Simon Franks: The battle for tax justice is like bringing law and order to the Wild West – but it is vital we deliver victory

When Caroline Flint’s amendment to the Finance Bill was accepted by the Government last week, she scored a victory for international corporate tax transparency that we should celebrate. But not for too long.

Flint’s hard work on behalf all of us in the fight for corporate tax transparency is admirable – but, in truth, I am sure even she would admit it is only tinkering at the edges.

We desperately need a global, integrated solution to tax avoidance and illicit financial flows that goes to the heart of the problem, enforces transparency, changes the rules globally, co-ordinates the policing of the rules and sends individuals and executives who break them to jail. We must also  imprison those who promote and advise on the avoidance schemes in the quest for exorbitant fees. The ramifications of letting the existing non-system continue will be more social unrest, entrenched inequality, larger public deficits and, ultimately, perpetual cuts in public services with an increasing tax burden placed on those in employment.

I do not overstate the point. When it comes to corporate transparency we still live in a situation of almost complete lawlessness,  a metaphorical Wild West. Global tax avoidance is a case of multinational companies pulling the wool over the eyes of both developing and developed countries through nefarious schemes, aided in some cases by corrupt politicians. This not only pits rich states against poor states but, more outrageously, positions the world’s most powerful against everyone else.

If anyone still needs to be convinced of this, I suggest they take a look again at the Panama Papers. These papers provided proof, if any was needed,  of what those fighting for tax justice have been saying: that tax avoidance is colossal and that an enormous ecosystem of blood sucking, leech-like advisors, banks, nominees and trust companies exist only to manipulate and extort from ordinary taxpayers.

Surely the Panama Papers will have convinced everyone not on the take from this morally bankrupt system as to just how flawed the international tax structure is. They give ample evidence of how so many powerful vested interests are deeply implicated in the creation and maintenance of this system.

The lack of a robust, cohesive, co-ordinated, international tax system illuminates what is essentially a lawless, global state of affairs. Despite the vast number of multilateral task forces set up by international bodies such as the OECD, G20, UN, IMF, World Bank, etc. to fix the current situation, nothing really has changed. As usual, mixed messages from leaders, competing national agendas and the power of corporate lobbies have led to impasses, or rules that are easy to circumvent. There is little co-ordination where there needs to be absolute cooperation.

This won’t do. The scale of the problem is enormous. Current estimates suggest that developing nations alone lost circa $1 trillion to illicit flows over recent years. In the developed world an archipelago of tax havens ensures that equally large sums of money are shielded or hidden from tax authorities.

Moreover,  the lack of transparency means that these authorities have little opportunity to track such flows. Add to this the current global corporate tax rules and treaties that seem to have been constructed in a way that allows many companies ample avenues to avoid paying tax without technically breaking the law. Not that the law is always clear. There are a staggering 21,000 pages of UK tax rules, which creates huge complexity. Complexity which is navigated by an HMRC that is under extraordinary influence from large companies and their advisors. Perhaps there is no clearer indication of the insidious extent of this influence than the tax reform consultation process, which has been utterly captured by big business. So much for inclusive and democratic process.

Thanks largely to the admirable efforts of groups like Tax Justice Network, Tax Fabian Society and Oxfam, the public is starting to wake up to the enormous double standards inherent in the way we collect taxes. In questioning the rules and tax treaties, they have created a pressure for government action.

The recent landmark ruling against Apple’s egregious attempts to circumvent and pervert tax justice is, one hopes, just the start of the fight back on the part of the tax authorities. As someone who ran several businesses, I understand the complexity they face. I hope tax authorities around the world will be given the resources they need to recruit the brightest and the best. They will need to be if we are to keep up with these corrupt avoidance schemes.

Caroline Flint is not alone. Labour politicians have been at the forefront of this fight. Tom Watson is currently leading the way in working to stop the Government following through on its incredible decision to let Companies House delete more than 2.5m public records on UK companies – a move that makes a mockery of the Tory pledge to tackle corporate irresponsibility and fight corruption and tax avoidance. And Meg Hillier is fighting the Government on its cuts to HMRC resources. This leads to the question of where on earth the Tories are in this fight? They have certainly talked the talk. Perhaps, ultimately, their corporate backers prevent them from really dealing with the issues that need tackling.

The fight for transparency is the first big campaign in the war for tax justice. In getting her amendment into the Finance Bill, Caroline Flint has proved she is worthy of the battlefield. Sadly, there are bigger battles ahead, battles in which vested interests will muster all strength to prevail.