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Where Now for the Well-Worn Mantra of 'We're All In This Together?'

06/04/2016 16:57

The huge leak of data from the Panama based law firm, Mossack Fonseca, has laid bare a web of secrecy and lies that has allowed hundreds of politicians, business people and sports-people - including 72 current or former heads of state - to hide wealth, evade taxes and launder money.

Whilst many people may not be surprised by the lengths the rich and powerful go to hide their wealth, the scale of the leak and the UK's own involvement are deeply troubling.

The leak shows UK "intermediaries" -bankers, accountants and lawyers - commissioned the most offshore shell companies from the firm, aside from Hong Kong. Over 2,000 British firms instructed Mossack Fonseca to create companies for their clients and a total of 32,000 shells were created for British clients.

And all this just weeks before the Prime Minister, who has also found himself dragged into the tax haven storm, is due to host an international anti-corruption summit in London.

David Cameron had promised to sweep away tax secrecy and clamp down on tax avoidance, but in reality the UK Government continues to dance around the issue. Too much time has been spent by Downing Street spin doctors crafting carefully worded statements on the Prime Minister's personal affairs and not enough time given to dealing with this insidious financial cancer eating away at the international reputation of UK plc.

Whilst previous 'sweetheart' tax deals with companies like Google have been labeled as victories, HMRC has proven to be less energetic in standing up against tax dodgers and the havens they hide their wealth in. Although to be fair to HMRC, how can it be expected to launch a full scale assault on tax evasion when ministers have hobbled it with massive staff cuts and Treasury directed "rationalisation"?

The fact of the matter is, the UK Government is relaxed about tax evasion and now it has been found out, clear for us all to see.

All the emphasis in the last two days has been to focus on legality, conveniently setting aside the equally important matter of morality - something I am always wary about injecting into political discourse.

Whilst the alleged actions of those involved may technically be legal, at a time when austerity is being forced upon ordinary people the length and breadth of Britain it is nigh on impossible to justify them as being moral.

Where now for the well-worn mantra of "We're all in this together"? Where now the Chancellor's iron determination?

The British Virgin Islands, a British overseas territory, was by far the most popular tax haven state used by firms in the documents. According to the leak, more than half of all the firms listed were incorporated in the British Virgin Islands. Others were set up in UK jurisdictions, including British Anguilla, Jersey, the Isle of Man and the UK itself.

Whilst tax havens under UK sovereignty have been urged to combat money laundering and introduce central registers of beneficial owners, only Montserrat has indicated it will do so. In fact, secrecy helps keep the British Virgin Islands economy afloat. It is estimated that just over 50% of government revenues come from incorporation fees. This isn't just happening on the government's watch, but in its own back yard.

So what will the Government do to address this scandal?

HMRC has assured the public that they will examine the data and act swiftly and appropriately. I'm less than confident, but what else could it say? The truth of the matter is that the UK continues to govern tax havens such as the British Virgin Islands. Without appropriate ministerial action, this Government will bear some of the responsibility for the tax dodgers, money launderers and corrupt leaders who use them.

Those involved in this tax scandal have carefully colluded to play this corrupt game and they've treated tax regulations as a charade. And the response? Spin - Downing Street style. This is risible.

The UK Government needs to up its game and seek assurances that British crown dependent territories, such as the Cayman Islands and the British Virgin Islands, will abide by tax laws. More immediately, the Prime Minister must use the upcoming anti-corruption summit to push for an international agreement on stricter rules concerning tax havens and beneficial owners.

Greed, corruption and lax regulations have allowed the wealthy and powerful to exploit the UK's tax havens, and the road runs all the way to Downing Street. For months, this Government has promised to clamp down on tax secrecy. The Panama leak proves that they've paid nothing but lip service so far.

We need a government that will tighten regulations around tax avoidance, increase transparency and ensure everyone pays their fair share. That is the least that the public - a rightfully angry public - deserve.

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