Panama Papers – Let’s not get distracted

As the hysteria surrounding politicians’ tax returns continues we are in danger of missing the opportunity to address the true issue here. Jeremy Corbyn continues to pursue the politics of envy by insisting on more and more details regarding David Cameron’s tax return. He seems oblivious to the reality that the issue with tax havens is their use to hide income and assets and hence not including on an individual’s tax return.

Whilst there are genuine reasons to invest in offshore companies, these reasons are generally at or near the wrong end of the morality spectrum. Their main attraction is secrecy which inevitably leads to tax havens being used by dictators in weak and unstable states to syphon money away from the genuine needs of the people, criminals to launder their dirty money and wealthy individuals to avoid or evade tax. The OECD has made tremendous progress in a very short space of time with its BEPS project thanks to the support and assistance of governments around the world. Governments need to continue to work together to eliminate such havens and rich countries need to take action to ensure tax havens such as Panama come into line with other countries with regards to their disclosure processes and rules. Such rich countries benefit from significant inward investment from these offshore funds (just look at the London property market) which makes them more reluctant to be so aggressive with their remedial actions.

It would appear to me that the target of government interventions in order to gain traction in eliminating these structures should be the facilitators of the aggressive avoidance, offshore service providers. They need to come under more scrutiny especially with regards to their lax ‘know your client’ procedures and their role as trustees, where in reality they wield little or no power over trust assets, but simply follow client instructions. Significant penalties and/or custodial sentences for facilitation of tax evasion and money laundering would make it much more difficult for would be criminals to execute their plans through severe deterrent for service providers thereby significantly reducing the attractiveness of tax havens. Let’s focus on these issues and stop the political point scoring over the tax returns of our MPs.

#tax #JeremyCorbyn #offshore #investment #MPs

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