The Panama Papers have proven to be a significant source of controversy in the European union. Given the relatively worrisome state of the EU economy, it should come as no surprise that members of the general public are outraged when information regarding tax havens, currency exchange, and secret accounts amongst members of the political class is leaked. In response to this anger, representatives from the UK, Germany, France, Italy and Spain have recently announced that they will be launching a collaborative effort to crack down on the growth of secretive financial dealings amongst affluent business leaders and politicians. This five-nation coalition has initiated a new data sharing initiative which, it is hoped, will ensure that business owners are held accountable for the appropriate amount of taxes they should be required to pay by law.
The implications of this collaboration are quite significant. Most importantly, it sets a new precedent by which these five nations are hoping to encourage the remaining members of the G20 to adopt similar disclosure methods. As a point of reference, it is important to note that G20 members such as the United States, Saudi Arabia and China do not currently allow for the disclosure of citizens’s tax information. This has made accountability a particularly elusive measure, and has helped to stoke tensions between nations seeking to increase their tax revenue by cracking down on corruption and illicit dealings.
In a statement regarding the induction of these new policies, British Chancellor George Osborne proclaimed, “Today we deal another hammer blow against those who hide their illegal tax evasion in the dark corners of the financial system…Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefitting from corruption.”
Although the UK and its four partner nations are, obviously, taking these measures quite seriously, many experts remain skeptical that these measures will produce long-lasting, substantial reform in either tax or currency exchange issues. International coalitions operate at peak efficiency when a large number of partner nations agree to collaborate. At the moment, the reach of these new policies remains quite narrow. With that in mind, tax evasion will likely continue to remain a serious problems for the foreseeable future. It is the hope of Osborne and others, however, that these new policies will provide a symbolic and tangible victory for government regulators.