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Spain

Paradise Papers: a view from Spain

By Rafael Simancas

From the Panama papers to our very own Royal Castellana papers, and now the Paradise papers. The scandals surrounding tax avoidance and large-scale tax fraud follow one after another with increasingly astronomic sums and ever higher profile protagonists.

But beyond superficial analysis and frivolous commentary, these behaviours deserve a rigorous assessment, because they seriously undermine democratic institutions and feed the monster of populism.

The last episode denounced by an international platform of investigative journalists brings to light more than 13 million documents that affect more than 120,000 people and companies.  These citizens and companies hired the offshore services of a couple of specialized firms to manage resources in up to 19 tax havens located all over the world, from Malta to Panama through Singapore. The uniqueness of these fiscal paradises is in the guarantee of secrecy for deposits and very low taxes.

One could see such practices as sitting alongside international terrorism, corruption, drug trafficking or the laundering of money from criminal activities. But many of the clients detected in these services are large well-known companies and characters of apparent prestige from the spheres of politics, sports, culture and even European royalty.

The damage caused by these scandals in our societies is extremely serious. Not only due to the resources that are stolen from tax authorities, with which public services have to be financed. The full awareness of the generalization of these behaviours undermines what economists call “fiscal morality”, that is, the willingness of citizens to voluntarily comply with their fiscal obligations.

If large companies with large profits and large public figures manage not to pay what they owe, how can one make ordinary citizens aware of their duty to pay their taxes.

In Spain, in addition to these international scandals we must add the domestic scandal of the 2012 tax amnesty of the ruling Popular Party, through which more than 40 billion euros of black money was laundered, at the modest price of 3%.

The moral of the story is clear: if you comply with the Treasury, you pay between 19% and 45% of your income; if instead you hide your money and accept the Government amnesty, you only pay 3%. It is devastating to see that many of those involved in the main cases of corruption have used this way to bring out their spoils: Rato, Bárcenas, Granados, Marjaliza, López Viejo.

The appearance of Xavier Trias in the Paradise papers roll call is particularly grotesque. After leading all the demonstrations in defence of the Catalan homeland and wielding all kinds of false grievances from the rest of Spain, it turns out that so much patriotism did not prevent the secessionist spokesman in Barcelona from hiding his assets in tax havens, in order not to pay taxes that his Catalonia needed.

However, the citizenry is fed up of being fed up, if one can say this. The narrative of these scandals is always the same. Great impact, grand statements of condemnation, chestbeating, promises of corrective action. And then nothing. This is because the interests at stake are influential: the clients who directly benefit, and the tax haven states whose gain is as significant as it is illegitimate.

Is there a solution? Of course, but it implies brave decisions. Tax havens that exist de facto in the European Union itself and that contravene the very foundational principles of equality and solidarity can be banned and eradicated: Malta, Luxembourg, Ireland, Gibraltar … The obligations regarding tax and financial transparency can be generalized and homogenized, in addition to establishing common and narrow tax rate ranges, so that countries do not unfairly compete over taxes. And introduce harsh punishments on companies and individuals who use those tax havens that remain.

As this is about identifying those behaviours that seriously undermine our democratic system and our coexistence, tax avoidance and fraud should be seen as toxic as terrorism.

Source: Nueva Tribuna

Translation by Revolting Europe

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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