The English tax accountant Richard Murphy has done more than anyone to expose tax havens. Now Murphy says businesses are scared witless of appearing on the front pages and we are seeing a shift in their behaviour, even though there are many battles ahead.
The release of the Panama papers is yet to reach its endgame, but there are some clear truths we can take from it. People or businesses that don’t pay their taxes – whether deliberately or through ignorance – undermine state revenues. They also distort competition by putting the non-compliant at an advantage, and they increase inequality, as it is the better off who more often tend to escape their obligations.
Companies such as drugmaker Pfizer and medical device maker Medtronic that have used a technique called an inversion to reduce their tax bill recently got a smackdown from President Barack Obama:
The so-called Panama Papers span thousands of pages, revealing that many of the world’s elite have been hiding their money in offshore accounts in an attempt to shield their income from taxes. Their release – the biggest data leak in history – depicts a world of rampant tax noncompliance. However, it also reveals just how vulnerable all electronic data in the 21st century are to discovery.
The aim of progressive taxation and the welfare state is to redistribute wealth from the richest to the poorest in an effort to erode the worst aspects of poverty and inequality. How well the British tax and benefits system is doing towards this aim can be seen in the latest, newly released inequality statistics from the Office of National Statistics.
The United Arab Emirates (UAE), and the United Kingdom (UK) signed an agreement on Wednesday designed to end double taxation between the citizens of the two nations. The UAE’s Minister of State for Financial Affairs, Obaid Humaid Al Tayer, and the UK’s Commercial Secretary to the Treasury, Lord O’Neill of Gatley, signed the treaty, which is intended to enhance the economic and trade ties between the countries and to protect both companies and individual citizens from the threat of double taxation.
The Australian Taxation Office is reported to be playing a “lead role” in sharing intelligence between tax officials from OECD countries, as part of the continuing fallout from the revelations of the Panama Papers. The Joint International Tax Shelter Information Collaboration, which is chaired by ATO head Chris Jordan, was being convened in Paris overnight, Australian time.
A majority of Americans of both parties believe that the gap between rich and poor is getting larger, making the issue a prominent one on the campaign trail this year.
The tax dealings of a number of politicians have come under scrutiny, following news of their offshore holdings in the Panama Papers. The leaks have led to the resignation of the Icelandic prime minister – and the UK Prime Minister, David Cameron, has been criticised for shares he used to have in an offshore fund set up by his late father.
Early in the financial crisis, the US forced all large banks to take an infusion of capital. This helped put a floor under the US financial system. Regulators and stakeholders encouraged US banks to address the significant nonperforming loan problem.
