One headline dominated the news this week around the world: the Panama Papers, a leak of four decades of documents from a law firm in Panama revealing financial wrongdoing by the rich and powerful. The papers show potential evidence of wealth hidden namely for tax evasion and money laundering, and implicate many global leaders – one of whom, Iceland's Prime Minister Sigmundur Gunnlaugsson, already stepped down this week as a result.

Great Britain is directly implicated in the scandal, with critics citing the hypocrisy of Tories’ hardline rhetoric on tax avoidance while “soft-pedaling reform” of a global system where wealth is still easily shielded from tax. The revelations show the audacious scale of tax avoidance by the wealthiest through tax havens, and provides a stark example of the way institutional corruption perpetuates wealth inequality in Britain – limiting the government’s tax revenue and depriving the poorest and most vulnerable of necessary public programs as relentless austerity cuts continue.

U.K.-Linked Tax Haven

Britain’s involvement in tax havens, money laundering and other hidden corruption intermittently raises its head. In fact, the U.K. is known as one of the most attractive destinations for dirty money in the world.

In 2015, such suspicions were confirmed when official data revealed that almost 90 percent of more than 40,000 high-value London properties held by foreign companies were incorporated in tax havens, including the British Virgin Islands, which do not require them to disclose information about ownership.

In response to the report by Transparency International, DCI Jon Benton of the Proceeds of Corruption Unit spoke of how the proceeds of money laundering and tax haven corruption are nearly always used to purchase high-end properties. “Properties that are purchased with illicit money, which is often stolen from some of the poorest people in the world, are nearly always layered through offshore structures,” Benton told the Financial Times.

The current housing crisis in London offers the clearest example of how institutional corruption through tax havens is exacerbating already extreme levels of wealth inequality in the country. As the government "turns a blind eye" to wealthy investors embezzling money into London property, ordinary Londoners can no longer afford to rent property, let alone buy it.

Twisting the knife further, the Conservatives have gone to war on social housing and those who rely on social housing tenancies. The government’s social housing reform has caused many to lose their homes in London and elsewhere as housing responsibility is increasingly handed to an elite and wealthy minority. As The Independent [writes]http://www.independent.co.uk/voices/comment/how-the-conservatives-ruined...), the new localism means "the freedom for councils to abandon their social duty to house those in greatest need on the diktats of private developers who, like the Chief Whip, don’t want too many ‘plebs’ mixing with the new urban gentry.”

However, the Panama Papers reveal Britain’s involvement in tax havens and money laundering runs deeper than merely turning a blind eye.

Prime Minister David Cameron’s father, Ian Cameron, is one high-profile name caught up in the revelations. According to the leaked documents, Ian Cameron ran an offshore investment fund that managed to avoid ever paying tax. As the Guardian reported, Cameron’s Blairmore Holdings Inc. company, which was set up in the 1980s, managed tens of millions of pounds for the wealthy – but has never paid tax on U.K. profits.

In recent years, some of the world’s most prominent corporations have been accused of tax avoidance on their British sales, including Google, Starbucks and Amazon. Starbucks had sales of £400 million in Britain in 2012 alone, but paid nothing in corporation tax. Amazon’s situation is shockingly similar: in 2011, it posted U.K. sales of £3.35 billion, but only reported a £1.8 million "tax expense."

The taxes Google has paid in Britain hit headlines recently as the miserly figures paid by the Internet giant created an uproar. For example, in 2011, Google’s U.K. unit paid just £6 million to the Treasury despite a turnover in Britain of £395 million.

The Impacts of Tax Avoidance on the Poorest are Blatant

Determined to slash the deficit, Britain has been forced to operate under a strict austerity regime. With cuts to benefits and key public sectors – including the National Health Service, firefighting services and the police – anger has been boiling on Britain’s streets as the most vulnerable continue to be unfairly penalized.

Now, the confirmation of financial wrongdoing among the world’s wealthiest, and the knock-on effect such vast levels of tax avoidance has on economies, is likely to exacerbate the growing anger of the poor. Global Citizen writes in the wake of the Panama Papers: “As wealthy individuals and companies shield their income in tax havens, schools for poor children may lose resources; food and housing assistance programs may be rolled back; health care may become less reliable; and other developments may occur that entrench poverty.”

The Fallout

The trove of confidential documents leaked from Mossack Fonseca, the Panama-based law firm, not only cast light on the offshore financial arrangements of high profile figures and some of the world’s wealthiest – it has also been cited as the “largest leak of financial data ever." In a sense, however, the information merely confirms what everybody already knew.

As Roger Bullock, quality surveillance engineer at Parsons Brinckerhoff, a multinational engineering and design firm, told Occupy.com: “My first reaction to this story was 'Tell us something we don’t know.' I would have thought that many people would be aware that this sort of thing is going on all the time. It used to be the Channel Islands and the Cayman Islands but now Panama is obviously flavor of the month."

"Measures will now be put in place to plug certain loopholes, but the accountants of the super rich will find other ways and means of helping their clients avoid tax, thereby heaping the burden on the rest of us,” he said.

2ae2c4ed00000578-0-image-a-38_1438132508671_1.jpg

If you like what you read and want to see more original reporting from Occupy.com, donate today!