Pandora Papers: The rotten system of tax havens | United States



The international investigation known as the Pandora Papers, of which this newspaper is a partner and whose revelations are still ongoing, reveals the perverse cogs of tax havens. It also highlights the sheer scale of tax evasion (and sometimes tax evasion) by government leaders, celebrities and corporations. Suspicious jurisdictions are the tools and the breeding ground that allow them to enrich themselves at the expense of all, by shifting the burden of their absenteeism to loyal taxpayers. Sometimes these financial transactions can finance more serious crimes such as money laundering, arms trafficking or drug trafficking. The huge amount of money involved, the fact that it affects individuals in more than 90 countries and the pervasiveness of these practices following previous disclosures such as the Panama Papers, represent a triple alarm.

The first alarm indicates that the fight against tax evasion, improved in recent years thanks to lists of suspicious jurisdictions and a proposal for a minimum overall corporate tax rate of 15%, remains insufficient: its successes are as a modern day tale of Sisyphus, the character in Greek mythology who was forced to keep rolling a boulder up a hill only to see it come down again and again. The second cause of alarm underlines the essential need for citizen pressure, firm action by States and international cooperation as tools to prevent rapid movements against regulatory efforts. And thirdly, the alarm warns us that we should not leave everything to crises, because these react to derision in an ambivalent way: they can stimulate greater fiscal awareness, but they can also create incentives for groups. minority groups in search of even more substantial returns.

Rotten tax haven system creates long list of damaging consequences that undermine confidence in democracy

Each year, around 370 billion euros in taxes ($ 427 billion) are lost to tax havens, according to the Tax Justice Network, and this loss of tax revenue means fewer resources for the welfare state. It also creates a downward tax spiral that exacerbates these problems in the hope that lowering taxes would reduce capital flight. But it’s even worse than that, because avoidance by the rich removes income from income tax and wealth tax, so these taxes then become less progressive as they affect proportionately more the popular and middle classes. And what tax evaders do not pay tends to be offset by increases in consumption taxes: this is also an anti-progressive measure because this consumption levy places a greater burden on the stockings. wages, since most of their income must be spent on consumption rather than savings. .

As for corporate tax avoidance, it’s a similar story: in advanced economies within the Organization for Economic Co-operation and Development (OECD), the average corporate tax rate fell from 32% in 2000 to 23% in 2018. Again, this data The point is worse in Spain, where the state receives only a little more than half of what it received before the Great Recession of 2008, while the revenues of all other major tax categories have amply recovered.

The rotten system of tax havens creates a long list of harmful consequences that undermine confidence in democracy: it erodes collective morality on the obligation to pay taxes, it hijacks trade and investment flows, it creates unfair asymmetries between certain companies and their competition, it shifts capital towards other territories, it corrupts intermediaries and foments a passive attitude of professional associations which engage in an ethical relativism. Acting on this front is not just a fair popular demand, it is a need of the state. Harmonization of tax rules globally is undoubtedly essential, but in addition, individual states urgently need to step up their efforts against local tax crimes, strengthen bans on eligibility for public procurement and grants (including EU Next Generation funds) for companies and banks operating in tax havens, and to create “quarantines” for certain professionals, such as state attorneys and tax inspectors, who then go to work for the same people they once tracked down. In short, there is still an effective room for political action against high-level tax evaders.

english version by Susana Urra.



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