 2.5 billion US dollars from Quebec and the Caisse de dépôt et placement (CDPQ), although 947 .5 million dollars of profit were declared in a Luxembourg company between 2008 and 2019.

Furthermore, this same IRIS report recalls that the Volkswagen battery factory, which should receive $13.2 billion from Ottawa for its construction, is 100% owned by a Luxembourg subsidiary. of the group. Concerning Northvolt, it is of course impossible to predict at the moment the extent of the tax avoidance linked to the project given the opacity of the financial arrangements; However, these legalized maneuvers will probably indeed take place.

When you look closely, the fact that governments grant subsidies to companies that practice tax avoidance is not paradoxical: they are only two sides of the same coin, both of which demonstrate the state complacency towards multinationals.

The “battery industry”

The high probability that the Swedish company could resort to tax avoidance makes the issue of tax justice all the more salient. According to Alain Deneault, “policies of convenience” and tax havens must be considered as typical problems of globalization, just like organized crime and money laundering networks. Large-scale research work, carried out in 2018, confirmed the extent of tax losses caused by tax havens: these could reach more than 500 billion US dollars.

The recent mobilization of the Popular Education and Community Action Movement of Quebec (MEPACQ), without directly pointing the finger at fiscal injustice, denounces the misappropriation of public money from the social safety net and disinvestment by public authorities of their social missions. In their press release, the activists mainly react to CDPQ’s investment of $200 million in the Northvolt Six project. The slogan chosen by MEPACQ speaks for itself: “On foot, hungry and poorly housed, your batteries, not our priority! »

If very incentive policies for multinationals – which promote technical solutions – are justified by the ecological and climatic emergency, it seems important to remember that this legitimacy should not lead to an avoidance of consultation processes in matters of energy transition. The greatest danger would thus be embodied by those who use climate change to justify their anti-democratic and destructive projects for biodiversity.

Indeed, the eagerness of governments to invest in the “battery sector” and their obstinacy in seeing the energy transition as a business opportunity rule out the possibility of a constructive social dialogue that would move us towards a fair and viable energy future. , as argued in a recent manifesto published by a civil society group.

Putting an end to state complacency in relation to tax avoidance measures would constitute one of the key steps towards the great challenge that we must collectively face with the social and ecological crisis. The State, by knowingly deciding to legalize tax avoidance maneuvers and by squandering its national budget in the “battery sector”, would it not itself be depriving itself of the colossal resources necessary for the start of a socio-ecological transition? ?

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