The media is awash with stories from the Paradise Papers, a cache of 13.4m leaked files exposing measures taken by multinational corporations, and wealthy individuals, to minimise their tax liabilities.
The Guardian article highlights the extent of the problem that allows “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 this 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 tax in that country. Tax pays for the infrastructure that allows you, as a company or an individual, to make a profit.
If there’s no tax income, there’s no schools to 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, you have no right to agency in that society, and no right to 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 anyone 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 shouldn’t they pay an international tax rate.
That would close the loophole allowing 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.