Magazine article The Spectator

Leading Article: The Road to Panama

Magazine article The Spectator

Leading Article: The Road to Panama

Article excerpt

The 11 million documents leaked from Panama lawyers Mossack Fonseca tell us much that we know already. It's hardly news that the Central American state is a popular destination for those who dislike paying tax. But to obsess about this aspect of the story, as so many did this week, would be to miss the most striking discovery, which is just how many politicians and government officials have been using Panama to disguise their extraordinary wealth.

Few were under any illusions about Vladimir Putin being a good and faithful public servant, yet it comes as a surprise that he appears to have a personal fortune that would have made the tsars look like paupers. According to the International Consortium of Investigative Journalists, which has analysed the 11 million leaked documents, friends and associates of the Russian leader have channelled $2 billion through Panama over the years.

At least 140 other politicians have been using banking facilities in Panama. Many of the names might be expected -- from members of the Assad family to the king of Saudi Arabia, and Hosni Mubarak, the former president of Egypt. Others were more surprising, such as Sigmundur Gunnlaugsson, the prime minister of Iceland (who has now resigned). David Cameron is also caught up in the revelations, albeit at a remove. The Downing Street aide who tried to dismiss revelations about an offshore trust run by the Prime Minister's late father as a purely private matter should watch the television pictures of the protests in Reykjavik. Nothing fuels anger so much as politicians burdening their people with taxes while seeking cosy offshore arrangements for themselves.

You cannot blame a son for the opportunistic financial arrangements of his father, even if they did help pay his school fees. The Prime Minister heads a government that has outlawed some of the practices his father employed to avoid paying tax on a trust that he ran. But Cameron also heads a government that charges one of the highest top rates of tax in the world: 47 per cent, once National Insurance is included. It is a policy that could have been designed to help the accountants who come up with perfectly legal yet definitely shifty schemes involving places like Panama.

The answer lies not in Jeremy Corbyn's extraordinary suggestion this week that the government should impose direct control on the British Virgin Islands and other overseas territories that are used as tax havens. It would be better for Britain to create a tax system that attracts business rather than sending it scurrying for cover. …

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