Time to make wealthy elite pay their dues

The latest tax avoidance revelations by wealthy companies and individuals should hopefully prompt greater action to make them pay their taxes, writes Michael Clifford

Bono was exposed as investing in a Lithuanian shopping centre through a Malta-based company.

Poor old Bono is getting it in the neck again. This time he has been exposed as investing in a Lithuanian shopping centre. How un-rock ‘n roll can one man be?

Is this the same Bono who has healed divisions and spread love with his shamanic persona in one hand, and three chords and the truth in the other?

Is this the same Bono who supported the Dunnes Stores workers in their protest against Apartheid? The same Bono who has saved half of Africa, while maintaining the aura of a prince of rock ‘n roll?

The same Bono who frequently stands arms raised before thousands, as if he is a conduit to elevate the mundane realities of life onto a higher plane of freedom?

And look at the poor fella now, investing in some ugly piece of concrete in Eastern Europe out of which disposable nappies, baked beans and cheap wine is flogged to the masses. Mr Bono sir, where did it all go wrong?

It didn’t of course. Mr Bono is only doing what the wealthy have always done and that is to avoid paying a level of tax that is commensurate with their considerable wealth.

The singer’s investment through a Malta-based vehicle in the Lithuanian shopping centre, as revealed in the Paradise Papers, is entirely legal. The interesting aspect to it is the Malta-based company, which operates in an environment where tax of around 5% is payable on vehicles such as that in which he was involved.

The latest revelations of how the cream of the wealthiest in the world squirrel away their millions is neither surprising nor shocking, but vitally important.

The so-called Paradise Papers is a companion piece to the Panama Papers released last year.

Together they give a panoramic insight into how the wealthiest people and corporations move money around in order to minimise their obligation to pay their fair share.

The Panama Papers came about as a result of a leak from the Panamanian law firm Mossack Fonseca. The current leak is from Appleby, a firm that operates in 10 different jurisdictions, a blue chip outfit that would, in a corporate sense, look down its nose at the Panamanian firm.

In order words, any suggestion that what Mossack Fonseca were up to was anything but the norm has now been blown out of the water.

These firms are but two in a transglobal army of accountants and lawyers which facilitate the avoidance of billions of dollars in tax.

These so-called professionals act entirely within the law, or at least can reference some law in some country which gives legitimacy to their parasitical business.

The vast squirreling away of money is also facilitated by dozens of developed countries where governance is nominally by democracy.

These governments act either out of self-interest or fear of the consequences of disrupting the avoidance, or most likely a combination of both.

In such a milieu, with facilitation by officers and makers of the law, is it any wonder that the wealthy elite can tell themselves that what they are engaged in is morally acceptable?

Is it any wonder that they can congratulate themselves on their munificence towards charitable causes, and bask in the grateful plaudits from organisations desperate for money from any source?

One small example of the mentality of these people towards paying their fair share is available in figures for the so-called domicile levy.

This was introduced during the depths of the recession in 2009 to bring into the net tax exiles who pay little or no tax here.

The levy was for a relatively modest €200,000 for Irish domiciled people — either resident or non-resident — and who earned over €1m for the tax year.

In the first year of the levy, 2010, a total of 32 individuals stumped up, but by 2015, this had dropped to 13. Does anybody believe that such a low take-up reflects the number of individuals who would qualify for the levy?

Far more likely that hundreds of those who would qualify have found legitimate routes to avoid paying it. If that’s the attitude to a symbolic contribution to the national coffers, what lengths do these people go to in order to avoid serious taxes?

But of course, they tell themselves that they are paying their fair share, and are merely being “creative” and engaging in “tax planning” through the myriad of off-shore avoidance vehicles.

In such a bubble of self-defined morality, it is easy for people like Bono and his fellow millionaires to avoid any rigorous self-analysis of the rights and wrongs of paying their fair share to society at large.

That is why publication of the Paradise Papers is vital to effect change in society. As seen elsewhere, change will only come about when the matter is dragged out into the public glare for proper scrutiny.

Tentative steps have been taken in the last year to tackle the vast off-shore network that facilitates the wealthy elite.

This publication must surely accelerate the efforts to ensure that taxes are not just for the little people, but also must be borne by the elite individuals who continue to live in their own rarefied universe.

TAX AVOIDANCE OR TAX EVASION?

The Paradise Papers purport to detail the tax affairs of some of the wealthiest people and companies on the planet.

They reportedly reveal the exploitation of offshore schemes to avoid tax.

U2 frontman Bono, Queen Elizabeth II and the US commerce secretary Wilbur Ross are among those named in the 13.4m documents.

What is tax avoidance?

Tax avoidance involves companies and people using legal ways and following the rules to reduce their tax bill.

This could include setting up a company in a country that does not levy corporation tax to avoid paying the higher rates of tax here.

On a smaller scale, investing savings into a tax-free savings account also counts as avoiding tax.

Whilst tax avoidance is legal, critics argue that individuals and corporations taking their taxable wealth out of their home country is immoral, as it decreases the revenue government has to spend on health, education and other public benefits.

What is tax evasion?

Tax evasion is an offence that involves illegal ways of paying less tax than required.

This could be done by an individual who does not report all of their taxable income.

What is a tax haven?

A tax haven is a country or jurisdiction whose rules facilitate tax avoidance by offering more favourable laws or conditions than other states.

Popular tax havens include Bermuda, the British Virgin Islands, and Jersey in the Channel Islands.


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