Tax justice – it’s in our interest

People have a habit of rushing to condemn some country or other for ‘bad’ conduct, as long as it is not their own. People are no different wherever they happen to live. Take the tax theft brought to light by the Panama Papers, and before that, LuxLeaks. Most of the opprobrium has been reserved for some far away, obscure country, when in fact Malta (a far away and obscure country for most of the world) has its finger in the pie.

It is hypocritical to harp on about Panama, while ignoring the part EU countries, from the UK and its overseas territories, to Luxembourg, The Netherlands, Belgium, including Malta have in the global tax theft industry.

Some prefer to use the sanitized term ‘tax avoidance’ – but I prefer to use the term theft. For it is those – companies, corporations and individuals – that benefit most from the system and the institutions of a country – from infrastructure, to stable economic environments, to an educated workforce, security and public order – which then are helped to steal from that same country what is due in taxation, and what should help to oil the wheels of the same system they rely on.

We have Maltese MPs telling us how they help companies steal taxes but say that they themselves are not shareholders or ‘ultimate beneficiaries’. Should it make a difference? What they are saying is that they are helping people like Keith Schembri and Konrad Mizzi open companies in tax havens, but it doesn’t matter since it is not them opening the companies. It is sheer hypocrisy to harp on that other countries do ‘bad things’ but then fail to see that some services offered by the financial services industry in Malta, and fellow EU member states, are aiding and abetting tax theft, sometimes attracting criminal organisations and contributing to keeping the poor poorer and public services starved of much needed funds.

The same criticism is being leveled at the UK and David Cameron organizing a conference against corruption – including tax fraud – when the UK, mostly through its overseas territories and ‘the City’, as the London financial sector is called, has acted as a magnet for fraudsters, corrupt politicians and corporations, and dirty money.

Some weeks ago the governor of our Central Bank, in couched terms, warned that the days of making hay while the sun shines are numbered and suggested that ‘the island, for example, could diversify into having other products related to the insurance sector’. Certain types of services will face a crackdown, with countries taking unilateral action to stop the kinds of deals done by, for example, Luxembourg with IKEA. They will find ways and means to make corporations pay their fair contribution in the countries they operate from – whether we like it or not. It seems that Nationalists and Labour politicians want to remain in a state of denial. Some of them actually make the global tax theft problem possible through their intermediary services. Of course they make sure that what they do is legal – through the laws they themselves designed.

There is a European Union wide push to stop the theft by the super rich from each and everyone of us. Luxleaks showed how Luxembourg and other EU member states made secret deals with big companies. The amount of taxes being paid should be public.

Those getting privileged treatment should not be able to hide behind secrecy. There should be disclosure of where companies have subsidiaries, where they employ people, where they declare their profits and pay taxes, as well as where they have assets and whether they receive state subsidies. Shell companies exist to avoid taxes and are magnets for dirty money and criminal organisations. There should be a ban on so called letterbox ‘companies’. Contrary to what many think there is no common EU definition on what a ‘tax haven’ is. To fight tax theft a common EU-wide definition and cooperation between member state tax authorities is essential.

Workers, employees and SMEs help prop up society by contributing their fair share of taxes, their ‘membership fee’ for being part of our society, our country and the EU. It is time for those who are in a position to contribute most towards the common good to do so as well.