To be kept informed about events and site udpates, enter your email address and click on the arrow search
CPGB-ML Blog Hands off China Gallery (Flickr) Videos (YouTube) Radio (Soundcloud) Red Youth Lalkar Shop
Proletarian
Search Proletarian search

>>back to Proletarian index >>view printer-friendly version
Proletarian issue 81 (December 2017)
The Paradise Papers and corporate tax avoidance
As usual, it’s one rule for us and another for them.
The cutely named ‘Paradise Papers’ are a collection of 13.4 million documents from the offshore law firms Asiaciti Trust and Appleby, recently leaked to the Süddeutsche Zeitung, the biggest daily newspaper in Germany.

The documents concern the confidential tax affairs of over a hundred thousand people and companies. Süddeutsche Zeitung is the same newspaper that received the ‘Panama Papers’, 11.5 million leaked documents from Panama-based law firm Mossack Fonseca. (See Panama Papers, Lalkar, May 2016)

What was revealed

Depending on where you are living, the corporate media might have spent some time bleating about how the leaked documents ‘prove’ that Donald Trump is a ‘Russian agent’ (he's not), about which particular celebrity has been avoiding tax (it would seem almost all of them), or perhaps bemoaning the dodgy financial dealings of our very own Queen (the horror).

Among the highlights are:

- That the Queen has millions invested in the Cayman Islands (a British colony and offshore tax haven in the Caribbean), as well having some money invested in Brighthouse, a usurious business charging exorbitant rates of interest to the poorest in rent-to-own agreements for household equipment like washing machines.

- Details of the ‘aggressive’ efforts at tax avoidance by some of the largest companies in the world, such as Nike, Apple and Google.

- That tax havens like the Isle of Man issued billions to the superrich for VAT refunds on their luxury yachts and private jets, which were claimed as being for ‘business purposes’.

- That mining giant Glencore loaned $45m to Israeli billionaire Dan Gertler, notorious for his corrupt and ruthless business practices in the Democratic Republic of the Congo.

The database can be searched through a portal from the International Consortium of Investigative Journalists’ website but to date no raw data has been released.

The lacklustre media response

Apart from the Guardian, the media response to the revelations in the Paradise Papers was decidedly muted, in sharp contrast with the previously leaked Panama Papers in 2015. Newspaper owners like David and Frederick Barclay (the Telegraph), Rupert Murdoch (the Times, the Sun and the Wall Street Journal) and Jonathan Harmsworth (the Mail) have no interest in having their tax affairs and those of their peers exposed to the masses; that is, after all, part of why they use offshore tax havens in the first place!

In a way, this is symptomatic of the jaded news cycle – we’ve heard this all before. Dizzy headlines and editorials came in the wake of the Panama Papers. One writer for Time Magazine even went to far as ludicrously to state that “the Panama Papers could lead to capitalism’s greatest crisis” – as if the only thing preventing such a crisis is that most people just didn’t know that the rich and powerful avoid paying tax. (The Panama Papers could lead to capitalism’s great crisis, Time, 4 April 2016)

However, what revelations like this do is to cement ever firmer in the minds of those who are not part of the monopoly bourgeoisie the fundamental class differences between us and them – they are not like us; they don’t play by the same rules; they are small in number but stack the deck in their favour in a million different ways – and these irreconcilable class differences are what eventually drive the oppressed to revolution for their own survival.

We can see from the papers that it is not just corporations and individuals in the imperialist countries that make use of these tax havens, but also the comprador bourgeoisie in the oppressed nations. They act as fixers between imperialist capitalists and domestic labour and natural resources, and receive a share of imperialism’s profits for their dirty work. These individuals use tax havens to hide ill-gotten wealth, obtained through selling out the wealth of their people to international capitalists. (The offshore connections of Latin American presidents, ministers and business leaders revealed, IJIC website, 21 November 2017)

Tax and imperialism – placing the payment of tax in the global setting

The framing of this tax scandal in the imperialist press has been an exercise in damage limitation. Take for instance a typical example in the New York Times: How corporations and the wealthy avoid taxes (and how to stop them) by Gabriel Zucman, an economics professor. (10 November 2017)

The focus of the article is on how ultra-wealthy capitalists and capitalist corporations avoid paying tax in the imperialist states in which they are based, but how this can be ‘solved through regulation’ (don’t laugh).

First, we need to bear in mind that for all the noise about companies and people paying their tax, the British government and the Crown maintain the biggest network of tax havens in the world: Bermuda, the Cayman Islands, the British Virgin Islands (BVI), Jersey and the other Channel Islands, Gibraltar and the Isle of Man, to name a few. One 2013 study estimated the amount of money hidden away in UK jurisdictions at $32 trillion, and the real number is likely to be much higher. (Britain rules the world of tax havens, Queen is warned, The Guardian, 7 November 2013)

Since then, the British government has regularly indulged in talk about (and vague gestures toward) ‘cleaning up’, purely to divert the mild pressure from other states who want a share of the spoils and to dupe workers at home into thinking they’re doing something different this time. In reality, however, the British state has no interest in cleaning up its network of colonial tax havens. How could it, when the state exists to serve the very class of people who benefit from it?

If ever there were a real story about the bourgeoisie not paying their tax it would be the sorry story of how the British government facilitates the hiding and laundering of profits made through the superexploitation of the oppressed countries through its colonies and dependencies.

Moreover, Zucman’s article makes no mention of where these largely untaxed profits come from. The assumption is that they have been made in the imperialist countries and so it is only right and proper that tax should be paid in these countries.

A Marxist understanding of how imperialism works, however, shows us that multinational corporations – such as Apple, Nike or Amazon, to name a few that are so often in the press – make the majority of their profits from exploiting labour and global wage differentials. Labour creates value, and a great amount of the actual manufacturing work is done by low-paid workers in poor countries – the iPhone, or a pair of trainers, or a t-shirt are all manufactured in sweatshops and factories across southeast Asia, South and Central America and Africa before being exported to the imperialist countries for sale.

These corporations make their money from exploiting low-cost labour in the developing countries. Take Apple, for instance. The majority of the work to produce an iPhone is subcontracted out to Foxconn, a Taiwanese company that bases most of its factories in Guangdong province in southern China. The majority of the value for the company is created by labour overseas – by the workers doing the manufacturing labour, physically producing the commodity that is an iPhone.

Very little value is created in the imperialist countries: advertising, marketing, sales, distribution, ‘management’ and a nebulous ‘design’ – though if anyone has looked at how the iPhone has changed over the past few years they would see that ‘design’ is limited to minor cosmetic changes and building in more potential for rapid obsolescence.

Not only the manual labour of building the phones, but even important and value-adding research and programming work is increasingly being ‘offshored’ by big tech companies to cheaper teams in India, the Philippines or Singapore. (See Apple looking to quadruple software development outsourcing to India by Slash Lane, Apple Insider, 14 February 2012)

If Apple (or any other corporation) is to pay its ‘fair share’ of tax on its profits, it should be paying them to China and India, and any other of the exploited nations whose cheap labour it uses, and where the true value of its products is created, not to imperialist Britain or the United States.

There are many in Britain who want the bosses to hand over a fair ‘fair share’ of companies’ profits; they want their ‘fair share’ of the exploitation of labour. This is the fraction of surplus value that accrues to the state rather than to the capitalist.

Doubtless the 1.23 million workers employed by Foxconn in China assembling Apple iPhones and Dell laptops are little concerned if the surplus value they produce for appropriation by imperialist monopolies is or isn’t taxed ‘properly’ by the great imperialist beasts thousands of miles away.

While we are happy to see the venality and corruption of the imperialist ruling class ever more starkly exposed, it is clear that asking the rich to pay their ‘fair share’ of tax in the imperialist heartlands will not bring us a step closer to tackling the real injustice at the root of the capitalist world, which is so evident to anyone with eyes to see: the massive disparity in wealth and resources between the many and the few.

This disparity stems from the capitalist imperialist system itself: from the exploitation of workers by capitalists; the exploitation of poor countries by rich ones, and the appropriation of the wealth that is created by the many into the hands of a few.

>>back to Proletarian index >>view printer-friendly version