Federal government covers $1.1M tax bill for Laval corruption recovery
Ottawa intervenes after Quebec city faced unexpected tax on funds recovered from jailed ex-mayor. Settlement protects residents from bearing burden of fraud restitution.
The federal government has agreed to pay $1.1 million to settle a Canada Revenue Agency tax bill imposed on Laval, Quebec, for funds the city recovered from a corrupt ex-mayor, Finance Minister François-Philippe Champagne announced Friday.
The decision shields the Quebec municipality north of Montreal from an unfair tax burden after it successfully pursued restitution from former mayor Gilles Vaillancourt, who pleaded guilty in 2016 to years-long collusion and corruption surrounding public-contract awards. Vaillancourt was sentenced to six years in prison and ordered to repay Laval more than $8 million, including $7 million recovered from a Swiss bank account.
Laval formally requested federal intervention in March, arguing its residents shouldn't bear tax consequences for money the city recovered through legitimate legal action. Champagne's office acknowledged the situation was unfair and acted to rectify it.
"The government recognizes that the tax situation was unfair to Laval and its residents, and is acting to rectify it," said Champagne's press secretary, John Fragos.
The settlement establishes a precedent for how Ottawa handles similar disputes involving municipal fraud recovery, ensuring that communities pursuing accountability for corruption don't face unintended tax penalties. The move represents a rare instance of federal intervention in a local financial dispute, signalling that recovered public funds shouldn't be treated as taxable income for municipalities.