I have a question about offshore tax havens that no one has ever been able to answer. It’s not a riddle – it’s simple, really. It is: can you name one legitimate reason to keep your money in a tax haven?
The media keeps implying that there must be one, as they point out (mostly to avoid the libel laws) that using a tax haven does not necessarily involve illegality or ‘wrongdoing’. But what form of activity that isn’t wrong could possibly involve stashing your cash offshore? Or more precisely – why should we shy away from saying that starving the public purse of money is itself wrongdoing?
In the Paradise Papers leak, the super-rich and global corporations have been caught masked up, carrying a gun and revving up the getaway car with a bag of money marked ‘swag’ – yet still they are being allowed to make excuses and tip-toe around the obvious. They’re allowed to jealously guard sums which far outstrip anything that one individual could possibly need in several lifetimes.
The mega-wealthy like to see themselves as lone wolf entrepreneurs, building careers (and fortunes) purely on their own sweat, talent and determination. But this millionaire ego-trip bears little relation to reality – the truth is, you can’t make millions without public support. Their fortunes rely on publicly funded projects. Building roads that let them transport goods from A to B. Enforcing laws that allow them to rely on contracts they set up, and trust that people with less money than them will have to respect their property rights. Supplementing the poverty wages they pay their staff with things like funded housing and free healthcare. Supporting the finance industry with a wealth of government guarantees.
And yet they refuse to pay back into the society that made them wealthy. The truth is that this elite have committed is the world’s biggest robbery: from you, from me, from our public services, from our entire society. And this theft has been happening all day, every day for decades, on a scale that is simply breathtaking.
If you ask how much cash is hidden in tax havens, the answer is: no one knows exactly, but it’s big enough to distort everything you think you know about the global economy – and, because it’s the richest who hide their wealth, it means global inequality is far worse than it appears.
According to the Tax Justice Network, estimates of how much global wealth is held offshore range from $7.6 billion (£5.8 billion), by economist Gabriel Zucman, to their own higher estimate of $32 trillion.
Big numbers get thrown around a lot in politics, but just stop for a moment to think about this one. Each of those dollars could be a grain of sand on one of those tropical beaches, and it would stretch for miles. It’s more than the annual economic output of the US and China combined.
Alex Cobham from the Tax Justice Network points out that, despite the media’s focus on high-profile individuals, this is not really about ‘individual criminality’ but ‘the systemic nature of the problem’. The entire Paradise Papers leak is just about one law firm – a tiny scratch on the surface of the issue.
Look at the UK alone. The PCS union – the trade union that represents tax collectors in the civil service – puts the annual cost to the UK of tax avoidance and evasion at £120 billion.
Remember the ‘£350 million a week’ Brexit bus? UK tax avoidance comes to over £2 billion a week – more than six times as much as even that infamously inflated figure. That really is enough to fund the NHS: the entire NHS’ annual budget is £116 billion.
The Tories said at the general election that austerity cuts are necessary because ‘there is no magic money tree’. But the tree has been found: it’s a species of palm tree, it turns out, that grows in the Cayman Islands, the Bahamas, the British Virgin Islands, and all the other places where the super-rich bury their treasure.
There are enough of these magic money trees to fund public services not only in Britain but every country in the world. A system of unitary taxation, with ‘country-by-country reporting’ so we know where multinational corporations are really making their money, could help us start to harvest their fruits.
Every penny the tax dodgers squirrelled away should have been spent on improving society for everyone. They have not robbed some anonymous ‘taxman’ – they have robbed your local school and hospital. Once you accept that there’s no such thing as legitimate use of a tax haven, then here’s another question: why shouldn’t all these people be thrown in jail?
The government will um and er, as ever, and is already leaning on the argument that not all of this activity was necessarily against the law. The answer is simple: if it’s not illegal, it bloody well should be.
Feminist futures: Red Pepper’s feminist special issue: ● Our bodies, our choice ● Is the future xenofeminist? ● Women and the new unions ● Feminists on the anti-fascist frontline ● Plus: Left politics and the generational divide ● Decolonising museums ● Book reviews ● and much more
And you choose how much to pay for your subscription...
David Frayne writes that the shorter working week promises more freedom and
A new report from Autonomy proposes a radical set of policies to boost the economy and improve quality of life by shortening the working week, writes Eleanor Penny
We need democratic control of the financial sector. An interview with Saskia Sassen
We can harness the power of public finance to bankroll a better future, writes Lavinia Steinfort
The radical economist outlines how she'd overhaul the UK's broken economy.
Grace Blakeley dissects the failure of finance capital and calls for radical measures to take it back under democratic control