The United Kingdom Moving Forward

“ … this [tax avoidance] is hugely unfair to the millions of hard-working people in Britain who pay their taxes” (Freytas-Tamura, 2016) : P.M. David Cameron’s Involvement with the Panama Papers & The United Kingdom Moving Forward Allison Brown Introduction to Global Studies Dr. Björkenwall 15 May 2020 From Central America to mainland Europe, the Panama Papers scandal in 2016 affected heads of states, celebrities, and average people across the globe. The largest leak in “ … the history of journalism” (Porter/Karsten, 2018, pg.2). The scandal forever changed the way tax avoidance and offshore companies are policed in different societies. This change was evident in the United Kingdom with heads of state and multiple individuals from high society being caught in the scandal, changing how government officials in the U.K. respond to financial policy. In this essay, I will show how Prime Minister David Cameron's public record and policies towards tax avoidance and offshore companies changed after his involvement in the scandal and how the United Kingdom moved forward after the Panama Papers. “Frankly, I don’t have anything to hide …” (Freytas-Tamura, 2016, par.4) were some of the first words Cameron spoke in a press interview admitting to involvement with the Panama Papers in April 2016. After weeks of dodging the press and refuting claims of involvement (Worthy, 2016, pg.14), Cameron came forward to address the nation and offer an explanation prefacing with; “I’ve never hidden the fact that I’m a very lucky person. I had wealthy parents who gave me a great upbringing … I’ve never tried to be anything that I’m not” (Freytas- Tamura, 2016, par.8). Cameron would explain that his late father, Ian Cameron, had stored £30,000 ($42,160 USD) in the off-shore account company “Blairmore” , named after a family estate (Worthy, 2016, pg.14). In 2010, after his father’s passing, Cameron sold the shares of the off-shore account before filling the role of Prime Minister later in May of that same year. Following further probes from the press, government, and even public requests to step down from the office, Cameron insisted that the funds his late father kept were subject to taxation “There are many other unit trusts like it … it is being unfairly described and my father’s name unfairly written about” (Freytas-Tamura, 2016, par.6), insisting that the shell company was not tax-avoiding and legally compliant. Further evidence and 1 investigation would reveal that “Blairmore” under Ian Cameron committed tax avoidance with a shell company in the Bahamas. However, perhaps his saving grace in the eyes of the press and public, before becoming Prime Minister, Cameron paid income tax on the dividends which he received from Blairmore during his period of ownership, but there was no capital gains tax payable as the gain fell within the annual exempt amount of £10,100 in the 2009-2010 tax year (Nicholas, 2018, pg.34). Cameron paid what little taxes he was legally held viable for in inheriting the funds, but still made a substantial profit from the illegal shell company with no moves to rectify his financial gain. Moving forward politically, Cameron’s tone and policy regarding finances in the U.K. after the Panama Papers leak would change drastically. Before Cameron’s involvement with off-shore companies was revealed, he was vehemently opposed to tax avoidance while he held an office in parliament (2001-2016) and on the campaign trail for Prime Minister (Ashcroft/Oakeshott, 2017, pg.189). Cameron’s statements were bold; A year before entering the race for P.M., facing pressure from the Labour Party and conservatives wary of European Union tax avoidance legislation, Cameron stated the following regarding tax avoiders; “I think we should be very clear — tax evasion is illegal, and for that, you can be prosecuted, you can go to prison … These very aggressive tax avoidance schemes, they are wrong, and we should really persuade people not to do them” (Freytas-Tamura, 2016, par.16). His supposed “attack” against this illegal financial activity went no further than his bold statements, and over his initial years as P.M. Cameron would push for policy changes that made tax avoidance easier for Britains such as abolishing a tax loophole for in-country residents that allowed thousands of wealthy families who reside in Britain to hold their finances overseas without paying taxes on their income (Steel, 2016, pg.8). Throughout his campaign and initial years in the office of Prime Minister, Cameron continued 2 to push financial law changes to shield and allow tax avoidance and the formation of shell companies to continue for Britains abroad. In Cameron’s three months that he would remain in office after the Panama Papers, he responded to the scandal with little to no interest politically and made no official moves, unlike many other heads of state in Europe at the time, to address off-shore British companies. Cameron would resign from the office of P.M. in July only months later fundamentally disagreeing with the U.K.’s vote to leave the European Union and making way for a new Prime Minister to move forward with what would come to be known as “Brexit” (Sampson, 2017, pg.9). Cameron would leave the office and no further questions regarding his or his family’s involvement with the Panama Papers would be asked as he left public life. Moving forward, the United Kingdom under Theresa May’s leadership as P.M. would again make no major changes to policies for offshore companies, her own involvement in the scandal was even noted with her husband being named in the leak and having “ … serious questions to answer” (Bowers, 2018, par.8) regarding his involvement. Following this additional leak, aggressive dialogues between the Labour Party and May would ensue, but ultimately no major changes would occur due to the looming E.U. referendum and arguably a lack of care regarding wealthy Britons committing tax avoidance. The United Kingdom and P.M.’s David Cameron’s encounter with the Panama Papers scandal is crucial to examine because of his actions in a high office of power. Cameron not only allowed the illegal financial activity to occur but actively made it easier during his time in the office of P.M. and May who followed would do little to nothing to remove corruption. This ignorance of tax avoidance and shell companies is problematic because their actions allow for further illegal activity and tax avoiders to not only survive, but thrive. 3 In conclusion, through examining P.M. David Cameron’s involvement with the Panama Papers and his public record on issues of financial policy, Cameron’s public record towards tax avoidance and offshore companies changed following his own involvement. Following his time in office, P.M. Theresa May would also be involved with the scandal and make no substantial changes to prevent this laundering moving forward in the United Kingdom. This “acquittal” of sorts for members of high society in the U.K. has only enabled their avoidance and financial misgivings since (Sampson, 2017, pg.22) and again, no substantial moves from the government to address both the Panama Papers and Paradise Papers leaks. In order for tax avoidance, shell companies, and groups such as Mossack-Fonseca to dissipate in the modern world, governments globally must make substantial changes to financial law and penalize those found to have been involved and benefited from illegal activity, not grant them a high public office. Until this cycle of corruption and avoidance is broken by substantial international action, it will flourish and only worsen the world’s economic state. Word Count: 1,205 4 Bibliography Ashcroft, Michael A., and Isabel Oakeshott. “Call Me Dave: the Biography of David Cameron.” Published text. Leyland, Preston, England: HMP, 2017. Bowers, Simon. “UK Backs Panama Papers Crackdown on 'Dirty Money' Havens.” ICIJ. International Consortium of Investigative Journalists, May 2, 2018. https://www.icij.org/investigations/panama-papers/uk-backs-panama-papers-crackdown-dirty-m ney-havens/. Freytas-Tamura, Kimiko. 2016. “David Cameron of Britain on Tax Avoidance” The New York Times, https://www.nytimes.com/2016/04/09/world/europe/panama-papers-prime-minister-davi -cameron-of-britain-on-tax-avoidance.html. Porter, Tony, and Karsten, Ronit. 2018. “Whistleblowing as a new regulatory instrument in global governance: The case of tax evasion” Cambridge Review of International Affairs 3: 537-560, DOI: 10.1080/09557571.2018.1546278 Sampson, Thomas. 2017. "Brexit: The Economics of International Disintegration." Journal of Economic Perspectives, 31 (4): 163-84. DOI: 10.1257/jep.31.4.163 Steel, Mark. Britain: When it comes to tax, it is obvious Corbyn is the villain and Cameron the victim Green Left Weekly, No. 1092, Apr 2016: 15. Availability: https://search.informit.com.au/documentSummary;dn=025954173188269;res=IELIAC> ISSN: 1036-126X. 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