The media is awash with news of the Paradise Papers, a leak of 13.4m files exposing measures taken by multinational corporations and wealthy individuals to minimise their tax liabilities. The Guardian article Paradise Papers leak reveals secrets of the world elite’s hidden wealth highlights the extent of the problem. For example, “Millions of pounds from the Queen’s private estate has been invested in a Cayman Islands fund – and some of her money went to a retailer accused of exploiting poor families and vulnerable people.” Another example exposes “A previously unknown $450m offshore trust that has sheltered the wealth of Lord Ashcroft.” Another highlights “Aggressive tax avoidance by multinational corporations, including Nike and Apple.” All of the examples in the article and the many more in the Paradise Papers expose one thing, the extent to which wealth insulates itself against taxation.
I think tax is the price you pay to live in a civilised society. If you want to do business in any country, you should pay your tax in that country. Tax pays for the infrastructure that allows you as a company or an individual to make a profit. If there is no tax income, there will be no schools educate your workforce, no roads to transport your goods, no healthcare for the consumers of your services. If you do not pay your fair share of tax you have no right to agency in society and no right to a profit.
The real problem exposed in the Paradise Papers is the low tax territories that allow the wealthiest to move their money into off-shore accounts or trusts or businesses. For me the only solution to this kind of behaviour is a single rate of tax, all over the world, no matter the territory you are in. The only way to stop wealth being moved to low tax territories is to remove low tax territories. I know this won’t happen. I have no faith that any world leader will do anything to curb these aggressive tax avoidance schemes. The political will just isn’t there. The vested interests are too powerful. But a single worldwide tax rate is the logical extension of the multinational business. If multinationals trade internationally why not make them pay an international tax rate. If rich individuals live internationally why not have them pay an international tax rate. That would close the loophole that allow low tax territories to exist in the first place. What’s the point of moving your money if there is no benefit to this slight of hand. Just a thought.