There was a “depressing familiarity” about the Pandora Papers, said Brooke Harrington in The New York Times. The contents of almost 12 million leaked financial records, published by an international consortium of journalists last week, exposed “legalised corruption” in the offshore finance industry “on an almost unimaginably vast scale”.
But so, too, did the Panama Papers and the Paradise Papers before them – leading to a sense that nothing ever changes. Actually, though, things are changing. It is clear that these leaks are discouraging elites from using offshore financial services. There may be no real chance of being prosecuted, but the risk of reputational damage is large: just ask Andrej Babiš, the Czech PM whose party lost a general election last week, days after the papers revealed that he had used offshore shell companies to secretly buy property on the French Riviera.
Tax avoidance, personal or corporate, is “increasingly regarded as immoral and unpatriotic”. And thanks to modern technology, whistleblowing is safer and easier than ever: five years after the Panama Papers, no one knows who was responsible. The leaks are going to keep coming.
Days after the Pandora Papers were released, the Irish government finally abandoned its 12.5% corporate tax rate, said The Irish Times – “a once-untouchable totem of Irish economic policy”. There was a “certain symmetry to the timing”. Just as people are sick of the rich hiding their wealth from the authorities, so public tolerance of vastly wealthy firms using “lopsided national tax regimes” to avoid paying tax where they do business “has never been lower”.
Owing to this new intolerance, 136 nations, including the entire G20, have agreed to the Organisation for Economic Co-operation and Development’s global tax reform plan, said Richard Partington in The Guardian. Backed enthusiastically by the UK and, crucially, President Biden, this aims to set a minimum world corporate tax rate of 15%.
Still, the UK remains a major player in the world of offshore finance, said Matthew Shillito on The Conversation. And it must do much more to reform the sector. In 2016, after the Panama Papers, David Cameron pushed for a beneficial ownership register that would force UK companies to reveal the people who ultimately benefit from its assets. “Five years later, we are no further forward.”
In 2018, a draft bill was published that would have forced “overseas entities” buying UK property to disclose their beneficiaries; but that too has stalled. The Government talks a good game about fighting financial crime – but ultimately, “lack of action speaks louder than words”.