Trouble in Paradise?


This week on Facebook: Blissful ignorance, Tax Havens and the Paradise Papers —

To each his suff’rings: all are men,
         Condemn’d alike to groan,
The tender for another’s pain;
         Th’ unfeeling for his own.
Yet ah! why should they know their fate?
Since sorrow never comes too late,
         And happiness too swiftly flies.
Thought would destroy their paradise.
No more; where ignorance is bliss,
       ‘Tis folly to be wise.

Thomas Gray —Ode on a Distant Prospect of Eton College

Apparently of extreme importance to the International Consortium of Investigative Journalists (ICIJ) and Transparency International, leaked documents dubbed the Paradise Papers, show how deeply the offshore financial system is entangled with the overlapping worlds of political players, private wealth and corporate giants, including Apple, Nike, Uber and other global companies that avoid taxes through increasingly imaginative bookkeeping manoeuvres.

Kate (Attorney): Someday, we’ll smarten up, change some laws, and put you OUT OF BUSINESS.
Larry the Liquidator: You can change all the laws you want. You can’t stop the game. I’ll still be here. I adapt.  Larry the Liquidator — Posted by Peter on February 3, 2012

While the Paradise Papers give an insight into some of the world’s ultra-rich there are consequences to challenging the funding of legal tax avoidance themes that the Paradise Papers do not deal with. For example; last week I posted MPs’ Pensions and Yours, where MPs’ pensions were guaranteed by the Exchequer making up any deficit in the Parliamentary Contributory Pension Fund (PCPF). Investments made by PCPF include several US tech giants who are accused by MPs themselves of avoiding tax. As I wrote, with such a contribution made by the taxpayer MPs can afford their hypocrisy.

After years of resistance, the Parliamentary Contributory Pension Fund has finally come clean and made public their top 20 holdings. This is a good first step but, as expected, the fund has a deeply questionable investment strategy investing in dirty energy and tobacco. Independent — Thursday 2 March 2017

The UK is unlikely to be the only government who may be glad of the extra taxes that transferring funds out of legal tax avoidance schemes would bring about. Especially the ability to plunder pension fund investments — excluding their own of course — in support of their fiscal policy. The Paradise Papers bring no answers to this financial dilemma, which impacts on many people who are not ultra-rich.

A government can only acquire debt free money from the efforts of other people increasing the tax revenue income stream. Other People’s Money —Posted by Peter on January 25, 2012

The global scramble for economic growth is already increasing competition between governments for inward foreign investment. This raises the question of how public administrations prevent funds from being transferred out of the country without becoming a tax haven to encourage inward investment. Assuming that as result of this ICIJ investigation tax havens are closed down (perhaps in the manner proposed by Transparency International), the fiscal capacity of a government is likely to be effected — especially those of the current tax havens. Self interest in the scramble for economic growth impacts on every government and is likely to make an existing problem¹ unsolvable.

The questions facing politicians are also the same ones that come up after every new substantial leak: How can we continue to tolerate a situation in which tax loopholes still haven’t been closed? And why are EU member states still allowed to cheat their partners within the bloc out of tax revenues? The Ongoing Battle against Tax Havens

 

 


Monday — What to Know About the ‘Paradise Papers’ Leak: The documents — tagged as “Paradise Papers” — were obtained by German newspaper Süddeutsche Zeitung and shared with almost 100 media partners around the world by the ICIJ, an international consortium of journalists.

Tuesday — Why aren’t the streets full of protest about the Paradise Papers? Many activists justifiably, and optimistically, anticipated that the largest leak in human history would provide the evidence necessary to spark an ongoing series of protests worldwide that would yield concrete, lasting change.

Wednesday — Joyful Tax Havens, Offshore Banking and the “Paradise Papers”:  The Bermuda minister for finance, Bob Richards, for instance, rejects the suggestion that his country is a joyful tax haven for the stinking rich and robustly powerful. Language and perception is everything here. A tax haven, according to the Bermuda side of things, suggests terrorism and money laundering. A no-tax or low-tax threshold is an entirely decent incentive. “We didn’t pass a law to say that the Googles of this world don’t get taxed.”

Thursday — Every Country Is a Tax Haven: If the new revelations spark outrage, this will be despite the fact that the overwhelming majority of activities chronicled by the papers have been called perfectly legal. Most developed countries have laws in place that allow residents to legally avoid paying more in taxes—tax avoidance is legal, while tax evasion is not.

Friday — Tax Havens / Bank Secrecy: Tax havens aren’t tax havens just because they have low taxes—rather, what makes a tax haven is its opacity of financial information. This is why tax havens are often more accurately referred to as ‘secrecy jurisdictions,’ and why they facilitate many more problems than just tax evasion.


¹The dangerous global Race to the Bottom on Corporate Tax (pdf): Tax havens are frontrunners in a global race to the bottom on corporate tax. Yet every country is being swept up in this. In an attempt to attract business, governments around the world are slashing corporate tax bills — damaging their own economies, and those of other countries in the process.

One response to “Trouble in Paradise?

  1. Pingback: Ethics and the Law | Aasof’s Reflections

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This site was created for members and friends of My Telegraph blog site, but anyone is welcome to comment, and thereafter apply to become an author.

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The Real Economy

Hello, I’m Ed Conway, Economics Editor of Sky News, and this is my website. Blogposts, stuff about my books and a little bit of music

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Professor Mark Elliott

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Am I my Brothers keeper?

An Anthology of Short Stories

Selected by other writers

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