International taxation; a new era?

International taxation used to be the purview of a number of niche tax specialists, rarely catching the interest of national government’s or gaining significant public coverage. All of this changed in April 2016 with the advent of the Panama Papers – an enormous leak of documents from the firm Mossack Fonseca, detailing the intimate financial arrangements of individuals and top tier organisations around the world. Governments seemed quick to act, with the scandal growing larger by the day, but how much can, and will really change?

Here in the UK, we have historical ties to Europe, America, Africa and parts of East Asia, and there was a time when the people of this country considered corruption and fraud to the problems of ’lesser nations’. To those of us willing to see the world as it really is, it has always been obvious that the United Kingdom has been a major exporter of financial corruption, in many cases through our network of overseas territories. The British Virgin Islands alone house a significant percentage of the world’s offshore tax havens; shadowy territories which conceal the ownership of many of their registered companies.

As public anger has grown over the tax dodging abilities of corporations and their owners, national governments have started taking the issues of international taxation more seriously than ever before. Yet it also seems more the case than ever that tax dodging simply cannot be stopped; governments, banks, law firms; they’re all involved in a system designed to propagate and condone this behaviour – to moralise away the theft of tax revenues as an issue of morality, or privacy, or to claim that if the full rates were paid that ’wealth creators’ would flee the imposition.

In my opinion, any government that is not willing to find a solution to this problem is no government at all. To allow a minority (the rich) to hold hostage the majority population with threats of job losses and economic catastrophe is tantamount to bowing to terrorism. Government’s and institutions of the world regularly hold a policy of non-negotiation with terrorists – after all, if a man holds a gun to yor head to get you to agree to one thing, they will never stop at one thing, but will continue to take more and more until you have nothing left.

If we continue to allow the rich to shuffle money around the world and to hide it in illicit, offshore tax havens, we will continue to see declines in public services, and the in the standards and quality of living for the rest of the population as greater and more frequent liberties are taken by those able to support the success of our society as a whole. For the average man on the street, the option to pay our taxes is no option at all – they are taken by force by a government as the price for schools and hospitals and our general safety. If we truly value these things, we shall have to take a stand against those that would shirk their responsibilities. The tax system – both national and international – will be vital to the success of this.

Complete transparency, both at an individual and corporate level, is the only answer. To allow an individual the option of deciding what they can show to the taxman is clearly not working; the 240 billion dollars a year in lost tax revenues is a clear enough display that when trusted to do the right thing, many of those that should be paying are not. Anyone that knows me well will tell you that individual rights come pretty high up on my list of political principles – but I am a pragmatist, and I can see that if this system continues, it will continue to protect and propagate itself; to spread it’s philosophy among a certain segment of the population that they owe as little as they can pay; that somehow, the global wealth that is the birthright of every man, woman and child on the planet is somehow more their’s than their neighbours.

I hope that governments can come together to change the system. I hope the World Bank, and the IMF, and the EU, and every other organisation with the ability to see and change things for the better will do so. But I also recognise that there are significant vested interests that will be working to prevent that from ever happening. I just hope that in time, as a society, we can overcome them.

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