The Panama Papers

By Bernadette Meaden
April 4, 2016

In May 2010 the incoming coalition government seized upon a silly, ill-advised note left in the Treasury by the outgoing Chief Secretary Liam Byrne. It said, "I'm afraid there is no money". It was intended to be a jokey reference to what the Treasury habitually says to all Ministers when they seek funding for their departments.

But it proved to be a gift that kept on giving to politicians like George Osborne, who had long believed in a low tax, small state, free-wheeling free market economy. The erroneous idea that there was simply no money to allow an alternative approach became the foundation for six years of cuts to the welfare state and public services.

The falsity of this belief, that there was no money, was illustrated in almost every budget, as a supposedly cash-strapped nation invariably found something to give to the most privileged people in society, be it through a cut to income tax, inheritance tax, corporation tax, or a generous bonus on people's savings, via Help To Buy or Lifetime ISAs.

So the idea that there was simply no money for decent public services and a supportive welfare state was already looking pretty unconvincing. The release of the 'Panama Papers', blowing the lid off global tax avoidance and evasion, has highlighted the fact that the world is in fact awash with money, it is simply being hoarded by a tiny minority of the world's population.

Because the papers have been entrusted to Western media organisations, instead of being made publicly available and searchable, there is a danger that the information could be used politically, to embarrass perceived enemies of the West but protecting 'our' people. That remains to be seen. But we already know that Britain lies at the heart of this world of dirty money. More than half of the 300,000 firms listed as Mossack Fonseca clients were registered in British-administered tax havens.

In light of these revelations, the government will no doubt make all the right noises about clamping down, but if they don't match those words with the resources for the tax collectors at HMRC to do the job, they will be worthless. HMRC has suffered swingeing budget cuts, like all other public services. They have lost thousands of staff and plans are in motion to close 137 of the 170 tax offices around the country. So if the government is to have any credibility whatsoever in its response to the Panama revelations, it will make a major investment in HMRC and give it the people and the resources it needs to do the job. As Richard Murphy of Tax Research UK says, 'Let’s be clear that corruption takes many forms. Failing to provide the resources needed to tackle corruption is, in itself and in my opinion, a form of corruption.'

Even before the Panama Papers were released, the case for repeated spending cuts for the poor, alongside repeated tax cuts for the rich was looking untenable. An investment in HMRC could pay for itself many times over.  If the government doesn't make that investment as part of its repsonse to the Panama Papers, it will be a clear indicator of its true values, and where its loyalties really lie.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden

 

  

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