Recently the publication of confidential documents known as the Panama Papers have came to light. The information contained inside the documents were highlighted by the media as one of the largest ever confidential data exposures which brought many well-known figures’ special tax arrangements to light. This included President Vladmir Putin of Russia, Mauricio Macri, President of Argentina, Salman of Saudi Arabia, Petro Poroshenko, President of Ukraine and Sigmunder David Gunnlaugsson, the Prime Minister of Iceland among other heads of government. Only a partial list of individuals has been named in the Panama Papers so far and the International Consortium of Investigative Journalists say they aim to release the full list of companies and people in the files in early May 2016.
The Panama Papers may hint towards the start of radical reform in terms of private tax arrangements by wealthy individuals in the future. Until now, rich people in a position of power may have been able to store vast amounts of their money by taking advantage of tax loopholes and storing money offshore in places such as Panama and Switzerland. One corporation which has made headlines recently is Mossack Fonseca, a Panamanian law firm which specialises in assisting its clients with creating company structures and undisclosed offshore accounts. Mossack Fonseca have released an official statement regarding recent media coverage claiming they use company incorporation and related administrative services which are widely available and commonly used worldwide. They also go on to state they are responsible members of the global financial and business community and their services are regulated on multiple levels, often by overlapping agencies. It is important to note offshore structures are entirely legal and choosing to use them for tax arrangements may be more a question of morality than anything else.
The Panama Papers may be important in addressing the wealth gap. The records reveal how a global industry of law firms and big banks sell financial secrecy to politicians and world leaders as well as billionaires, celebrities and sports stars. This information may be productive in establishing change in law firms and banks as well as fundamental tax laws to help rebalance the books in the future. Some of the top banks identified in the papers were HSBC, UBS and Banque J. Safra Sarasin in Luxembourg, however there are more than 500 banks, their subsidiaries and branches associated with Mossack Fonseca according to the details within the documents. The significance of the Panama Papers may represent the possibility for social change and recent events have already motivated street demonstrations as seen in Iceland, London and Paris. Even though hundreds of journalists in many countries with the ICIJ have already spent months examining the documents, the internet makes it possible for anyone to search for information which may affect them specifically. This greater access to information and freedom to research information which was previously confidential may be the first step in productively uprooting profiteering methods used by the elites.
The Panama Papers may signal towards the beginning of change in terms of letting the public know what special tax arrangements many senior figures and powerful people of the world hold overseas. This freedom of information may support the public’s understanding of the circumstances in more detail and may improve changes in banks or law firms directly involved in the documents such as HSBC. The papers may also identify the global tax system as something which needs to see fundamental change in order to be more effective and beneficial to those at the bottom as well as the top. Overall, it may be important in addressing transparency and ensuring equality in the future.
What may be done to promote equality and ensure fairness in terms of paying tax?