When ‘privacy’ becomes a problem
Prime Minister Boris Johnson needs to show he's on the right side of ongoing tax haven debate
As Boris Johnson insisted all Conservative Party donations are “vetted” under rules set up by the Labour Party and his predecessor Tony Blair basked uncomfortably in the ignominious light shed on his property transactions, a clear thread running through the revelations contained in the so-called Pandora Papers has emerged.
And that is the use of tax havens and offshore companies by the super rich to avoid scrutiny of, and publicity about, their business affairs.
Some might say they are entitled to privacy, but this becomes a problem if those affairs have an underhand and stealthy effect on democratic politics, particularly if the ultimate source of the funds involved is corrupt.
In short, we need to be confident that wealthy criminals, dodgy officials and dictatorial regimes are not using their ill-gotten fortunes to buy influence in democratic countries like the UK.
There is little doubt that the temptations on offer for those willing to play the game are huge.
A 2019 article published by the International Monetary Fund reported that anywhere between $8.7 trillion and $36 trillion is estimated to be held in tax havens. For reference, the size of the whole world’s economy is about $85 trillion.
It has also been estimated that tax havens cost governments worldwide between $500 and $600 billion a year in lost corporation tax revenue.
So it is understandable that US President Joe Biden is trying to establish a global minimum tax rate and also that this has attracted the ire of the chief minister of tax haven Jersey.
Perhaps the Conservative party has nothing to worry about over its donations from wealthy Russians facing allegations of financial wrongdoing. Tony and Cherie Blair did nothing illegal when they did not have to pay £312,000 in stamp duty because they acquired a £6.45 million London townhouse by buying the offshore firm that owned it, apparently because the seller insisted.
But the Blairs could have avoided the embarrassment of the current headlines by buying a different house. And the Conservatives should reconsider the robustness of Labour’s old rules on donations, rather than relying on them in an attempt to justify having wealthy friends in strange places.
A good reputation is a precious thing. Joe Biden’s efforts are bolster