It’s that time of year again: tax-filing season. Millions of Americans are probably downloading the latest version of their tax preparation software as we speak or picking it up at their local software store.
The Panama Papers is a treasure trove of information on the activities and clientele of a large, but not a typical law firm operating in an offshore financial centre. In this case, it is a firm called Mossack Fonseca, based in Panama. It follows a series of spectacular leaks by the International Consortium of Investigative Journalists, including the HSBC files and the Luxembourg leaks. Here are six things that stand out from the latest revelations.
1. Same old techniques
The Panama Papers leak sheds some light on the intricate ways in which the wealthy can exploit secretive offshore tax regimes. As well as charging minimal or no tax to residents and non-residents, the main characteristics of tax havens are their lack of transparency and effective information exchange.
As the leaked files of Panama-based law firm Mossack Fonseca show, these havens are used by individuals and companies to stash their cash away from the prying eyes of civilians or investigators. This is not necessarily because their money has been obtained illegally.
A great deal of attention has been paid to the obstacles African governments face in effectively taxing the profits of transnational corporations. African governments are frequently urged to widen their tax bases by reducing tax incentives for foreign investors. But what about Africa’s rich? Some Africans are very rich, and in many cases, they are not paying their fair share of taxes.
The American Dream that has existed in this country for over 50 years is on life support. For some Americans, it may already be dead. While recent consumer confidence surveys indicate that Americans seem somewhat optimistic about the overall economy, most polls and studies show that we are anxious about our own economic futures.
Barclays has announced it is to withdraw from Africa. It will gradually reduce its 62% stake in Barclays Africa Group over the next two to three years – and, naturally, this raises questions about the prospects for banking in Africa, where Barclays has had a presence since 1925.
The first few months of a new year can be a stressful time financially. The Christmas holidays typically lead to depleted savings and higher credit card balances, while tax season is right around the corner.
Unfortunately, for most us, this is not a seasonal dilemma but a chronic problem that brings anxiety throughout the year.
Bernie Sanders has proposed bringing back postal banking to save millions of unbanked Americans from the clutches of payday lenders.
HSBC’s decision to keep its headquarters in London is good news for the British government. An exit would have been seen as a vote of no confidence by one of the world’s major financial institutions. However, it is even better news for the British economy.
The current debate on tax reform in Australia is strong on rhetoric but largely devoid of hard evidence. Also missing are clear proposals from the government that can be assessed on their respective merits.
The purported benefits of reform centre on worthy outcomes such as a larger economy, reduced government deficits, more stable revenue sources, less complexity and a fairer system.
