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9 November 2017

Bono’s Maltese investments are a reminder that tax avoidance has been normalised

Charity begins with paying tax. 

By Jon Trickett

My constituency runs an open office, where anyone can come in for help with the problems they face. Universal Credit, Personal Independence Payments and other delayed benefits are a constant worry for people in my area.

Yet my constituents, some of whom can’t even afford food for themselves, give to food banks, donate money to charity and often give each other a helping hand when times are tough. This exemplifies the ethos of solidarity and mutual support that we saw in the miners’ strike. But poor people shouldn’t have to rely on other poor people. That is why the revelations in the Paradise Papers struck such a chord with me.

I’ll admit it, I was at first a little confused when it was reported that U2 singer Bono used a “Malta-based firm to invest in Lithuanian shopping centre”. None of it makes much sense until you realise that Malta has extremely low taxes, and for foreign investors, the tax paid on profits is just 5 per cent. (Bono said in a statement that he was distressed by the revelation and had been told the shopping centre was “fully tax compliant”) .

I do not need to point out the irony of a self-proclaimed philanthropist using a company based in Malta to invest in Lithuania, when there is need for investment in homes, healthcare and education in Irelan­d. Yet this goes beyond any one individual. 

For the Paradise Papers remind us that tax avoidance is not only endemic, but that it is normalised and insitutionalised. It’s less about this or that person, but rather it being seen as entirely acceptable by a whole class of people to take advantage of international loopholes and specialist accounting firms to get around paying their fair share. It’s also about a system that here in the UK has been protected by the Tories for the benefit of the rich at the expense of everyone else.

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It’s one rule for the few and another for the many.

In my constituency and across the country, many individuals and business are struggling to get by and the smallest amount makes the biggest difference. Yet when it comes to paying taxes, there is an overwhelming acceptance, and even pride, that they are helping to create the conditions for society to prosper, from which we all benefit.

But it’s revelations like those in the Paradise Papers that start to undermine this vital sense of social responsibility. It becomes understandable that some people start to question why they have to pay their taxes while others more able to find ways not to. As well as depriving the country of billions, tax avoidance eats away at the very fabric of our society. It’s corrosive.

Core British values such as “fair play” have been perpetually undermined by a class of people who think that they are above the law. Over the years this has led to a deep sense of disenchantment in a number of communities, which has expressed itself in different ways, like the vote for Brexit last year.

We know this Tory government won’t act – they are a central part of an establishment that thinks we should continue with business as usual. As well as cutting funding for the department that collects taxes, HM Revenue and Customs, the Tories have taken millions in donations from the likes of arch-tax dodger Lord Ashcroft, who recently hid in a toilet to avoid answering questions on his financial affairs. For all Ashcroft’s efforts, there are some things you can’t flush away.

The British public are sick and tired of hearing how the wealthy and powerful flout rules, and find ways around laws that the rest of us abide by. Tax avoidance may not be illegal, but it is immoral, and has far-reaching consequences. Only a Labour government will clamp down on it. When we do, the stories of investment we’ll be reading about won’t be concerning Lithuanian real estate but massive investment in our public services, in regions long neglected, and in an economy desperately in need of transformation.