Tax Havens: A Red Herring?
December 31, 2017Posted by on
However it is time to get serious again with a series of articles that point out the hypocrisy of the EU in their approach to tax havens. Of course the EU is not the only public administration complicit in this charade, every government protesting against their notional loss of taxes due to the tax avoidance of money secreted in tax havens share in any criticism of the EU. This, despite a global awareness of such activity on the part of public administrations and a political unwillingness to act before the revelations of the International Consortium of Investigative Journalists (ICIJ) and their publication of the Panama Papers¹.
The whole issue of the Panama Papers is a distraction from the real issue of government fiscal policy, a red herring gifted to politicians. Politicians have seized on the revelations of the Panama Papers to express concern about a government’s lost taxation opportunity. This, despite the fact that the money legally deposited in tax havens represents a very small percentage of the budget. Any connection between the political inability — or unwillingness — to control the much larger sources of monies secreted illegally in tax havens remains to be revealed. What no politician (certainly not in the UK) will admit to or will accept responsibility for, is the amount of taxation that is already wasted and their own use of tax havens to protect their sinecures.
Economic growth is global with public administrations competing for the necessary inward investment of capital to succeed in today’s competitive markets. To attract inward capital investment requires that governments have a competitive fiscal policy and while taxing money secreted in tax havens may provide politicians with a moments moral respite, it will do little to stop them pursuing a beggar thy neighbour fiscal policy. An policy that is clearly revealed in the EU’s published blacklist².
²EU list of non-cooperative jurisdictions for tax purposes (pdf): The Council, at its meeting on 5 December 2017, adopted the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes, that are set out in the Annex.