The Times has reported:
Faced with the growing hostility of politicians, some tax havens quickly crumbled under the pressure.
But while countries such as Switzerland have bowed to demands to end the era of “no questions asked-banking”, Panama is digging in its heels and touting for business as one of the few places where money can still be safely stowed away.
Leading tax advisers report that lawyers from the republic — which has so far failed to make good on promises of greater transparency — have been e-mailing them to highlight its credentials as one of the last remaining tax havens.
One such firm is, apparently, Panama Legal who run about as abusive a web site as it is possible to imagine. Here is the evidence, if evidence were needed that lawyers are promoting abuse of the law from places like Panama.
Let me put this in straightforward context. Tax havens are places. They provide the abusive law. Offshore financial centres are populated by lawyers, bankers and accountants. They sell corruption services using the laws created by tax havens. Together tax havens and offshore financial centres combine to create secrecy jurisdictions. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction and that, in addition, create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
We should not confuse the lawyers referred to in this article with Panama itself. The lawyers, bankers and accountants have enormous influence in these places, but they are not the same thing as the tax haven. This has to be remembered because they can be tackled separately. In addition, whilst sanctions will have little direct impact upon these offshore financial centres populated by what Prof Prem Sikka calls ‘the pinstripe mafia’ sanctions will have a very real impact on the countries themselves.
Now is the time to exploit this difference.
Sanctions have to hurt way beyond the financial servicers sector if this is to happen.
The financial services sector (often expatriate) have to be seen as the enemy of ordinary people within tax havens as well as in the world at large if this is to happen.
There is possible.
NB The Times has a quite interesting review called Your guide to the G20 blitz on tax havens
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You haven’t mentioned why Panama has recently been given so much leeway. Its government threatened to blackball any US contractors from tendering for work on the massive project to widen the Panama Canal if it appeared on any Washington blacklist!
Are you suggesting sanctions that would “hurt” the ordinary people of Panama just to get at the abusive lawyers and bankers there? It seems like an easy way out and completely contrary to the stated goals of tax reforms being meant to help ordinary people or developing countries – of which I am sure Panama is one.
Min
I do not think it would be long before reform occurred – we’ll have to live with the collateral issue for the short term in my opinion for the sake of all those who suffer elsewhere.
Richard
Rupert
It didn’t work then, did it?
Richard
Richard
Thankfully it didnt work, but at least Washington can say that it kept its side of the bargain and claim that it was G20 and the OECD which did the damage.
[…] note was quoted in the article on Panama I referred to earlier today. That said: Mike Warburton, senior tax partner at Grant Thornton, said that they […]
Richard
But why should the people of panama – and these are the ordinary people, not the bankers and lawyers in the OS financial centres – be regulated to being “collateral” for the benefit of others? Did they have any say in what their country as become?
As for reform happening fast, I think it will for certain countries, but others may well hold out for a very long time, to the detriment of the ordinary people in those countries. Look at Zimbabwe, North Korea, and to a lesser extent Cuba. Sanctions have not removed those leaders, and mostly it is the common folk who suffer.
I can’t help but think your arguments for sanctions – at least as presented on this blog – ignore the fact that there are real people in these havens, very many of whom were not the ones who chose what their nations became.
Sanctions are always painful to the most vulnerable and most innocent in these countries. They also take a long time to work. Unfortunately, there aren’t many alternatives. Sending in the gunboats is likely to be worse for the people.
How long would Panama hold out against sanctions anyway? What those who have held out have in common is a very strong ideology enabling the government to present itself (rightly or wrongly) as being on the side of the people against the outside oppressors. Can Panama do this?