Treasure Islands - Nicholas Shaxson [140]
The final and most important thing is to change the culture. When pundits, journalists, and politicians fawn over people who get rich by abusing the system—getting around tax and regulation and forcing everyone else to shoulder the associated risks and taxes—then we have lost our way.
Language can change. When someone claims that tax havens make global finance more efficient, we can ask, “Efficient for whom?” When someone says countries should compete with each other on tax or financial regulation, or that policymakers should aim for a more competitive tax or regulatory system—one may ask: “What kind of competition are you talking about? A race to the bottom on tax, secrecy, or financial regulation? Or a race to the top, such as when corporations operate in competitive markets on a level playing field?” When we hear “privacy” or “asset protection” or “tax efficient” in the context of private banking, companies can be asked exactly what they mean. When a private equity company shows record profits, we can be told how much of that comes from genuine productive improvement, and how much comes from gaming the offshore system. When hearing a pillar of society say that they are a well-regulated, cooperative, and transparent jurisdiction, the investigator can assume the opposite and probe further. When magazines carry alluring advertisements from seedy offshore promoters who may be inciting clients to criminal behavior, we can complain. When corporations talk about social responsibility, we can ask if they mean tax. When journalists need expert commentators to advise them about that tax story they are writing, they must understand that their interviewee from the big accountancy firm works for a business that makes a living out of helping wealthy corporations and individuals get around paying tax, and that their opinions will reflect that corrupted worldview. They must find alternative opinions to balance those views.
The world’s international institutions and responsible governments could create and promote new guidelines and codes of conduct outlining responsible and irresponsible behavior in the fields of international tax and regulation, with special focus on offshore abuse. They could introduce general antiavoidance principles into their tax laws so that complex and abusive trickery, while technically not breaking the details of legislation, can be disallowed. Tax evasion can become a predicate crime for money laundering, and tax offenses, among others, could be included in international conventions such as the United Nations Convention Against Corruption. Professional associations of lawyers, accountants, and bankers could create codes of conduct stressing, among other things, that it is unacceptable for a member to help a client commit a financial crime, whether the crime occurs at home or overseas. The economics profession needs to reappraise its approach to understand the effects of things such as secrecy and regulatory arbitrage. It could start to measure illicit, secret things, difficult though that may be.
We can recapture our culture from the forces of unaccountable privilege that have taken it away from us.
At the time of writing, heavy government spending around the world has staved off outright economic collapse following the meltdown in global finance, but at huge costs to taxpayers. “Never in the field of financial endeavor has so much money been owed by so few to so many,” said Mervyn King, the governor of the Bank of England. “And, one might add, so far with little real reform.”
It is time for the great global debate about tax havens to begin in earnest. Whoever you are, wherever you live, and whatever you do, offshore is at work nearby. It affects you. It is undermining the government you elect, hollowing out its tax base and corrupting your elected politicians. It is sustaining a vast criminal economy and creating a new, unaccountable aristocracy of corporate and financial power.