As if the Panama Papers weren’t enough, we have had more information about the barely legal and unethical dealings of the super-wealthy following the release of the Paradise Papers. Much of the focus has been about how individuals and corporations with the help of tax havens are able to structure their affairs to minimise their tax bills. In effect, they are stealing from taxpayers who bear an undue brunt of the cost for keeping their respective governments functioning.
This scandal has largely gone unnoticed in New Zealand because the corporate media is too busy recapping events in reality TV shows such as Couples Spend More Money Than Anticipated on Ego Projects, and Ignorant White People Discover That Arranged Marriages Aren’t That Great After All. So I’ll need to turn to international media again. The Guardian is the most prominent Anglophone newspaper that has covered the Paradise Papers and has put out too many articles to cover in any great detail, but I would like to discuss one that particularly caught my attention:
2017 Formula One World Champion Lewis Hamilton avoided paying up to £3.3 million of VAT (value added tax, known as GST in New Zealand) when importing a Bombardier private jet. The jet was made to look like it was available for charter, by doing so VAT can be claimed against the purchase and running costs associated with business operations. VAT can not be reclaimed when jet was used for leisure purposes. Depending on the breakdown of business and leisure travel, Hamilton may have been required to pay a proportion of the £3.3 million in VAT.
My disdain for the wealthy avoiding taxes is not limited just to Hamilton, but to everyone who has been caught out in the Paradise Papers. If you want to live in a civilised society, someone has to pay for it. It is only logical that those with the most wealth are liable for most of the taxation levied by governments. The quality of life of the majority of the population suffers when governments are not able to provide high quality services such as education, healthcare, and security.
Furthermore, the wealthy are only wealthy because of public infrastructure, an educated and healthy workforce, state-funded research and enforced intellectual property laws. Were it not for strong and effective government, they could not have achieved what they have been able to do. It is in their best interest to support government, and that means paying taxes. Weak arguments such as “the government would just waste money anyway” are just shallow excuses made by sad individuals trying to allay their guilt.
Of course it one thing to insist that the rich should pay their full amount of taxes voluntarily, but no one listens to me. Instead it is up to governments to close down the loopholes in the law that have been exploited. What I find interesting about Lewis Hamilton’s case is that he was able to avoid VAT, a consumption tax like GST.
GST has been defended by neoliberals because it was seen as “simple”, “efficient” and “hard to avoid”. The Paradise Papers have shown that all of these arguments are a complete sham. GST is nothing more than a regressive ideological act of faith that puts more pressure on ordinary people while allowing for the rich to become richer. Even worse, there are mechanisms which allow wealthy people to actively avoid GST on big-ticket purchases!
Governments are largely paying lip-service to the idea that something must be done, but don’t expect the oligarch-funded centre-right to do anything about it. Meaningful change starts by electing solid left/centre-left candidates to national office. It’s encouraging to see Bernie Sanders and Jeremy Corbyn come out against the practices highlighted in the Paradise Papers. The British government should also intervene in their overseas territories to harmonise the tax structure within the UK. That action alone would close so many loopholes featured in the Paradise Papers.
It’s vital to the long-term welfare of our society that it is properly funded by those who have the ability to fund it, who also happen to be those who have benefited the most from it.