Politics

You say tax haven, I say corruption port. Welcome to New Zealand

Opinion: NZ’s ranking as one of the least corrupt countries in the world counts for nothing if our good reputation is used to aid corruption elsewhere, writes Amnesty International’s Grant Bayldon

My daughter returned home with from seeing Romeo and Juliet at Auckland Pop-up Globe the other night quoting one of Shakespeare’s famous lines: “What’s in a name? That which we call a rose by any other name would smell as sweet.”

Well, she would, her name is Rose. But it got me thinking about esoteric language and whether or not the words we use for things change their reality – which, in the way these things do, got me on to tax havens.

I like to savour words and the connotations they conjure up. There’s a certain glamour about the term “tax haven”. Think tropical islands populated by bankers, accountants and lawyers who are more discreet, attentive and better dressed than your own.

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But there’s a clever piece of misnaming going on here. A haven is a safe harbour, a protection from the storm, or in this case protection from your own country’s tax department. That’s what most of the media coverage of the Panama Papers has been about: celebrities, leaders and the rich finding ways to avoid their tax obligations.

But scratch away a bit and it’s easy to see that what tax havens are really about is only partly to do with tax, and the rest of it is even more sinister. Because at their heart tax havens are about the secrecy and deception that fuels much of the misery in the world.

The tax dodging aspect of “tax havens” has been pretty well canvassed over the last couple of weeks. I don’t mean to minimise this; it has a massive impact on the ability of governments around the world to provide services.

In fact, Oxfam estimates that the money lost to tax havens in Africa alone could be enough to save the lives of a staggering four million children. It could prevent a million stillbirths. And it could employ enough extra teachers to educate every child in Africa. The flows of money out of Africa and into tax havens eclipse all the combined aid flows into the continent. This breaches the basic human rights obligation of governments to use the maximum of their available resources to provide for the basic rights of their people. On this scale, tax abuse is human rights abuse.

But in case that’s not appalling enough, there are two other, possibly bigger reasons that tax havens really exist, and they’re talked about much less.

Firstly, tax havens are a place to hide and launder ill-gotten gains. Let’s say you’re the minister of energy of a country with lax financial controls. You are in charge of running a tender for multinational companies to build a new power station. Want to make ten or twenty million on top of your salary? Easy – simply set up a trust account in a tax haven and let the bidders know that the winner will be required to make a large gratuity into your trust account, which of course they will quietly add to the tender price that your country must pay. This scale of corruption can only exist with the sort of secrecy that tax havens offer.

And secondly, they are a way to funnel money into activities that their funders want to keep in the darkness – activities that are behind serious human rights violations. This time let’s say you’re an arms dealer with few scruples. Want to sell weapons into a war zone with widespread atrocities and an official arms embargo on? Simply use your tax haven trust account to buy and sell the weapons and your financial tracks are covered.

It’s only if we look at tax havens through these lenses that we see the true impact that they have. We need to remember that it’s the people of developing countries who suffer the most because of the lack of services, wholesale corruption and ceaseless conflicts which tax havens not just make possible but fuel. Wherever suffering and misery are at their worst, the stench of so called “tax havens” will probably be in the air.

Clearly, even in the wake of the massive Panama papers leak, this is a problem that is even bigger than the news coverage it’s getting. So it’s good that the New Zealand government is reviewing its own role.

But take a look at the terms of reference for the review and you’ll see that much of it revolves around avoiding damage to New Zealand’s reputation.

This is where we as a country need to look at the bigger picture, because there are more fundamental things at stake here than our reputation. The question we really need to answer is this: are we even a small part of the mirror maze of international deception that protects a kleptocracy, fuels wars and denies millions of people life-saving services?

We simply can’t have it both ways. We don’t get to pride ourselves as a country for being a good international citizen, taking part in peacekeeping and international aid, if we are contributing to the system that makes these things necessary. And really, our consistent spot right near the top of the least corrupt countries in the world index counts for nothing if we use the good reputation that this brings to contribute to the corruption of other countries.

So what is a tax haven by any other name? I reckon they would smell even less sweet if we called them what they really are. Let’s start calling them corruption ports.

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