Corruption

The Paradise Papers: Central to Society

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By Sarah Jasem

The Paradise Papers are 13.4 million leaked documents spanning the period between 1950 to 2016, which reveal the extent to which the assets of corporations like Facebook, and wealthy public figures from the Queen to Harvey Weinstein, are held offshore where they can be unregulated and untaxed. Almost 7 million of these documents are related to a law firm called ‘Appleby’, filled with lawyers who specialise in registering trusts and companies in overseas jurisdictions with little to no tax rates such as the Cayman Islands, the British Virgin Islands, Bermuda and Mauritius. The leaks were passed on from German Newspaper Süddeutsche Zeitung to the International Consortium of Investigative Journalists, ICIJ. Similarly, in 2016, the same newspaper leaked 11 million documents to the ICIJ where the tax avoidance was orchestrated not be Appleby but by Mossack Fonseca, a law firm in Panama, hence the 2016 leak being marked, ‘The Panama Papers’.

The hiding away of money into offshore trusts where they cannot be taxed is something which started as a way for criminals with money, such as the Rodriguez brothers who were the leaders of the Cali Cartel in Columbia, to keep their illegal money safe. This mode of criminality has now become a common route to keeping illegal and legal money safe, incorporating something which was once deemed criminal, to being legal for whoever is able to afford the risk. Official attempts to regulate tax avoidance such as the PANA committee, set up in 2016 after the reveal are trying to change the law, but it is proving difficult. On the 5th December 2017, the EU wanted a blacklist of European countries used as tax havens to discourage tax avoidance, however EU countries such as Ireland and the Netherlands, used to hold assets from Apple are not to be included. The difficulty and resistance to impose any illegality is prevalent. Tax avoidance is expensive, requiring lawyers and the money to invest offshore, but it is ultimately legal. Therefore, when thinking of the nature of the Paradise Papers, it is not about finding illegality as those laws have not and may not be imposed and regulated; It is about who in society benefits and who does not.

Democracy in the western world is constructed in a way that allows some members of society, such as CEOs of big businesses, as well as famous celebrity and political figures to take advantage of the majority of the public. Like the delicate silk of a spider’s web, civilians and the public sector are interlinked- the ordinary person earning enough net income will pay within their tax bracket for their public schools, the healthcare system, the maintenance of their community and even British traditions like royal weddings. Unlike Marx’s pyramid of Capitalism, our Democratic capitalist society is web-like and interdependent by its very nature; however, like a web this system is fragile, and it is not made to accommodate those who spun it. Marx’s pyramid demonstrated that everyone with money was dependant on the poor’s labour, who work for basic necessities. Whilst this can be true in contemporary capitalism today, our society has fundamentally changed to accommodate the central reality of tax avoidance. Neoliberalism and its increased privatisation of public matters as well as the prevalence of cheap leisure by multinational corporations means there is room for leisure in the lives of the working and declining middle classes.

The public do not only pay taxes to sustain healthcare, public schools and the welfare system. They also give profit to very elite multinational corporations and private bodies that are rich enough to become a part of our daily lifestyle. Uber, Apple, Google, Amazon are just a few of the tax avoiding corporations who when combined, own around 10% of worlds unregulated GDP. Not only are they reliable and accommodating in order to facilitate leisure and convenience into the everyday lives of ordinary people, but they also represent the ideal of success (which is facilitated by their increasing unregulated wealth) which ordinary people may admire. Money is also legitimacy, so is it any surprise that the companies that ‘demand we be educated before we come to work for them’ such as Google and Apple, are places that people would be proud to work at? Contemporary western capitalism has created a climate where the very ideals of capitalism itself is dependent on the effects of tax avoidance. Increasing privatisation and increasing taxes on the rich cannot coexist in a meaningful manner.

Increasing privatisation allows a space for multinational corporations, whether advertising clothing or making movies, to become increasingly prevalent in our culture, narrowing and affirming certain images of luxury, success, intelligence, and ultimately what our purpose can be once our full potential is achieved. In other words, increased privatisation increases capitalist ideals in our culture, and the more prevalent they are, the more truthful they become. It also increases the substance of ideals and inherently brings the need to put what we are promised into our hands in order to close the distance between the ideal and reality. Contrastingly, the increase of tax with wealth is not, and is perhaps unlikely to ever be a part of the affirming reality of capitalist imagery. Swedish businessman, Lief Ostling, who despite living in Sweden, with culture values of ‘useful limitations’ and humble moderation, also decided to invest offshore with the purpose of avoiding taxes, asking himself, ‘If I pay as much as a thousand ordinary taxpayers, what the hell do I get for my money?’. If stable laws to punish tax avoidance and reduce the use of tax havens came to be, it would only demonstrate the fragility and perhaps a layer of falsity behind western democratic ideals, which inspire ordinary people to labour before ‘success’, ensuring that they pay for the public sector. It diminishes Capitalisms strength is lessened. Unsurprisingly, Ostling resigned.

 

Sources:

https://www.icij.org/

Dr. Anne Brunton (web analogy)

https://www.theguardian.com/news/2017/nov/05/what-are-the-paradise-papers-and-what-do-they-tell-us

 

Featured Image from Suddeutsche Zeitung

1 reply »

  1. “where the tax avoidance was orchestrated not be Appleby but by Mossack Fonseca”
    1. *not by Appleby but by…

    “It diminishes Capitalisms strength is lessened. Unsurprisingly, Ostling resigned.”
    1. The sentence makes no sense.
    2. Capitalism should never be capitalised unless it is at the beginning of a sentence.

    “Sources:

    https://www.icij.org/

    1. Citing a link to the International Consortium of Investigative Journalists and not to specific articles is bad form.

    Commentary:

    There is a legitimate critique to be drawn from the excesses of private corporations and the laxity of tax loopholes in contemporary western capitalist societies, certainly. And likewise, a critical analysis of the effects of neoliberal reality on culture and society are always welcome. The substance of this essay is good and shows potential. However, I feel as though at the beginning of the essay there is no thesis to be explored, and hence the reader does not really know what the “point” of what they’re supposed to get from this essay and are subsequently forced to deduce it themselves. Instead, we are provided with two paragraphs of pure exposition and information waterfalls. This on its own is not “bad” per se but is evocative of a bad essay-writing skillset, bad planning, and even worse structure.

    Overall 5/10 essay.

    Liked by 1 person

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