How do we make sure the Panama Papers lead to lasting reforms on tax evasion?

April 7, 2016

     By Duncan Green     

Scandals like the Panama Papers are a massive potential driver of policy change. In normal times, the sources of Panama Papersinertia are great and politicians wishing to make change happen face an array of vested interests and fixed ideas telling them what they want is either insane or impossible. It takes a scandal to shake things up, delegitimize the status quo, and persuade decision makers that they really need new answers.

But the political and media spotlight will move on. Some crises leave a legacy of change, in others, the waters merely close over the wreckage and life and politics go on as normal. So my exam question for you, dear readers, is ‘how can campaigning organizations ensure that in a couple of years’ time we will look back and be able to say that the current scandal triggered serious reform of tax havens?’

In the case of Oxfam, the timing couldn’t have been better: we launched a campaign on the evils of tax havens at the Davos meeting this year. We showed how they deprive poor countries of $170bn a year, exacerbate inequality etc. Our messages were perfect for this week’s hullabaloo: David Cameron needs to step up at next month’s anti-corruption summit, and do something about the role of Britain’s own Overseas Territories and Crown Dependencies – places like the British Virgin Islands that have featured prominently in the Mossack Fonseca paper trail.

Mossack FonsecaWe got in early once the story broke, with an initial reaction on Sunday night followed up by a press release setting out ‘5 steps for Prime Minister to put UK’s house in order before tax and corruption summit’. That ensured we got our share of media coverage and were able to stress Britain’s role both in the problem and potential solution. That’s important because the danger is that the summit will present corruption as purely a developing country problem – that will be a lot harder now.

Fine, but what else? Apart from enjoying the adrenalin of the moment, what (if anything) can we do to strengthen the long term impact of the current scandal? I’d love to hear people’s thoughts on this. A couple of suggestions from me:

  • Voices of the Global South. We need to establish the idea that tax havens are a development issue – much as we worked for years to reframe climate change as being about people as well as polar bears. The $170bn number is useful, and much quoted, but it would help to have some real people saying the same thing. I’m not sure it’s credible to find someone to say ‘my kids can’t go to school because of tax havens’, but at least get some developing country finance ministers up there saying the same thing on a national level.
  • Those voices also need to be at the table on any negotiations, to ensure developing country interests are represented in any big overhaul of the system. Let’s hope we hear more on that at the IMF/World Bank Spring Meetings next week.
  • Commitments that provide real levers for future advocacy. Politicians saying ‘we must do something’ can all too easily turn into not very much. A commitment to change the law, the acceptance of a principle (e.g. ‘OTs and CDs should be subject to the same laws as the rest of us’) even to start a review process, is preferable.
  • New sources of money: The Robin Hood Tax could prove to be one of the big legacies of the 2008 crisis – 10 EU countries are currently introducing it (though not the UK, sadly), with potential big wins for climate change and aid funding. The fines on BP after Deepwater Horizon paved the way for some important change in the US Gulf states. What’s the equivalent here? Some kind of withholding tax, with a portion allocated to developing countries?
  • New Players: The Robin Hood Tax campaign pulled in unusual suspects such as faith organizations (the Salvation Army) and mainstream civil society players like the Women’s Institute. Widening the coalition around tax haven reform could have a lasting impact. Floods helped get insurance companies much more vocal on the economic risks of climate change – are any private sector allies coming out of the woodwork over Panama?.

Any other suggestions?

And in case you were on some other planet this week, here’s the two minute animated explanation of what this is all about

[And thanks to Nick Bryer, Luke Gibson, Oli Pearce, Max Lawson and Jon Slater for their suggestions]