Monday 27 January 2020

Leak of offshore wealth proves that paying taxes is just for the common people

Even at this early stage is already clear that the "Panama Papers", basically the archive of Panamanian law firm Mossack Fonseca, is the largest data leak in history.

It consists of 11.5 million documents stretching back over 40 years detailing tax avoidance, tax evasion and what looks suspiciously like money laundering, on a huge scale by government leaders, businesspeople and other well-connected individuals.

Among those caught in the fallout is Russian President Vladimir Putin, with leaked documents detailing highly-dubious transactions of up to $2bn. Chinese President Xi Jinpeng also has some explaining to do with his brother-in-law using offshore companies set up by Mossack Fonseca along with eight current and former members of the Communist Party Politburo.

But what about us here in Ireland? Remember the Guinness and Mahon scandal, when a 'Golden Circle' used offshore accounts to conceal money from the taxman in the 1980s and 1990s.

What the Panama Papers show yet again is that, when it comes to paying tax, there is one law for you and me and another for the wealthy.

Once your wealth and income rises above a certain level how much tax, and where you pay it, is a largely voluntary decision. Tax, as the American hotelier Leona Helmsley, AKA the 'Queen of Mean' , once famously remarked, "is for the little people".

Covering up tax avoidance (which is legal) and tax evasion (which isn't) by the wealthy and well-connected will become much harder following the leaking of the Panama Papers.

The rich countries' organisation the OECD has been cracking down on the use of tax havens by companies and individuals.

Panama, which the OECD had publicly criticised for its refusal to cooperate, was one of the few tax havens refusing to play ball.

Is it pure coincidence that the Panama Papers leak, in reality a gigantic computer hack into Mossack Fonseca's records, followed shortly after the OECD's criticisms?

The revelations are only beginning. In the months ahead tens of thousands of prominent people, some of them Irish, will have details of their offshore financial affairs leaked.

When that happens the taxman will be very interested.

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