The Panama Papers and Politics -- Il-Panama Papers u l-Politika

 

These few weeks saw the 'news' of the revelation of almost a quarter of a million offshore entities.  These had been established by a legal company in Panama, Mossack Fonseca, over the course of forty years.  The documents were revealed by the International Consortium of Investigative Journalists.1

 

To see why this is relevant, we have to understand what is offshore and why it's used.  The International Monetary Fund says that a financial centre is called 'offshore' when it resides in a jurisdiction where business is undertaken primarily by entities that are not resident, where the value of transactions and/or assets (like property) is much higher than necessary for domestic (resident) use, and where the centres offer one or more of the following features: low (or zero) tax, next to no financial regulation, banking secrecy and anonymity.2

 

Panama is one of these centres.  Another is actually Malta, where this industry was established by the Nationalist government in the eighties.  After Malta joined the EU, it was asked, and accepted, to modify some related rules which were deemed to be of detriment.3  Nevertheless, today the offshore industry in Malta is still strong, so much so that the Malta Financial Services Authority (MFSA) estimates that in 2014, 56% of assets held by banks in Malta are held by those that don't have a connection to the domestic economy.4  This proportion is declining year upon year, so today the MFSA says that the industry has gone onshore.

 

There are legitimate reasons why one has accounts in jurisdictions outside of his residence, however it is accepted that the main reason that wealthy individuals or commercial companies do so is to reduce, or eliminate, the tax they pay.  One way this is done is for the owner of economic activity in a high tax country to seem to reside in a low tax country.

 

Another way is for the owner or owners of an incorporated company to be hidden, where replacement directors and even shareholders are nominated, so that the ultimate beneficiaries are invisible.  In this way, economic activity can be hidden from authorities.  What has happened with the documents from Mossack Fonseca is that the ultimate beneficiaries were revealed, and these included prime ministers and other well known persons, which has caused pandemonium around the world.

 

The amount of funds involved globally in this industry is astronomical.  One estimate by the economist Gabriel Zucman is that $7.6 trillion, representing 8% of global wealth, is held in offshore centres, and that the unpaid tax is of the order of $190 billion every year.5

 

To retain a sense of how big this story is, consider that Mossack Fonseca is only the fourth largest legal company setting up offshore entities in the world.  One can only wonder what's being hidden by the other three larger legal companies!

 

Every so often, there is a commotion when the case of a multinational, such as Google or Apple, is heard, who pay a very small percentage of their income as tax, due to their intricate use of these offshore centres.  These companies always defend themselves as abiding strictly by the law.  The tragedy is that many of them are right, as the US President remarked recently, much of what is done  is legal, not illegal.6

 

And who makes the laws?  Is it not members of parliament, in parliament?  And what are they doing to resolve the problem?

 

Very little.  Too little.  It's difficult to avoid the impression that things stand where they are as those with the power to do something, that is members of parliament, prefer everything to remain the same.  Perhaps it's to their advantage, and those that have the confidence and connections to organise meetings to influence their decision making.

 

Those that live by their pay cheque don't gain anything with the offshore system, because as we know their income is tax reduced at source before the cheque is even received.  The ones to gain are the individuals and commercial institutions whose income tax depends only upon the yearly tax return, and who structure their finances so that their wealth is stored away from where the economic activity is undertaken.  For those on a wage, this is not even possible.

 

I smiled while reading a debate that happened in Malta recently on this subject, after it was revealed that some members of the government were mentioned in the Panama Papers.  Plenty of words were said about the immorality and lack of wisdom their actions entailed, however I think the main point was missed.  If their action is so reprehensible, why isn't there a law against it?

 

There's nothing stopping members of parliament of any country from passing laws in the national interest, as they are supposed to be doing.  There's nothing stopping governments from working together to resolve this problem, which reflects the global nature of the problem.  There's nothing stopping the opposition from setting aside partisan politics and support government-proposed legislation in this regard.  Why hasn't this happened so far?

 

There are signs that this cooperation has started.  For example, in the latest meetings of the Group of 20 most advanced economies, the G20, a project entitled BEPS was prominent which seeks to keep multinational companies from artificially reducing profits in one country to transfer them elsewhere.  In Australia this week also the government has just announced a substantial increase in resourcing for the tax department to follow this subject.  I'm just surprised how governments around the world, which have lost and still are losing so much revenue, have left this situation persist for so long.

 

I often write about being disillusioned with our representatives in the parliaments of where we reside.  Who are they really representing?  Why is there a law applicable for the wealthy and strong, and another for the rest?

 

We need to make wise choices in elections!

 

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Dawn l-aħħar ġimgħat kellna l-'aħbar' li ġew żvelati dokumenti fuq kważi kwart ta' miljun entitajiet offshore.  Dawn l-entitajiet kienu stabbiliti minn kumpannija legali fil-Panama, Mossack Fonseca, fuq medda ta' erbgħin sena.  Dawn id-dokumenti ġew żvelati mill-International Consortium of Investigative Journalists.1

 

Biex naraw għalfejn dan kollu hu relevanti, irridu nifhmu x'inhu l-offshore u għalfejn jintuża.  L-International Monetary Fund tgħid li ċentru finanzjarju jissejjaħ offshore meta jkun parti minn ġurisdizzjoni fejn in-negozju jsir primarjament minn entitajiet li mhumiex residenti, fejn il-valur tat-transazzjonijiet u/jew tal-assi (bħall-proprjetà) huma ħafna ikbar minn dawk għal skopijiet domestiċi (residenti), u fejn dawn iċ-ċentri joffru xi waħda jew iktar minn taxxi baxxi (jew żero), ftit li xejn regoli finanzjarji, segretezza bankarja u anonimità.2

 

Panama hija waħda minn dawn iċ-ċentri.  Oħra hija fil-fatt Malta, fejn din l-industrija ġiet stabbilita minn gvern Nazzjonalista fis-snin tmenin.  Wara li Malta ssieħbet fl-UE, ġiet mitluba, u aċċettat, li timmodifika xi regoli relatati li kienu miżmuma li kienu ta' ħsara.3  Madankollu, illum l-industrija offshore ta' Malta għadha b'saħħitha, tant hu hekk li l-Malta Financial Services Authority (MFSA) tistima li fl-2014, 56% tal-assi miżmuma minn banek f'Malta huma miżmuma minn dawk li m'għandhomx konnessjoni mal-ekonomija domestika.4      Dan il-proporzjon qed jonqos sena b'sena, għalhekk illum l-MFSA tgħid li l-industrija marret onshore.

 

Hemm raġunijiet leġittimi għalfejn wieħed ikollu kontijiet f'ġurisdizzjoni barra mir-residenza tiegħu, madankollu huwa aċċettat li r-raġuni prinċipali li individwi għonja jew kumpanniji kummerċjali jagħmlu dan ikun biex inaqqsu, jew jeliminaw, it-taxxi li jħallsu.  Mezz wieħed kif dan isir huwa billi s-sid ta' attività ekonomika f'pajjiż ta' taxxa għolja ikun jidher li għandu residenza f'pajjiż b'taxxi baxxi.  

 

Mezz ieħor hu li s-sid jew sidien tal-kumpannija inkorporata jkunu moħbija, fejn diretturi u anke dawk li jżommu l-ishma ikunu nominati, ħalli s-sidien aħħarija ma jidhrux.  B'dan il-mod, l-attività ekonomika tista' tiġi moħbija mill-awtoritajiet.  Li ġara bid-dokumenti minn Mossack Fonseca kien li ġew mikxufin s-sidien aħħarija ta' dawn il-kumpanniji offshore, u dan kien jinkludi prim ministri u nies magħrufin oħra, li qajjem kjass madwar id-dinja.

 

L-ammont ta' flus involuti globalment f'din l-industrija huwa astronomiku.  Stima waħda minn ekonomista jismu Gabriel Zucman hija li $7.6 triljun, li jirrappreżenta 8% tal-ġid globali, huwa miżmum fiċ-ċentri offshore, u li l-ammont ta' taxxa iffrankati huwa ta' madwar $190 biljun fis-sena.5

 

Biex iżżomm sens ta' kemm din il-ħaġa hija kbira, biżżejjed tiftakar li l-Mossack Fonseca hija biss ir-raba' l-akbar kumpannija legali offshore fid-dinja.  Wieħed biss jista' jimmaġina x'qed jiġi mistur mit-tliet kumpanniji legali offshore li huma ikbar!

 

Kull tant żmien, ikun hemm għagħa meta jinstema xi każ ta' kumpannija multinazzjonali, bħal Google jew Apple, li globalment iħallsu persentaġġ żgħir ħafna tal-introjtu tagħhom bħala taxxa, permezz tal-użu intrikat ta' dawn iċ-ċentri offshore.  Dawn il-kumpanniji dejjem jiddefendu ruħom li qed jimxu skrupolożament skont il-liġi.  Id-disgrazzja l-kbira hi li ħafna minnhom għandhom raġun, għax bħal ma qal il-President Amerikan Barack Obama ftit ilu, ħafna minn dak li jsir huwa legali, mhux illegali.6

U l-liġijiet min jagħmilhom?  Mhux membri tal-parlament, fil-parlament?  U dawn x'qed jagħmlu biex isolvu l-problema?

 

Ftit li xejn.  Ftit wisq.  Diffiċli li wieħed jevita l-impressjoni li l-affarijiet huma kif inhuma għax min għandu s-setgħa li jagħmel xi ħaġa, jiġifieri l-membri tal-parlament, jippreferu li jibqa' kollox kif inhu.  Forsi jaqbel lilhom, u lil min għandu l-kunfidenza u midħla biżżejjed li jorganizza laqgħat  biex jinfluenza d-deċiżjonijiet tagħhom.

 

Dawk li jgħixu bil-paga ma jiggwadanjaw xejn bis-sistema tal-offshore, għax bħal ma nafu l-introjtu tagħhom jitnaqqaslu t-taxxa tad-dħul qabel lanqas biss ma jkunu rċevew iċ-ċekk.  Jiggwadanjaw dawk l-individwi u istituzzjonijiet kummerċjali li t-taxxa fuq l-introjtu tagħhom tiddependi biss fuq dak li jiddikjaraw fil-karta tat-taxxa tagħhom darba fis-sena, u li jagħżlu li jirristrutturaw il-finanzi tagħhom biex il-ġid tagħhom jiġi maħżun 'il bogħod minn fejn issir l-attività ekonomika.  Għal min hu bil-paga, din il-ħaġa lanqas tista' ssir.

 

Tbissimt naqra ftit id-dibattitu li sar Malta fuq dan is-suġġett riċentement, wara li ġie żvelat li xi membri tal-gvern issemmew fid-dokumenti li ħarġu minn Panama.  Sar diskors fuq l-immoralità u n-nuqqas ta' għaqal tal-aġir tagħhom, imma għalija il-punt huwa ieħor.  Ma jidher li hemm xejn illegali f'dak li għamlu.  Jekk l-aġir tagħhom huwa tant repreħensibbli, għalfejn m'hemmx liġi kontrih?

 

M'hemm xejn iżomm lill-membri tal-parlament ta' kwalunkwe pajjiż milli jgħaddu liġijiet fl-interess tal-pajjiż, kif suppost li qed jagħmlu.  M'hemm xejn li jżomm lill-gvernijiet milli jaħdmu flimkien biex isibu soluzzjoni globali, li tirrifletti n-natura globali tal-problema.  M'hemm xejn li jżomm lil opposizzjoni milli twarrab il-partiġġjaniżmu u tappoġġja riforma proposta tal-gvern f'dan il-qasam.  Għalfejn s'issa dan ma sarx?

 

Hemm sinjali li din il-kooperazzjoni bdiet ssir.  Per eżempju, fl-aħħar laqgħat tal-Grupp tal-għoxrin pajjiż l-iktar żviluppati, il-G20, kien prominenti proġett imsejjaħ BEPS li jfittex li jżomm lil kumpanniji multinazzjonali milli jkunu jistgħu artifiċjalment jnaqqsu l-profitti f'pajjiż wieħed biex jittrasferuhom f'ieħor.  Fl-Awstralja wkoll din il-ġimgħa l-gvern ħabbar żieda sostanzjali fir-riżorsi tad-dipartiment tat-taxxa biex isegwu dan is-suġġett.  Jien niskanta kif il-gvernijiet ta' madwar id-dinja, li tilfu u qiegħdin jitilfu tant introjtu, ħallew din is-sitwazzjoni sseħħ għal tant tul ta' żmien.

 

Spiss nikteb li ninsab disilluż minn dawk li jirrappreżentawna fil-parlamenti ta' fejn noqogħdu.  Lil min verament qiegħdin jirrappreżentaw?  Għalfejn hemm liġi għal min hu għani u b'saħħtu, u liġi oħra għall-bqija?

 

Għandna bżonn nagħmlu għażliet bl-għaqal fl-elezzjonijiet!

 

 

 

 

 

 

1https://panamapapers.icij.org/blog/20160403-key-findings.html, retrieved 2/5/2016

2https://www.imf.org/external/np/mae/oshore/2000/eng/back.htm#II, retrieved 2/5/2016

3http://www.lowtax.net/information/malta/malta-offshore-business-sectors.html, retrieved 2/5/2016

4MFSA Annual Report 2014, p20

5https://theintercept.com/2016/04/05/heres-the-price-countries-pay-for-tax-evasion-exposed-in-panama-papers/, retrieved 2/5/2016

6http://www.theguardian.com/news/2016/apr/05/justice-department-panama-papers-mossack-fonseca-us-investigation, retrieved 2/5/2016

1https://panamapapers.icij.org/blog/20160403-key-findings.html, retrieved 2/5/2016

2https://www.imf.org/external/np/mae/oshore/2000/eng/back.htm#II, retrieved 2/5/2016

3http://www.lowtax.net/information/malta/malta-offshore-business-sectors.html, retrieved 2/5/2016

4MFSA Annual Report 2014, p20

5https://theintercept.com/2016/04/05/heres-the-price-countries-pay-for-tax-evasion-exposed-in-panama-papers/, retrieved 2/5/2016

6http://www.theguardian.com/news/2016/apr/05/justice-department-panama-papers-mossack-fonseca-us-investigation, retrieved 2/5/2016