Panama Papers: Why should we care?

Panama has always been one of the best tax havens in the world – both during and after the reign of  General Manuel Noriega – and Mossack Fonseca (run by a Swiss tax expert named Jurgen Mossack and his Panamanian partner, Ramon Fonseca) is one of the dominant players in the parallel world of tax havens.
In this sense, the unprecedented leak of nearly 40 years’ worth of documents (more than 11 million documents on more than 210,000 companies, trusts, foundations, and world leaders), revealing that Mossack Fonseca offered its services to facilitate money laundering, tax avoidance, and criminal activity should surprise no one.
Offshore entities of this kind have been created precisely for fulfilling such roles for the rich and powerful that rule the world
Indeed, as Mark Hays, senior adviser of Global Witness (a non-profit organisation that acts as watchdog against international corruption) told International Business Times: “What is surprising is that this is just one law firm involved in this practice, but there are thousands of companies involved in orchestrating these schemes…”
What will be done?
Nonetheless, one of the main questions behind the biggest leak of private documents seen on the internet is whether we should care at all about the existence of a global web of corruption, and whether something will be done about it.
The answer is positive on both counts.
In a world of extreme inequality and massive social problems such as ours, the economic, social, and political effects of tax avoidance due to the existence of tax havens are enormous.
Without taxes, societies will struggle to function as they will be unable to provide essential public services.
But while workers and small-to-medium-sized businesses are paying the full tax rate, global corporations and the super-rich have been paying fewer and fewer taxes over the years with the concomitant growth of the world economy and the spread of offshore tax havens.
Welcome to global capitalism, tax injustice, and the undermining of democracy.
According to Tax Justice Network 2012 estimates, some $21trn to $32trn is hidden away by the super-rich in offshore entities.
Just imagine how many schools and hospitals could have been built in various countries by the tax proceeds of this enormous amount of black money.
Just imagine how much less inequality there would be both inside and between countries if the mammoth problem of tax avoidance could be avoided.
New era may dawn
Just imagine how less severe and painful the refugee problem could have been if this hidden wealth were available today.
These realities are, of course, all too well-known to the global community, which is why the leaders of the G20 nations agreed a couple of years ago to put the issue of tax avoidance and tax havens at the top of their to-do list.

Source: Islamic News Daily

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