The Blog

The Panama Papers Reveal Something We Already Knew: it's One Rule for the Rich and Another for the Rest of Us

The revelation that more than 214,000 off-shore companies have been established in Panama to help the super-rich avoid paying tax is shocking, but not especially surprising. The scale of the evasion might be more than most suspected, with everyone from Putin to the Chinese political dynasty to Lionel Messi to David Cameron's father (and Cameron himself) implicated in the scandal, but we pretty much all begrudgingly accepted that this kind of thing goes on. It's a sad indictment of the global state of politics that the ubiquitous response to the news that the super rich are evading tax on a worldwide scale was, "Yeah, and what else is new?".

In his polemical essay The Lion and the Unicorn, George Orwell references this sorry state of affairs, saying "Everyone knows that there is one law for the rich and another for the poor". Perhaps one reason for the miraculous ascent of Jeremy Corbyn to the top of the Labour Party is that previous socially democratic governments have failed to address what has apparently been known for decades. New Labour's Peter Mandelson famously once said that he was 'intensely relaxed about people getting filthy rich (although he has recently retracted his comments). When people criticise the 'political class', they are criticising the fact that the rich have been able to steal from the poor in broad daylight - there is no attempt to even conceal the treachery. George Osborne, for example, makes no effort to hide the fact that he is giving Google an especially good deal on their corporation tax rate, instead he gleefully parades it around like it is some sort of victory. If you or I tried to pay the piddling amounts that Google pays on their revenues in the UK, we would soon be on the receiving end of a visit from HMRC.

It is in moments like these that the façade of us all being in it together that David Cameron has been trying to maintain throughout his premiership melts away to reveal the ugly face of conservatism that has been there since he attained office. The fact that his family were personally involved in tax evasion has received the attention from the media, but what is far more revealing is that Cameron stepped in to avoid the European Union cracking down on tax avoidance involving offshore trusts. At the same time that the benefits of the most vulnerable were being slashed, and thousands more children were entering absolute poverty.

The public reaction has been quick to the scandal has been quick; there have been marches calling for Cameron's resignation, and the protestors have even been effective enough to prompt an apology from the Prime Minister - but that is all they are going to get. Unlike in Iceland, there is no chance the PM will resign - because this is what we voted for. Sigmundur Davíð Gunnlaugsson, the Icelandic Prime Minister who has resigned in the wake of the scandal, was elected on a wave of anti-bank fury, and stood on a progressive ticket that promised to stop this kind of thing from happening. In Britain, however, we all knew what we were getting when we gave the Conservatives a mandate for power in 2015. This was a party whose Chancellor went on daytime television and gave advice on how you could go about avoiding inheritance tax.

In the prelude to the 2010 election, the Conservatives, under the guidance of PR Guru Steve Hilton, made a concerted effort to detoxify their image. Moving away from the 'Nasty Party' of Michael Howard and Iain Duncan Smith, they wanted to present themselves as a party of decency who were on the side of hard-working people, who would act on climate change and help the NHS while still cutting the deficit and lowering taxes. There was still a whiff of privilege about the ex-Bullingdon boys, but for the most part, the British electorate lapped up these lies and voted them in.

The five years that proceeded the 2010 election proved that this is not the party of the working man, as much as George Osborne will claim otherwise. This is the party that cut the top rate of tax (for those earning above £150,000 per year), that cut corporation tax for big business, and that has now been exposed as having lobbied for companies to be able to avoid and evade paying their taxes by hoarding their money in overseas trust funds. The Conservative Party has willingly handed billions to the super-rich in two ways: through cutting their taxes, and through allowing them to choose not to pay tax, if they don't want to (surprisingly, they usually don't). Even the measures that are often claimed to be helping the poor are often secret giveaways to the rich, for example, the increase in the personal allowance to £10,500 benefits the richest more than it does the poorest. In his resignation letter last month, Iain Duncan Smith mocked the idea that "we are all in this together". The Mossack Fonsenca scandal shows just how right he was.