Editorial: Tax Evasion Is Stealing

The ”Panama Papers” have unveiled a spider’s web of financial dealings involving hundreds of thousands of corporations whose main goal is to hide the names of their owners and the origin of their funds. These are the companies in charge of moving the fortunes of wealthy entrepreneurs, celebrities, elected world leaders, dictators, tax evaders and corrupt people.

The creation of shell companies in tax havens – countries or regions that have set lax financial laws to attract wealth – is not illegal in itself. Panamanian law firm Mossack Fonseca, from where more than 11 million documents were leaked, merely created these companies, barely consisting of a certificate of incorporation and a postal address. The problem is the purpose for which these corporations were used.

In some cases, the goal was to evade taxes. Individuals and companies hide money there in order to keep those funds away from the treasury of the countries where they would be taxed. In other occasions, the purpose is to conceal dirty money belonging to politicians and their surroundings, whether China, Iceland or Russia. Sometimes, the sole possession of this type of company raises suspicion, as in the case of Argentina’s President Mauricio Macri and his circle, who reached power by promising transparency and a commitment to fight corruption.

The banking industry plays a crucial role in these operations. The International Consortium of Investigative Journalists analyzing the leaked documents has found the names of over 500 banks, subsidiaries and offices who registered more than 15,600 shell companies through Mossack Fonseca. Banks such as HSBC and Credit Suisse are just two of the institutions fined in the past for contributing to launder money for drug lords and for helping clients evade taxes, respectively.

Tax evasion is tantamount to theft. The economies and budgets of many countries and the quality of life of millions of people would be in better condition if everyone paid their taxes. The same would happen if this money returned to its country of origin.

This is just the beginning in the unveiling of the secrets of these companies and their owners. The hope is that publishing their names will take away these individuals’ sense of invulnerability and that countries like the U.S. – whose weak tax laws promote evasion – will adjust their legal resources and punish them.