#PanamaPapers: Beyond Naming Names

Media coverage of the Panama Papers, the leaked set of 11.5 million confidential documents that provide detailed information about offshore companies listed by the Panamanian corporate service provider Mossack Fonseca, has been widespread this week.

But in today’s guest blog post, author and academic Andrew Sayer warns against seeing tax havens as anomalies and asks us to look beyond the current focus on naming and shaming the users of Mossack Foneseca’s services… 

Andrew Sayer

Andrew Sayer

‘We have done nothing illegal’. If you’ve been following the stories of tax dodging that have come out of the Panama Papers, you will have seen this feeble response many times.

To explain why the elaborate schemes for avoiding tax are not illegal, just remember the golden rule: those with the gold make the rules.

And they make them to suit themselves.
‘When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.’ (Frédérik Bastiat, liberal economist, 1850)

Tax havens are not are not anomalous islands in an ocean of normality. They are key staging posts in the circulation of money in the world economy, deliberately constructed with the covert patronage of the UK, US and other major governments to help their financial sectors, the rich and corporations to hide wealth and escape tax.

Fingerprints

The fingerprints of the City of London are all over the evidence, so beware attempts to restrict the outrage to Panama. As I warned in Why We Can’t Afford the Rich, the bogus ‘independence’ of the havens is being used to excuse the failure to do anything about them.

The UK government has the powers to close down its archipelago of tax havens, but this would go against the interests of the City and its allies, in fact some eminent politicians with interests in the City have called for Britain itself to go further down the road of becoming a tax haven.

“..taxation is something we should welcome as a necessary condition of a civilized society”

Much of my book is about how the rich free­ride on the rest of society. Deliberately dodging tax, whether it’s done legally or not, is one of several ways of doing this.

News programmes on UK television often blithely claim that ‘no­one likes paying tax’, but while there may be some taxes that are unjust or dysfunctional, taxation in general is something we should welcome as a necessary condition of a civilized society.

Deluded thinking

Members of the Tea Party in the US sometimes use the slogan ‘you are not entitled to my income’, but they are deluded in thinking that what they earn reflects what they and they alone have contributed. Individuals and companies all depend on the state for education, infrastructure, the law, and a host of institutions that make for a civilized, secure society, without which they could earn little or nothing.

Some of those identified in the Panama Papers try to appeal to norms of privacy, as David Cameron did initially; privacy sounds better than secrecy, and it’s something ordinary people (who don’t dodge their taxes) tend to value. Aren’t our economic affairs our own business?

“..we are not self­ sufficient, private individuals but interdependent social actors…”

Yes and no. Everything we earn and spend depends on economic relations with other people – as producers and consumers, buyers and sellers, employees and employers, borrowers and lenders, tenants and landlords, and indeed tax­payers and governments.

Who gets what in the economy depends on these relationships: we are not self­ sufficient, private individuals but interdependent social actors, so it’s important that these relationships are fair. But some are not, as my book shows.

To hold the rich to account we have to be able to identify their income, net worth, ownership of beneficial assets, and taxes paid. In Norway and Finland everyone is required to make that information available to the public.

And though we often speak of ‘private companies’, this is misleading. Yes, they are owned by private individuals, but they depend on members of the public for their workforces and their customers ­ while also having considerable power over them ­ and again they rely hugely on services and infrastructure funded through taxes by the public. Their ‘privacy’ should be contested.

This is why our reaction to the Panama Papers should go beyond naming names, important though that is: it raises much deeper questions about our economies and how they’re organized.

Why we cant afford the rich_PBK_[FC] (1)Why we can’t afford the rich is available to purchase here from the Policy Press website.

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If you liked that you might also like this:

FACT: We can’t afford the rich

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

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