It’s not about tax evasion or avoidance, it’s about inequality

Focusing on politicians’ tax affairs misses the real point: the Panama Papers expose deep structural inequalities and their consequences

Allister-McGregor-100The recent political stramash over the Mossack Fonseca revelations has involved endless media interviews, commentaries and expert pronouncements about whether David Cameron’s family had engaged in and benefited from sensible tax efficient investment strategies or from dubious tax evasion. This is missing the point: the real basis of anger is the demonstrable inequality that the leaked Panama Papers illustrate.

In an extended period of austerity there are not many people in Britain on dwindling disability benefits or declining real wages in the public sector that are discussing setting up an offshore investment fund in order to provide a solid financial future for their children. Many people in the UK reasonably aspire to creating an inheritance for their children and to secure enough funds to ensure them a good foundational education, or a pathway into a good university without having the worry about debilitating student debt, or a leg-up into the housing market, but few can achieve this at the scale that has been revealed.

Of course, underpinning inequality is power. The financial inequality that this exposure reveals is a basis of power that props up an edifice of deep structural inequality that we know is alive and thriving in the UK.  We know that top establishment jobs still tend to be dominated by candidates from a limited number of elite universities and that getting into those universities is still structurally biased against young people coming from public sector schools.

But these are only some of the more obvious of the many ways in which inequality shapes British society and its politics. The confidence of power and wealth divide our children from a very early age and the chimera of entrepreneurial opportunity sees large numbers of people without power or money supporting the ideologies of wealth.

And then there is the matter of government: if you are in the group that is making the rules, nationally and internationally, about where we draw the line between what is acceptable and what is not, what is legal and what is criminal in respect of tax and inheritance, then that too puts you in a position of power. Despite David Cameron’s claims over the last few weeks that no government or prime minister had done more “to make sure we crack down on tax evasion, on aggressive tax avoidance, on aggressive tax planning, both here in the UK and internationally”, the UK has been obliquely criticised by Pierre Moscovici, the European commissioner on tax policy, for its opposition to an EU blacklist of tax havens.  The UK government’s defence in this case, as it was when it blocked EU action against Bermuda earlier in the year, is based on transparency.  Again, this is missing the point – it is not seeing the inequality that matters (although that may help), it is the inequality itself.

The Mossack Fonseca leak reveals not just British inequalities but global ones. As Oxfam’s recent ‘pre-Davos’ report on inequality notes, “Almost a third (30%) of rich Africans’ wealth – a total of $500bn – is held offshore in tax havens. It is estimated that this costs African countries $14bn a year in lost tax revenues. This is enough money to pay for healthcare that could save the lives of 4 million children and employ enough teachers to get every African child into school.”  Although various inequality champions (for example, the Institute of Economic Affairs) may quibble about methodologies and the data used in Oxfam’s calculations of wealth inequalities the picture is painted in such bold strokes that a detail of methodology here or there is not going to make much of a difference to the deeply unjust picture it paints.  Similarly, in India, a country where the World Bank calculates that around 170 million people are currently living below the $1.90 poverty line, it is reported that 500 Indian billionaires were revealed on the Mossack Fonseca list.

While our wealthy and powerful folk here in the UK are well-mannered and believe in giving all of our hard-working people a ‘fair’ chance to pull themselves up this is not the same for some of their fellow account holders in these tax havens. Forbes reports that perhaps up to 33 individuals or companies mentioned in the Panama Papers are blacklisted by the United States for their association with drugs, organised crime or terrorism.  But in many countries around the world you don’t need to be a criminal or terrorist to financially underwrite human suffering.

The inequality that some of these super-rich benefit from is often transformed into less palatable expressions of power than those we experience in the UK. This is the power that lies at the heart of many global problems, driving poverty, vulnerability, trafficking, precarious jobs and unsafe working conditions.  It is power that can be brutally demonstrated in political repression, violence and the exploitation of the powerless.  Yes, it is the case: they are all in it together.