Ralph Cassar
The Panama Papers have confirmed, if any confirmation was needed, how the global financial system – or the so called ‘free market’ – allows the global elite avoid paying their fair share of taxes. When rich people or criminals hide their money, it makes the rest of us poorer. What many do not realise is that what is not collected in tax is missing from governments’ coffers to finance essential services like health, education and a host of other services including social and physical infrastructure.
In a glaring example of legal tax theft, revealed this time by the LuxLeaks documents, furniture giant IKEA avoided some billion Euros of tax over six years, aided and abetted by The Netherlands, Luxembourg and Lichtenstein. Other examples are the financial manoeuvres by multinationals such as Google, Amazon, Starbucks – through the use of ‘postal address’ shell companies – to avoid carrying their fiscal responsibility in the countries they operate from and do business in. The Panama Papers continued to add to the wealth of publicly available information on the extent of legal corruption, bringing to light how 365 banks including HSBC and RBS created more than 15,000 offshore companies for their wealthy clients. Banks are the accomplices of tax havens, perpetuating the injustice of two tax systems – one for the 1% and another for the rest of us.
The secrecy and tax avoidance cloud hanging over countries like Panama is precisely why Konrad Mizzi and Keith Schembri must go – it is unacceptable that a Minister and a Prime Minister’s right hand man open accounts and companies in secretive tax havens, in the same way that was unacceptable that PN government Ministers had secret accounts in Switzerland.
Back to Malta and its role in the global tax theft business. Although some are quick to point out that Malta is not an offshore centre, it in fact offers what are known as ‘offshore onshore’ services – including fiduciary companies – basically a postal address at some lawyer’s office. Through this scheme taxes are refunded to shareholders, that is the owners of the company, with companies paying an effective corporate tax rate of 5% on profits. With all the so called ‘due diligence’ or box ticking, very recently some fiduciary companies, with former Prime Minister Gonzi’s son as a director, were investigated (not by the Maltese) on links to the Italian mafia. Due diligence my foot.
A quote from the Financial Times some years ago says it all: ’The Republic of Malta’s importance as an onshore tax-haven is on the rise as more wealthy investors move money out of Switzerland for fear that they may be drawn into the crackdown on tax evasion within the country’ (http://www.ft.com/cms/s/2/
the vacuum cleaner business magnate James Dyson is mentioned as a prominent legal tax avoider. No prizes for guessing which country is mentioned as his tax haven of choice. Malta is considered as a tax haven. In simpler words, a legal tax theft centre. As an aside, it struck me as rather strange how anti-divorce crusader Arthur Galea Salamone, in his defence of financial services, failed to mention the immorality of its tax theft services during the latest PN rally.
What’s more, the system of progressive taxation, where a person’s responsibility towards society is tied to income – the more you earn the more you contribute – has been turned completely upside down, with Finance Malta informing us through their website that ‘well-paid foreign executives’ in the financial services industry pay 15% tax on income from around 82,000 Euros up to 5 million Euros, and, no tax at all on income above 5 million Euros. The argument goes that without such incentives these people and bring their business with them. What we are not realising that we are engaged in a race to the bottom with other countries. Another country will offer even more opportunities for tax avoidance (theft is a much better term actually) and we can kiss these people goodbye.
Whether we like it or not, no huffing and puffing will prevent other countries taking steps to curb loss of tax revenue, especially after the awareness of the extent of the thieving manipulation by the richest of the rich raised by the Panama leaks. The bragging about how PL and PN built a ‘strong financial services industry’ is all bluff – it is all built on sand. The Central Bank’s chief’s coded message is clear – there needs to be diversification in the sector – he mentions insurance services as an example. Sure, as a country we made hay while the sun shined – but the sun is getting dimmer and dimmer.
In the EU and the world over a neo-liberal approach and a politics of austerity has ruined the lives of millions and eroded our democratic fundamentals. We must not be afraid to stand up to policies which put multinationals, banks and the speculative financial markets first, at the cost of common people, workers, SMEs, young entrepreneurs and the vast majority of people. The much talked about abuse of the welfare
system is peanuts next to the theft of taxes by the super rich.
Finally, I cannot but not mention the sheer hypocrisy of the Nationalist Party and the Labour Party who cackle and crow here in Malta, but then when it comes to the European Parliament, just last Thursday their MEPs joined forces and voted in a pro-multinational directive which could incriminate whistleblowers and journalists who breach corporate secrecy. It’s the same old story – Labour and Nationalists copying each other, trying to run with the hares and hunt with the hounds. Hypocrites.
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Ralph Cassar is secretary general of Alternattiva Demokratika and Attard local councillor.
