Naomi Fowler ■ The #PanamaPapers: Five things the world can do about it


Well, there are more than five things, but let’s start with these, from easier actions to ones that will prove to be trickier:

1) Invest and collect: governments around the world have been cutting back on their tax authorities. But before the Panama Papers scandal broke Canada announced it was joining the 21st century in the fight against tax dodging by beefing up the Canada Revenue Agency’s capacity to tackle tax havens. They’re investing hundreds of millions and estimate they’ll reap C$10 billion from their investment. It’s not rocket science…

2) Politicians must publish their tax returns: given the number of political elites implicated so far in the Panama Papers, this can’t come soon enough. Politicians don’t need to wait around. They could publish their tax returns today. Parliamentarians in Pakistan have been publishing their tax returns for years now – so isn’t it time the rest of the world followed? (we covered Pakistan’s move on the tax returns of their politicians in our podcast, the Taxcast)

3) Stop the importing of Panamanian-style secrecy into ‘cleaner’ jurisdictions through a black list which refuses company registrations where an entity, shareholder, general limited partner or partners are based in jurisdictions with unacceptable levels of secrecy, as we discuss in this podcast.

4) All countries must implement a public register of beneficial owners of offshore companies, trusts and foundations. The UK has a particular duty to take the lead here: if we added together all its Crown Dependencies and Overseas Territories it would be the number 1 biggest global player in secrecy in our Financial Secrecy Index. The British Virgin Islands was revealed in the Panama Papers as a Mossack Fonseca favourite. These UK satellite havens have so far been fairly unresponsive to PM Cameron’s polite requests to deliver on registries. The UK government can put its foot down here and even impose direct rule if they refuse to comply. The UK did this before to tackle corruption in the Turks and Caicos Islands in 2009. They can do it again.

5) Impose withholding taxes on rogue countries refusing to comply or cooperate with the sharing of data. We found the United States to be the jurisdiction of greatest concern in our latest Financial Secrecy Index. While it demands data on its own citizens overseas, it’s not so keen to reciprocate that data and in fact it is booming as the tax haven of choice for foreigners. Almost 100 countries have signed up to reciprocal automatic exchange of information. But not the United States. Clearly the carrot’s not working and we need a stick. It’s time to introduce a levy on payments originating in the EU that flow through US banks. We think a 35% withholding penalty tax is fair for anyone who’s not willing to fully reciprocate their data.

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Comments • 6

  • April 7, 2016 - 2:26 am

    By now, the men and women of the Tax Justice Network are aware of the difference between Bernie Sanders and Hillary Clinton when it comes to the decades-old tax haven industry. By pointing out those differences and explaining why TJN is endorsing Bernie Sanders for President of the United States, the organization could make a real difference in getting someone serious on this major issue into the White House. One would think TJN is well aware of this profound chance and will take full advantage of a too-rare moment in history – this tremendous opportunity to right an immoral, unethical and gargantuan wrong.

    • Nick ShaxsonNick Shaxson
      April 7, 2016 - 8:17 am

      we are apolitical and do not endorse any particular politicians. We also think that confronting tax havens is an issue right-thinking people across the political spectrum can (and do) engage with.

      • AvatarTom Benjamin
        April 8, 2016 - 4:37 pm

        I think you are correct to be apolitical and stay away from any endorsements, but there is a political story here that I am trying to figure out. I’ve spent more than a few hours today flitting from place to place trying to get a grasp on the problem.

        I’d like to understand the politics that created the sea change in recent years. I get that the financial crisis brought a new focus and presumably some pressure on the politicians, but they could have easily ducked away again. No matter how much excellent work is done by organizations like yours, it is too complicated to sink in with the electorate. And it is a very big task to take on.

        Still, the G20 took action and the OECD took on their program.

        Where is the President in all this? There is no way a sea change on this issue is possible without the United States. The Americans are first among equals at the G20 and they are the biggest funder of the OECD. Why would Obama allow that program to be set up, opt out from the beginning, and then make the IGA’s such weak tea? It does not make sense. Why would the rest of the G20 put up with that? First among equals does not give them that much clout, does it?

        Perhaps the convoluted structure the only way to get to the right place? This is what it sort of looks like to me.

        Obama’s problem was that he could not promise compliance to OECD standards given the current mishmash in the US and the political environment. The IGAs can also only commit to the information the US can produce under current law. If you carry the existing situation out to the logical conclusion, the United States is left as the only tax Haven country in the world.

        That is untenable. The Americans will be forced into compliance. The pressure will build as the other problems get cleared up. The IGAs then become reciprocal. Or am I being too optimistic? That would be typical Obama – if he cannot solve a problem he sets up a framework that will lead to the solution.


    • AvatarCarey Ostrer
      April 7, 2016 - 5:16 pm

      Actually I am not familiar with he specifics of either in their proposals or views on the subject, please enlighten me…

      • AvatarTom Benjamin
        April 8, 2016 - 7:12 pm

        I don’t think either candidate has been explicit on this subject. Clinton was part of the administration when the G20 started to get serious about the subject. We don’t know whether she had a role. We do know that Clinton herself did not use these tax havens because she has published all her tax records.

        Bernie gave the big speech about the free trade deal with Panama, but it rings a little hollow to me given that Vermont is rapidly joining the tax haven club. Why should Panama give up information on American tax dodgers if Vermont won’t give up information on Panamanian tax dodgers? Also Bernie hasn’t published any tax returns so we don’t know where his wife invests his money. .

        It is more likely that donors to Clinton’s campaign or to the Clinton foundation will show up in the Panama Papers so politically the leaks are probably worse for Clinton than Sanders.

  • Avatarkiers
    April 9, 2016 - 12:03 am

    O please, don’t bring Paquistan into anything. what a joke

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