Avoiding the questions

2016-05-03 06:00:00

With a repeat general election in June now certain, Spain’s two new political parties will try to take advantage of the most recent furore concerning a politician from the ‘old guard’. Former PP industry minister Jose Manuel Soria is now known to have been a ‘director’ (i.e. account holder), about twenty years ago, of a Panama-based ‘company’ (i.e. offshore bank account). He resigned two weeks ago, but not without trying to escape with a lie first. The incident and its aftermath are interesting for a number of reasons.
If you want to whip up public outrage at a politician or company, few methods are more effective than accusations of tax avoidance (legal if morally dubious) or evasion (illegal). News of Soria’s former offshore financial activities, disclosed as part of the ‘Panama Papers’, has therefore prompted a very fashionable kind of disapproval in Spain - one that might well benefit Podemos and Ciudadanos in the June vote.
It hasn’t been said enough, though, that it was Soria’s initial lie that merited his resignation, rather than his possession of an offshore bank account two decades ago. Despite the attention given to the latter fact, there hasn’t been much public discourse about the distinction between tax avoidance and evasion, or the nuanced difference between banking confidentiality and financial secrecy. Too often, the immorality of tax avoidance or the pursuit of greater financial confidentiality is assumed rather than actually argued for.
The Panama Papers are merely the most recent reminder of this. Three years ago, in April 2013, The Guardian released a list of high-profile figures running offshore bank accounts in the British Virgin Islands, another destination unable to escape its dubious distinction as a leading ‘tax haven’. For an article on the subject I interviewed BVI Premier Dr Orlando Smith, who insisted that the BVI is a reputable financial hub that maintains client confidentiality but does not tolerate secrecy. Yes, of course he was going to say that - but the notion cannot therefore be dismissed as risible. For the named individuals who had done nothing illegal or immoral, the Guardian’s ‘scoop’ was an unjustified invasion of their financial privacy. Yet this, of course, was not the headline.
The Panama Papers give us a new list of names to scrutinise, but they pose the same unanswered questions as The Guardian’s ‘BVI Papers’ did in 2013. The international financial regulations that make tax avoidance legal and popular remain in place, despite the ignominy inflicted upon those who exploit them. Soria and others like him can hardly be described as victims, but one wonders whether their detractors shouldn’t instead be attacking the laws which make offshore banking and tax avoidance such viable options in the first place.source surinenglish