YouMakethePana­maCut?

The Economic Times - - The Edit Page - Anuvab Pal

The list of In­di­ans with se­cret ac­counts in tax havens sounds like the guest list of a Page 3 party. When so many cel­e­brated and re­spected peo­ple are on the list, it makes you won­der if a tax haven is not so much an il­le­gal­ity as a sta­tus sym­bol.

As of now, The In­dian Ex­press thinks they’ve found some wrong­do­ing. Maybe a per­cent­age did stash money se­cretly with­out pay­ing tax. But if a ma­jor­ity did it legally, us­ing the Lib­er­alised Re­mit­tance Scheme and show they paid taxes, as this news­pa­per re­ported as be­ing pos­si­ble (‘Ini­tial in­quiries sug­gest 90% In­di­ans have used RBI’s lib­er­alised re­mit­tance scheme’, goo.gl/nbVsCL) in due course, for achiev­ers, the am­bi­tion might be not to get off the list, but to get on it.

First of all, we should note that Mos­sack Fon­seca sounds like the name of a Bond vil­lain. The name inherently sug­gests some­thing shady. I am al­ready pic­tur­ing a man in a white suit, straw hat, with a long cig­a­rette, drink­ing gin, un­der a palm tree, trans­fer­ring as­tro­nom­i­cal sums from his Swiss banks, on his iPad, while feed­ing his pet al­li­ga­tor.

Names like th­ese sug­gest se­crecy. It is not a clean name like Citibank or Bank of Bar­oda that says, ‘Look, we are a bank in a city like Bar­oda’. If I had a firm that helped set up tax havens, it would have a name like Strauss Mur­jani Part­ners or Her­zog Bose LLC. A com­bi­na­tion of Swiss-Ger­man ef­fi­ciency (I can al­ready pic­ture cold deep iron vaults) with a touch of In­dian warmth and du­plic­ity (a smil­ing face mak­ing you sign all sorts of dodgy doc­u­ments).

How­ever fraud­u­lent and vil­lain­ous the name sounds, though, and how­ever shocking to us av­er­age peo­ple, there is re­ally noth­ing il­le­gal about a tax haven — or Bond vil­lain-sound­ing firms. Just like a rat will al­ways look for food at the risk of any rat trap, man will al­ways avoid tax in the most ne­far­i­ous snake-like way pos­si­ble that is al­most — but only al­most — il­le­gal.

Ac­coun­tants world over will find the slight­est sliver of things to take ad­van­tage of as a ‘tax-de­ductible’, and cel­e­brate them as lit­tle vic­to­ries. In all hu­man be­ings, how­ever al­tru­is­tic we may be, a greedy lit­tle voice sug­gests that tax­a­tion means some­one took away stuff from you. The wealth­ier one gets, the louder that voice gets, as does the amount of money in tax. Sav­ing even a penny in tax al­most feels like 1-0 to you.

And Mos­sack Fon­seca found not just an item tax-de­ductible but whole is­lands tax-de­ductible — law­fully so — and told the world’s elite. That lot, for­ever dis­trust­ing of their home na­tions and too well known in their home na­tions, jumped to score an­other 1-0 over tax au­thor­i­ties. Again, within the law.

Sure, one un­der­stands that the state’s role in wa­ter, roads, power, air­ports, etc. But when it comes to pay­ing for it, the wealth­i­est to the poor­est will take the tini­est open­ing open to pay less. Also be­cause tax is col­lected by a face­less, no-fun en­tity. If tax was a nice sweet-look­ing old man who showed up on tele­vi­sion and said, ‘Don’t cheat me, I’m old and I need your help,’ maybe they’d be less Swiss and Panama ac­counts.

The shock, of course, was the amount of money off­shore. How­ever, in all hu­mans, there is a se­cret voice that tells us that those sums held by th­ese VIPs need, al­most beg, an ar­range­ment like this. It would be highly dis­ap­point­ing if we found out that Vladimir Putin had one sav­ings bank ac­count in Pun­jab & Sind Bank, or some In­dian bil­lion­aire was in line be­hind you at Dhan­laxmi Bank to make a cash with­drawal hold­ing a to­ken.

The other shock is per­haps the amount of money ev­ery bil­lion­aire, dic­ta­tor, de­posed PM, or war­lord puts into prop­erty in Lon­don. Which al­most begs me to spec­u­late that the list was leaked by a dis­grun­tled Lon­don jour­nal­ist who, look­ing to buy a flat, fi­nally no­ticed he was priced out by ei­ther LLCs or The House Of Saud.

All the din­ner party gos­sip about rich peo­ple’s se­cret money now has some credo. The names are the names you ex­pect. At most, the gos­sip can be, “What? That’s all he has?” There isn’t one where some­one went, “What, him? He has an off­shore ac­count? How? I saw him fight­ing with his driver over change yes­ter­day.”

Ap­par­ently, more names are due. The list for cel­e­brated In­di­ans on the Panama off­shore list is so large that the list it­self may have to be off­shored for safe­keep­ing. It may, for sen­si­tiv­ity, se­crecy, gen­eral VIP-ness and un­cer­tainty in In­dia, need a haven of its own.

Ma­haraja Gaipa­jama, you on Panama to be

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