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#PanamaPapers: The Larger Problem Lays Beyond Tax Havens

By: Javier Garay - @Crittiko - Apr 13, 2016, 11:11 am
Es necesario evitar la superficialidad al hablar de los Panama Papers, y separar a los políticos del resto de personas involucradas en el tema de paraísos fiscales. (El Siglo)
Superficiality must be avoided when speaking about the Panama Papers, and politicians must be regarded differently from the rest of other figures involved (El Siglo)

EspañolThe global scandal about the “Panama Papers” requires reflection that goes beyond the superficial. So far, coverage has been limited to which famous personality can be found on the list of people that used offshore companies to avoid paying taxes.

But this level of superficiality must be avoided. We cannot keep talking about those who appear in the list as if they were part of the same package. There is talk of athletes and show business personalities together with political leaders and individuals who may be involved in crimes, including terrorism or sponsorship of so-called rogue states.

Athletes and famous personalities have made their fortunes as a result of a compensation based on the valuation made on their skills, but they don’t have a greater impact on the way we operate as a society. Criminals that appear on the list, on the other hand, should be persecuted and the information surrounding them should be used to deepened the knowledge of their relationships and networks.

The analysis should also focus on politicians. Whether their fortunes come from corruption — which makes them criminals as well — or not, the available evidence should lead to an urgent discussion.

But that debate should not become moralistic. Nothing would be more futile than that. “How brash these politicians are! They must be punished!” And that may be true. But the point is these actions demonstrate that those who govern us are neither better human beings, nor do they have really altruistic interests. They are individuals like any other.

What this shows, then, is that it is necessary to rethink the extension of the expectations we place in their work and functions. Why should they, people like any other, have the power to decide or think for others? We cannot keep talking about those who appear in the list as if they were part of the same package.

People from 59 different countries have appeared so far in the Panama Papers. Of these, 47, almost 80 percent, are from underdeveloped countries. Of these, over 50 percent are from African and Latin American countries. But the problem is not only among undeveloped countries or populist governments; it’s global.

Unfortunately, the outrage has been limited to discussions of taxes. The general idea seems to focus on the “rich,” whether criminal or not, political or not, deciding to hide their resources in tax havens. Why isn’t the conversation focused on “social justice” and improving the situation of the poorest individuals?

If that was the debate, we should do it thoroughly. I repeat: there is no point in staying in what “should be” discussed as a result of outrage. We must recognize the way things are. The question should be: why people act the way they do?

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To others, things are different. Evasion does not show that those who do it are bad or that they want the poor to remain so. That we cannot know and maybe we do not care. Rather, what we can show is that perhaps tax policies in the countries involved are so punitive that having wealth has almost become a sin.

The solution, if this is the case, could not be further persecution or more punitive tax regimes. In both cases, the phenomenon will only increase. In the first case, it is also a pointless use of state resources: the collection is a means in itself, not the end.

States cannot be confused in that their end is chasing real criminals, those who do not meet the standards that allow us to live in society.

They want more justice? They want more collection? You want less evasion? Do they want to stop the “rich” from taking their money to tax havens?

Then let’s start by discussing more tax proposals from authors like F. A. Hayek, and less those of T. Piketty. That would be a good start.

Javier Garay Javier Garay

Javier Garay is a professor at the Externado University of Colombia. He has written two books on international issues, such as development, after his doctoral dissertation focused on the same topic. Follow him on Twitter @crittiko and through his personal blog, Crittiko.