What do the leaders of the UK, Iceland, China, and footballing body FIFA have in common? They all had a moment this week in which their palms became clammy, heart beating, and they asked their advisor “What did you say about Mossack Fonseca?”
Because what a week it has been. With the leak of the Panama Papers rich pants have been pulled down in all corners of the globe, revealing sets of embarrassing boxers from Reykjavik to Beijing. The papers, leaked by an unknown source to a German newspaper, list over 200,000 offshore companies, incriminating a staggering 143 politicians worldwide. Headlines are quick to proclaim the latest name to be dragged through the mud, and opposition politicians eager to cry corruption and call those involved “absolutely disgusting” (to quote Labour MP Jess Phillips).
But hey wait a minute- doesn’t this all sound a bit familiar? Except last time it was a Panamanian leak but a Luxembourgish one. In 2014, those pesky folk at the International Consortium of Investigative Journalists leaked the twisted tax secrets of 300 multinationals based in Luxembourg. Among those outed in the LuxLeaks scandal were Apple, Amazon, Starbucks, Walt Disney, Facebook, Microsoft, HSBC, Citigroup, Pepsi…the list goes on…and on.
So what’s different this time around? Well, the focus is more on the world leaders associated with offshore banking than any well known brands. This time it’s people, not just companies, being dragged through the mud. You can almost sense the tabloid journalists salivating. And yes, it does seem highly hypocritical (not to mention ironic) that David Cameron has ‘benefited’ from his father’s involvement in offshore wealth- all whilst battling to reduce a deficit exacerbated by missing corporate taxes. But I don’t blame him, nor any of the others. Why not? The left cry- this is greed, pure, dirty greed.
Well, I disagree. I would like to quote Eric Schmidt here, ex Google CEO, who said he was “very proud of the structure that we set up… it’s called capitalism”. And what is Capitalism? It’s a system that doesn’t discriminate between moral and immoral, race or gender. It only cares about money. A company’s only aim is to make money and grow. So what happens if the competition are using Tax Havens?
Take Apple for example. Between 2009 and 2012, a staggering $74 Billion was shuffled through an Irish tax scheme, allowing the company to pay just 2% tax on that sum. Now imagine you are a competitor of iTunes that doesn’t have an Offshore tax scheme. Suddenly your company is leaking money at the borders of every country you operate in while Apple is happily using a smokescreen to only pay tax in the Haven on all of it’s non-domestic trade. So do you adapt, or do you honorably cough up big chunks of your income while your competitor grows unhindered by such things?
It is testament to to this logic that so many high profile companies have been involved in these scandals. In a Capitalist world, it is adapt and grow, or be crushed. There is no time for ‘doing the right thing’ and customers (as 2014’s weak ‘Boycott Starbucks’ campaign shows) really do not care enough to be a factor. Last time I checked, Starbucks revenue was still over quadruple that of it’s nearest competitor (Tim Horton’s) worldwide.Don’t get me wrong- if I were a Politician, or in any role where I needed people to like me I would go nowhere near, and Cameron, Gunnlaugson, Infantino, Poroshenko and the rest of them were fools to do so. But money doesn’t care if you like it- it only cares about making more money.
So should Tax Havens be stopped? Definitely- but good luck. To do so would require laws to be passed in an international effort- one which banking lobbies in the US and UK will fight to avoid. The reason? A lot of that money that would’ve been paid in taxes the world over lands neatly in the pockets of the First World elite, including our own Prime Minister. It seems that fiddling taxes is the music piracy of the rich and powerful. Everyone does it, and nobody is quite sure whether it’s illegal or not. Whether it is moral, sensible or logical is a question our Prime Minister and other world leaders that caught called out this week will have to deeply consider. But money is like a river, it will flow through the easiest path. And neither moralists nor taxmen will stop it.
Dream.Think.Speak 