The guardian comment is free 5th April 2015 John McDonnell
The Panama Papers highlight the growing concern that there is one rule for the very rich and another for everyone else. For when individuals and companies manipulate the tax rules to reduce their tax bill, this understandably outrages those ordinary people paying the price of deficit reduction, and businesses who play by the rules. They, reasonably, expect a level playing field. The Panama Papers have destroyed any illusion of fairness in our tax system.
However, it goes even deeper than that. For the papers expose the Tories from top to bottom as a party that is not only failing to tackle tax avoidance, but deep down doesn’t really want to either. David Cameron, for example, says he has “some savings” from which he “derives some interest”, but does this mean any of his “savings” come or have come from Blairmore or any offshore tax arrangements at any time? He should just put the record straight rather than try to wriggle around, fooling no one.
The revelations also bring into question the government’s record in tackling tax avoidance and tax havens in particular. The UK has a huge responsibility to deal with this. Many of the tax havens fuelling the problem are British overseas territories or crown dependencies, relying on British financial, foreign policy and security support. Three years ago Cameron promised to get the UK’s own houses in order, but he has failed.
Virtually no progress has been made in ensuring the UK’s overseas territories and crown dependencies meet the UK government’s demands. But then, there is no evidence that the Tories were committed to this in the first place. Since the general election, they have dropped their commitment to public registers of beneficial ownership, despite Cameron claiming two years ago that “making company beneficial ownership information open to the public is by far the best approach”.
So we shouldn’t be surprised that a year ago Tory peer Lord Blencathra described Cameron’s crackdown on tax havens as a “purely political gesture”, or that former Tory foreign office minister Grant Shapps appeared to row back on the Tories’ demands, in a visit to the Cayman Islands last year.
The Treasury minister David Gauke let the cat out of the bag in parliament last month when he admitted that the UK’s overseas territories “are not committed” to a public register of beneficial ownership. Despite this continuing failure, the Tories continue to make the absurd claim that they are leading the way on the issue.
But then, this is the pattern we have come to expect from Cameron and George Osborne – big announcements and lots of rhetoric, with broken promises to follow. Take, for example, the UK-Swiss tax agreement, announced to great fanfare in 2011. It has raised a fraction of the £5bn promised.
And it came as no surprise when in the budget last month the Office for Budget Responsibility revealed that a key anti-avoidance measure announced in 2013 – a disclosure facility with the crown dependencies – is set to raise just a quarter of what Osborne initially promised.
Tories should not be judged on what they say but what they actually do. On six occasions last year, Osborne instructed his MEPs to vote down proposals to clamp down on multinationals engaged in tax avoidance. Meanwhile, in January it was revealed that the government had been lobbying the EU to remove Bermuda from an official blacklist of tax havens.
As more and more revelations emerge, it is increasingly clear that this is a Tory crisis, firmly rooted in their beliefs and attitudes. While the PM and chancellor mutter platitudes in public, their inaction in tackling these problems exposes those true beliefs. The Tories should come clean and set out their position: is the prime minister happy to receive money from big donors accused of tax avoidance?
The government needs, as Jeremy Corbyn has said, to stop dithering. There should be an immediate, independent investigation into the tax affairs of all British people linked to the Panama Papers. And, given the important role the UK plays in our crown dependencies and overseas territories, the government must now set out what further action it is prepared to take to achieve greater transparency.
There is no reason why the UK cannot use its relationship with these tax havens to force them to stop dragging their feet. At the very least, there should be strictly enforced minimum standards of transparency, including the publication of public records of companies’ accounts, directors, major shareholders and all beneficial ownership of trusts. Without these things, how can we possibly have faith that wealthy people and corporations are not receiving preferential treatment compared with those of us who fill in tax returns or have it deducted automatically?
Labour has already called for tax havens to be blacklisted unless they produce a public register of company owners and sanctioned if they fall foul. And it is surely time that the chancellor listened to our calls to end the unjustifiable cuts to staffing numbers at HM Revenue and Customs, as they cannot be put in a position where their hands are being tied.
The super-rich elite cannot be allowed to dodge their taxes and flout the rules. This unfairness and abuse must stop, and stop now.