April 12, 2016
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2016 April 13 - 19 [WORLD]
Panama Papers shed light on dark side of international economy |
For ordinary people, it is a crime to pay less tax than they should by improperly declaring their incomes. On the other hand, billionaires and multinational corporations greatly benefit from tax avoidance schemes by hiding their assets in tax havens where tax rates are at very low levels. This situation has been known for a long time, but it has yet to be sufficiently dealt with.
While the flow of money is becoming more and more borderless, tax systems belong to the sovereignty of each country. This inconsistency is taken advantage of with the use of tax havens. Measures to curb international tax evasion have been repeatedly discussed in OECD and G20 meetings, and the OECD has launched the Base Erosion and Profit Shifting (BEPS) project.
However, as long as each country’s tax authority individually keeps tabs on corporations, they are unable to understand how multinationals transfer their funds between their offices scattered across the world. Countries need to cooperate, and this will be possible only when national leaders have the political will to do so. The Panama Papers have suggested that some of these leaders themselves use tax havens.
With multinational corporations using legal loopholes to avoid paying a fair share in taxes, it is the general public that is victimized. In order to offset a decrease in tax revenues, there are only two options: more tax or less government expenditures for social welfare, education, and other fields. Tax evaders are also depriving developing countries of their funds to tackle poverty issues.
What is Japan doing about this issue? Asked if he plans to conduct investigations into the contents of the Panama Papers, Chief Cabinet Secretary Suga Yoshihide at a press conference on April 6 showed a negative stance, saying “I don’t think so.”
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