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Wednesday, April 6, 2016

You don’t have to go to Panama to find those avoiding duty to pay tax

 You don’t have to go to Panama to find those avoiding duty to pay tax



A security guard sits outside the Mossack Fonseca law firm in Panama City last Sunday.

THERE is not a lot of difference between the carry-on revealed in the Panama Papers and what passes for business-as-usual in Irish politics.
No, I am not referring to the shrouded shenanigans of a political elite. I am thinking of the political choices we routinely make.
It seems, that a lot of what was being facilitated by the firm of Mossack Fonseca may have been barely legal.

All the choices we make, probably are too.
The scale and complexity of what is revealed in Panama is astounding, but not surprising. If the details are eye-watering and the facts bring home what was suspected, it doesn’t diminish the scale and complexity of what’s involved.
Such scale is the privilege of an elite alone. There is likely wholescale kleptocracy involved as authoritarian regimes put resources beyond reach in preparation for the day when those lucky enough to get out, leave in a hurry.
The image of that last helicopter taking off from the roof of the US embassy in Saigon comes to mind, or the shah’s last flight out of Tehran.
Those flights ultimately brought their passengers to safety and, in the shah’s case, to the comfort of vast wealth he had stashed abroad. Others who used the services of the Panama law firm were possibly involved in blatant illegality, and money laundering illegal income from sight.
Are ordinary people involved in that sort of thing? Hardly. But if the scale and complexity is totally different, some of the moral equivalence comes uncomfortably close. It is very likely for example that a lot of the activity detailed in these leaked documents, was barely legal and possibly above board. Whether it is moral, is another matter.
Underlying public outrage is anger fuelled by the fact that some, but only some, can put their money beyond reach while the rest remained trapped in the tax net. There is the humiliation in being lumped in with the chumps who are taken for a ride.


Thousands of Icelanders protested outside parliament

There is too a righteous anger that special needs children go without necessary resources in schools or homeless families are piled into hotel rooms for months, even years. Yet a privileged few cruise at an altitude above taxpaying.
It is genuinely outrageous, but not as entirely different as we would wish to believe.
What is as outrageous, so much so it can be barely countenanced in the public conversation, is that on issue after issue swathes of us routinely make essentially the same moral choices as the rich and powerful.
It not new, either. We have in Ireland, a remote and previously not prosperous island, a rich tradition, if I can call it that, of the overseas account. A reverse of the immigrant’s remittance which kept so many alive, the non-resident account repaid the compliment in kind.
Butchers, bakers, and builders piled in, facilitated by local bank managers, in the day not long ago when relationship banking extended to ordinary punters.
I recall that Milltown Malbay and Roscrea, neither known for their cosmopolitan character, were particularly active centres for global banking.
It is odd that during our recent and magnificent commemoration of the Rising, scant mention was made of the fact the largest number of combatants around Dublin’s O’Connell St were neither rebels nor British soldiers, but looters.
No monument has ever been erected to them either.


Prime Minister Sigmundur David Gunnlaugsson is stepping down

Our own choices eerily mimic those of the assorted clients of Mossack Fonseca. Reducing property tax by up to the maximum 15% allowed became a blood sport across most of the country.
Only the Greens abstained entirely; and Labour, in a typical fashion that mixed moral superiority with mealy-mouthedness, would only commit the venial sin of supporting half the allowed reduction.
Otherwise, left, right, and centre piled in. Feck the homeless who relied on the local authority services funded by the charge. Forget too a central lesson of the economic crash which was that we had narrowed the tax base too far.

No this is what we demanded and what we got. We didn’t require the services of a Panama company, we just gave it to them in the neck, on the door-step. Water charges are a continuum of avoidance of the same responsibility.
It’s about a view that ultimately it is all for somebody else to pay. We offload responsibility.
For those whose activity via Panama was legal, as distinct from moral, our equivalence is much greater than any difference we might claim.

The debate about abolishing USC in the last election was part of the same conversation. Only the incompetence of the salesmen sent out to make the case saved the day.
Now as the shards of our once modular political system are with difficulty fashioned into a government of some sort, the conversation continues today in the Dáil around themes that are remarkably similar to the ones Mossack Fonseca might have had with many of its clients.
This is how you shelter from responsibility and this is how you can be rewarded in return. It all depends on whether you think scale or essence is more important. If the latter counts, few of us are qualified to pick up the first stone.

Legality is increasingly key to successful tax avoidance. Panama is an isolated outlier now. Next year, an unprecedented transfer of tax information begins, allowing authorities access to previously secret offshore accounts.
Panama is one of just four countires — with Bahrain, Nauru, and Vanuatu — refusing to sign up. Switzerland used to be a mainstay until the US threatened to throttle the cuckoo in the cuckoo clock.

Where once money-laundering could be conducted in the most respectable places, now it’s confined to sweaty dank counties you do not want to be seen in. The essence of course hasn’t changed.
What is required is a solid but preferably complicated legal basis, for tax evasion. It is style not substance that’s changed.
We know that because we are masterful at it. This is not subjective musing but a cold analysis of the choices we freely make. It is continuing in our name today as the Dáil reconvenes and likely fails once more to elect a government.
Those political timelines others worry about do not concern me, but substance does. As a country we need a broad tax base to be more resilient in a downturn. This must include water charges and a property tax.

The other part of that equation is a requirement to robustly withstand an onslaught on the public purse by public servants.
Leaving the blatant illegality of tax evasion aside, what’s is happening via Panama is tax avoidance on a gargantuan, global scale.
The policy choices we require in our name here are petty, almost trivial, in every respect except its essentials.

We are as keen on the avoidance of responsibility in our own personal affairs are we are outraged about others elsewhere.
Gerard Howling