Five years after the Panama Papers revealed the extent of offshore banking and commercial services through the activities of wealth management specialist Mossack Fonseca, hundreds of billions of pounds are still hidden in tax havens. The leak of nearly 12 million documents, known as Pandora papers, reveals that 35 current and former heads of state are among the clients of secret jurisdictions where huge sums of money are hidden in order to avoid taxes and transparency. King Abdullah II of Jordan, Czech Prime Minister Andrej Babis and the ruling Azerbaijani family Aliyev are among those with serious questions to answer, along with more than 100 billionaires and wealthy people around the world.
Beyond any specific act of venality, as scandalous as they are, looms a system whose existence is a total disgrace. Of course, and despite their immense personal advantages, the ultra-rich swindle everyone. They do this by refusing to pay their share for 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 protect their wealth and conceal what they are up to.
At the root of this international tax avoidance infrastructure is the idea that the rich and corporations should be allowed to do whatever they want; that the claims of governments for their money are in some sense unreasonable or unfair. How deeply anti-social this belief and its followers has never been better illustrated than today, in the midst of a pandemic and on the brink of climate catastrophe. 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 were losing $ 245 billion a year to corporate tax abuse and $ 182 billion to personal tax evasion.
The efforts of activists and media organizations have borne fruit. This summer, 130 countries signed up to a new global minimum corporate tax rate of 15%, along with measures to prevent multinational companies from shifting their profits. The EU has a blacklist of untransparent jurisdictions, and pressure has increased since Brexit to add the British Virgin Islands, Guernsey and Jersey.
But while measures to prevent tax evasion and money laundering have been stepped up, the legal tax evasion industry is booming. Chancellor Rishi Sunak was wrong to say that the leading role of the City of London in this system is not a “source of shame”. The British Crown Dependencies and the Overseas Territories were pioneers in the field of tax evasion and are responsible for a third of the total losses incurred by other countries. What further aggravates the situation is that the countries which suffer the heaviest losses in relation to their overall public expenditure are among the poorest in the world -ì and also those hardest hit by Covid-19 and heating. global.
Pandora Diaries have revealed how many world leaders and other public figures have a vested interest in the status quo. Politicians, including Boris Johnson, must now prove that they are not part of it. The storage of large amounts of cash in tax havens must stop.
* Editorial invited by The Guardian, UK