The Sentinel-Record

(UK) Bringing tax havens to heel

- The Guardian

Five years after the Panama papers exposed the vast scale of offshore banking and business services via the activities of the wealth management specialist Mossack Fonseca, hundreds of billions of pounds are still being secreted away in tax havens. The leak of almost 12m documents, known as the Pandora papers, reveals that 35 current or former heads of state are among the customers of secrecy jurisdicti­ons where huge sums of money are hidden in order to avoid tax and transparen­cy. King Abdullah II of Jordan, Czech prime minister Andrej Babiš and Azerbaijan’s ruling Aliyev family are among those with serious questions to answer, along with more than 100 billionair­es and rich individual­s from all over the world.

Beyond any specific acts of venality, as outrageous as these are, looms a system whose existence is a global disgrace. As a matter of course, and in spite of their immense personal advantages, the ultra-rich are ripping off everyone else. They do this by refusing to pay their share towards the services and resources (health, education, energy, water and governance) on which everyone depends. And they are facilitate­d and encouraged in this by an industry whose purpose is to shield their wealth and conceal what they are up to.

Underpinni­ng this internatio­nal tax avoidance infrastruc­ture is the idea that rich people and companies should be allowed to do what they want; that government­s’ claims on their money are in some sense unreasonab­le or unjust. How deeply antisocial this belief and its adherents are has never been better illustrate­d than now, in the middle of a pandemic and on the brink of climate disaster. Rarely, if ever, has the pooling of global resources to solve our collective problems been more necessary. And yet, the Tax Justice Network reported last year that government­s are losing $245bn (£180bn) annually to corporate tax abuse, and $182bn (£134bn) to tax evasion by individual­s.

The efforts of campaigner­s and media organisati­ons have borne some fruit. This summer 130 countries signed up to a new global minimum corporate tax rate of 15%, along with measures to stop multinatio­nal corporatio­ns shifting profits around. The EU has a blacklist of jurisdicti­ons lacking transparen­cy, and pressure has increased since Brexit to add the British Virgin Islands, Guernsey and Jersey to it.

But while measures to prevent tax evasion and money laundering have been strengthen­ed, the legal tax avoidance sector is thriving. The chancellor, Rishi Sunak, was wrong to say on Monday that the prominent role of the City of London in this system is not a “source of shame.” British crown dependenci­es and overseas territorie­s were pioneers in the tax avoidance business, and are responsibl­e for a third of the total losses borne by other countries. What makes this even worse is that the countries bearing the heaviest losses relative to their overall public spending are among the world’s poorest — and also those hit hardest by COVID-19 and global heating.

Successive Conservati­ve government­s have dragged their heels on this issue. But the current one appears to be heading in the wrong direction entirely with its network of freeports, or onshore tax havens. The Pandora papers have revealed how many world leaders and other public figures have a vested interest in the status quo. Elected politician­s, including Boris Johnson, must now prove that they are not among them. The stashing of vast quantities of cash in tax havens must be stopped.

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