Joyce McMillan: Paradise Papers show tax avoidance crackdown could end austerity

The staggering wealth hidden in offshore tax havens could end austerity '“ a fact being covered up by complicit fools in the media, writes Joyce McMillan.
Jeremy Corbyn doubtless hopes the Paradise Papers affair will translate into votes for Labour (Picture: Getty Images)Jeremy Corbyn doubtless hopes the Paradise Papers affair will translate into votes for Labour (Picture: Getty Images)
Jeremy Corbyn doubtless hopes the Paradise Papers affair will translate into votes for Labour (Picture: Getty Images)

He denied ever having said it, except about property speculators. Yet there are millions of us still around who can remember the moment, more than 40 years ago, when the then Chancellor of the Exchequer, Denis Healey, was reported as saying that he would “tax the rich until the pips squeak”; and, also perhaps, the strange lack of enthusiasm with which the phrase was greeted, even among some on the left.

For back then, at the beginning of the long political cycle that is now ending, we were confidently told by the rising generation of economists that taxing the rich was pointless and even counter-productive. There weren’t enough of them, the sums raised would be insignificant, and in any case they would just take their wealth elsewhere; indeed, you can still hear exactly the same arguments being rolled out today, against any suggestion of slightly higher taxes for the well-off in Scotland.

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If this week’s release of the so-called Paradise Papers demonstrates anything, though, it is just how far those arguments no longer apply. Today, it seems there are plenty of rich people; about 10 million across the world have some money offshore. And the sums themselves are simply staggering; the total was conservatively estimated in 2012 at something around $21 trillion, or almost £16 trillion. One trillion pounds is a million million; and with the annual total spend of the UK government running at around £800 billion, that means that those offshore funds are so vast that they could sustain the whole of the British public sector at its present level for more than 15 years, even if we in Britain paid no tax at all. The annual £20 billion that has been cut from UK public expenditure since we began our post-crash “austerity” drive in 2010 also uncannily matches the £18.5 billion conservatively estimated to be lost to the British exchequer every year through tax evasion and avoidance, even at present modest tax rates.

And all of this, it seems to me, should add a certain perspective to our view, when we come to discuss domestic policy on matters of taxation and austerity – or for that matter, the relatively tiny sums stashed away by cast members of Mrs Brown’s Boys. There is no point, of course, in berating those involved in this massive 30-year-episode of tax avoidance as if they had been involved in criminal activity. It is clear that from the City to Buckingham Palace, they move in circles, and inhabit a culture, in which avoiding tax is seen not only as normal and permissible, but as an obligation – a legal obligation for companies, a family obligation for individuals.

Yet the fact that it is legal does not make this tax avoidance culture, and those who benefit from it, any less contemptible, both morally and intellectually. How they must laugh, these people who have between them squirrelled away trillions, when they see decent politicians in assemblies like the Scottish Parliament agonising over whether to squeeze middle income earners for another paltry £200 million or so to maintain vital Scottish public services. How funny it must seem to them, when local authorities have to cut essential services to elderly people in need of home care for the lack of the odd £50,000 here or there – a sum which, in the offshore world, is mere loose change.

And what complicit fools they have made, over the past decade, of all those journalists and broadcasters who have solemnly conducted discussions which begin with the premise “in these times of austerity, when public money is scarce…” and have gone on to set taxpayers against benefit claimants, private sector workers against public sector workers, people suffering from infertility against other NHS patients – in other words, staging divisive dogfights for cash amongst needy ordinary citizens, while all of them were being comprehensively ripped off by those whose tax money, duly paid, would have made many of these discussions completely unnecessary.

Well, enough. It is now as clear as it could possibly be that this culture of legitimised tax avoidance is skewing the whole global economy away from the public goods that support advanced economies and civilised life, and creating the conditions, among sovereign governments, for a shameful race to the bottom on tax. There is therefore no question that governments now need to unite to end this situation, and to create certain basic minimums for the taxation of financial transactions, and of wealth wherever it is held.

Once these measures have been enacted, it will be difficult to believe that we put up with their absence for so long; and the free market ideologues who tried to defend this ridiculous situation will be as out of time, and out of fashion, as the old postwar Keynesians were during the 1980s. And one clear beneficiary of this cultural shift will be Jeremy Corbyn, that once-marginal representative of the small part of the Labour Party which never forgot that government and capital are of two different houses, and that the one exists to regulate and control the other, in the public interest.

For on this matter and others, Corbyn is now able to speak for the people precisely because he is not rich, has no money stashed offshore, and does not make the vulgar mistake of believing that cash is the only measure of a successful life – characteristics which he broadly shares with most British people. The Tories, by contrast, are up to their necks in the dysfunctional culture of boss-class financial sleaze exposed by the Paradise Papers, surrounded by armies of overpaid spivs, lobbyists and money-grabbers who think the well-being of others, or of society at large, is literally none of their business.

Dickens had it right, though, when he had Marley’s ghost roar at Scrooge that in the end, humankind is our business. The money men have had their day, and an increasingly ugly and indefensible one it has been; and now, as the wheels of history turn again, it is time for humanity to reassert itself, whether through a Labour Government led by Corbyn, or through any other democratic means that come to hand.