In the next taxcast: democracy for sale, via tax havens

Another day, another political party funding scandal.

This time it’s (again!) the UK, and its third largest party the Liberal Democrats. We will start with a quote.

“Tax-haven lobbyists and beneficiaries have captured and corrupted our party political fundraising.”

That’s not us saying it: it’s Donnachadh McCarthy, former Liberal Democrat Deputy Chair. And he should know. On this month’s Taxcast (our monthly podcast, out on March 21) you’ll hear how he tried for years to get the Liberal Democrats to tackle the scandal of party political funding. Until he realised that:

“some of the key people involved in the Lib Dems’ fundraising operations, who were opposing the reforms I was seeking to make our fundraising more honest, were linked to tax-havens”

He has written a book on the issue called The Prostitute State – How Britain’s Democracy Has Been Bought. It’s well worth a read, in particular Chapter 7: Tax Haven Pimps.

It’s a straight-from-the-horse’s-mouth account of someone who struggled from the inside to make a difference. The public are paying a very high price in lost tax revenue and a corrupted democracy. This is by no means just a Liberal Democrat affliction, nor an exclusively British one: it’s probably fair to say that all the major parties, in most (or all?) major democracies, are up to their eyeballs in questionable donors. And that’s just the democracies . . .

The result is a political class that serves donors, not constituents. That’s bad news for the economy, for public services, and for the pockets of ordinary people, as the financial burden is made to weigh most heavily on those who can least afford it. Is this the best way to fund politics?

The question isn’t “can we afford public funding for politics?” What we need to ask is this: “can we afford not to implement public funding for politics?”

For one powerful way of thinking about this, readers would do well to consider Dan Hind’s groundbreaking book Return of the Public. One for a future taxcast.