Another release of offshore tax papers, another wave of outrage from political leaders vowing to clamp down on tax evasion and money laundering, and another resigned shrug at a global financial elite that continues to play by its own rules.
The Pandora Papers, a leak of 12 million documents obtained by the International Consortium of Investigative (ICIJ) Journalists, puts a spotlight on to the secretive world of shell companies, secret trusts, shadowy property dealings and tax evasion on an industrial scale. And it’s the latest reminder that Australia could be doing a lot more to crack down on tax loopholes and purge the flow of dirty money.
Dark secrets, muted response
By now most of the world has woken up to the lengths to which the rich and famous go to hide their wealth in offshore tax havens.
The Pandora Papers are the ICIJ’s third big data dump exposing the financial dealings of the 1%. When its first leak, the Panama Papers, was released in 2016, Australian Tax Office (ATO) commissioner Chris Jordan flew to Paris for an emergency meeting to work out a global response. At the time it was one of the most ambitious international investigations in history to hunt down tax evaders, and Australian authorities took a leading role.
That initial report laid bare how extensive this global network of accountants and lawyers was and how entrenched it had become for the rich and powerful to hide their money and evade tax.
Then came the Paradise Papers in 2017.
And now the Pandora Papers reveal that 35 current or former heads of state are among the customers of offshore tax havens, with more than 100 billionaires and rich individuals. Findings include the king of Jordan spending $130 million on secret properties (he denies misusing public money) and shady property dealings between the Queen’s Crown estate and the Azerbaijani ruling family.
In Australia it’s exposed how mega-rich foreign families from countries like China and Sri Lanka have secretly made high value property transactions from behind the mask of a series of shell companies.
All up, it’s estimated countries lose $427 billion each year in revenue because of tax avoidance.
The leaks have generated a global push to lift transparency. But Australia has so far resisted closing a key loophole that allows the world’s richest people to send money offshore and manipulate their wealth.
Forgotten reform
In 2016, then-prime minister Malcolm Turnbull’s name was found in the Panama Papers database because — along with that of former NSW premier Neville Wran — he was previously a director of a company incorporated by Panamanian law firm Mossack Fonseca, one of the world’s leading shell company suppliers. While there was no suggestion of wrongdoing on his part, the news broke, awkwardly, in the middle of an election campaign where Turnbull was selling corporate tax cuts.
Earlier, the release of the Panama Papers had prompted Turnbull’s government to promise a public register of shell companies and beneficial ownership. Two years later, then-assistant treasurer Stuart Robert said the government was still committed. By 2019, Treasury admitted in response to a Senate estimates question on notice the government had never committed to it.
The response has been pretty muted to the Pandora Papers. It was telling that Labor put forward Deborah O’Neill, the NSW senator best known for snatching the number one Senate spot from Kristina Keneally, to lead calls for money-laundering reform. Responding to media questions, shadow treasurer Jim Chalmers hinted that Labor “would have more to say between now and the next election” about multinational tax evasion.
Greens’ treasury spokesman Nick McKim will introduce legislation requiring the government to establish a beneficial ownership register.
In a vague statement, Treasurer Josh Frydenberg said the government was investing money to modernise and consolidate business registers, which would “enable the development of a beneficial ownership register”.
Australia lags behind
The ATO has vowed to leave “no stone unturned” to investigate any links to Australians that emerge from the Pandora Papers. But it is hamstrung by the government’s reluctance to introduce a register of beneficial ownership.
Miranda Stewart, professor of international tax law at the University of Melbourne, says Australia has fallen behind the EU, UK and US in closing this critical loophole.
“The piece that is missing here is beneficial ownership,” she said. “We committed to it some years ago. The EU has introduced one. Australia is lagging on that.”
This means Australia still does not require private companies, other than those with anti-money laundering obligations, to maintain any information about who really owns them. If a register was introduced it would enhance the ATO’s ability to crack down on tax evasion. But it may be the politicians who want to avoid scrutiny, Stewart says.
“One reason governments have been slow to cooperate on beneficial ownership is because politicians benefit — just as businesses do — from these kinds of arrangements,” she said.
We all gnash our teeth, wring our hands, furrow our brows and sigh in expiration each time a “Panama Papers”, “Paradise Papers” or a “Pandora Papers” scandal erupts. Often, in response, governments run around and pretend to be shocked and undertake to do something ‘in the future after we have had time to consider our options – we must think carefully before we take any action’. In other words we just want to stall long enough for the public to lose interest and then it will be ‘business as usual’ again for everybody.
Honestly readers, how long do you think any government would last if it was really committed to taking meaningful action against the capitalist parasites that are bleeding the citizens of the world dry?
As anyone who has studied high-school biology knows, often the most successful parasites are those that just bleed the host organism to the maximum without killing it. That is what most of the rich and the super-rich who figure prominently in these reports have the good sense to do.
The plutocrats who really control our society allow governments to remain in office as long as they do not represent any real threat to them. This is the way ‘democracy’ works in western capitalist society. And in fairness, I would say that I would rather live here than in many other places where, even the pretense of democracy is totally absent.
I am not at all sanguine about the prospect for any real change as a result of the release of the Pandora Papers. Sadly I do not see the likelihood of there being any meaningful change in the way things are run unless, or until, there is a major global financial collapse. And then there is no guarantee that what replaces the current economic ‘free-for-all’, will be for the better. After observing the way that many people around the world have responded to the COVID-19 crisis, (with violent anti-vaccination marches and the spreading of various insane conspiracy theories, etc.) my optimism is further diminished.
The feature that enables the crass greed that is exemplified in this article is ‘Capitalism’. This form of economic model promotes selfishness, rewards duplicity and deceit and encourages ruthless exploitation of other human beings, not to mention other animals. There will always be an endless line of “Panama Papers”, “Paradise Papers” and “Pandora Papers”, not to mention Royal Commission into the Finance Sector or the Aged Care Sector, etc. while we retain this vicious economic system.
Sigh…
Capitalism is. It’s not the basis of an economic system. It’s what we do, it’s pure instinct. Being rich and powerful is freedom, and we all want that. Trouble is, to get more we have to take the freedom of others. It’s good to be King. Bloody revolution might fix things for a while, but the new leaders are still people. Money is power. Leaders may do good things, but few of them avoid corruption or betrayal.
Communism failed because it needed perfect citizens in order to work. We couldn’t be allowed to do what we do. But we did anyway. So there were those with power, and those with none, just like here.
Socialism, not Communism, recognised that our instincts aren’t going to change. We need to protect ourselves from one another. The right hold that government is bad, and imagine they are fighting for democracy.
Democracy is government. It’s us. It’s governing in the best interests of one another. We are making the decisions.
Do you doubt that Capitalism is just what we do? The conservatives tell us we should have no government interference, that we should leave everything to ‘the market’. In practice, doesn’t that mean we should let rich people make all the decisions?
Capitalism is not an ideology that drives our actions. It’s an ideology for those who to deny power to the people. It is kryptonite for Democracy. It’s simply a flawed attempt to explain what we do. Mostly it’s just rich people seeking to justify having more than a fair share.
So there’s the thing. Every generation has to fight their peers who want to take their freedom to enhance their own. Only the combination of Democracy and .Socialism can give us the opportunity to do that. Our current ‘Democracy’ is a competition between two Political Parties. The winner gets to govern us. How much more could we achieve if we governed ourselves, if every Member of Parliament had a free vote on every issue, and could co-operate for the good of the people?
The party system does not allow “…every Member of Parliament had a free vote on every issue…” – that’s why they always exhibit the lowest common denominator, less than the sum of parts.
A Parliament of independents would be the prerogative of free people.
Which rules us out.
Surprise surprise that the greatest rorters in the history of Australian politics would support the Pandora rorters in avoiding scrutiny.
Piketty proposed the most robust global solution: tax wealth where it is. He was attacked by mainly US neoliberal economists for impracticality, among many other nonsense shibboleths. A global pursuit identifying the owners of assets is exactly what Piketty advocates. That and an annual tax on wealth, at a modest maximum rate of 3%, by every jurisdiction in which that wealth exists. It has always made perfect sense to me. But not if you are not interested in improving society.
Without even considering the simple & equitable Georgist land tax system, there are two obvious solutions thanks to those computer thingies.
TOBIN Tax – an infinitesimal (eg 0.01r%) impost on all monetary movements.
Flat tax on turnover, no deductions.
Personally I would also favour a consumption tax, based entirely on energy input –
eg a kilo of spuds would have a small component, chips higher, crisps even higher and potato consume served at Machiavelli’s highest of all because of the energy cost of everyone/thing that brought it steaming to the table by some exploited waiter.
A Norwegian tax return must include a list of all items of significant value you control . The larger the value the more the tax.Amazing how many people in Australia have champagne lifestyles and declare little or no taxable income.
Is it Norway (or Sweden) which calibrates speeding fines to one’s recognised assets?
Will find out
Norway
Takk.
Has anyone thought about this poor government in all of this? Of looking at it from their avaricious acquisitive Coalition perspective?
“How are we going to attract all that lovely lineage-free money to our fair shores if we tried to shut down the attractive loop-holes that these rat-runners find makes it so enticing to “invest”, while they get their laundry done as they wait, here?”
“How are we going to keep our real estate market bubble super-heated, with home ownership perpetually out of reach for a growing number of fellow Australians (while inflating the value for those that had bought when it was affordable) – if we scare those real estate investors off?”