The Paradise Papers is a leak of 13.4m files. Some of the documents are about how powerful and very wealthy people (including the Queen’s private estate) secretly invested large amounts of money in offshore tax havens.
What is offshore finance?
How is the Queen involved?
The Paradise Papers show that the £10m of the Queen’s private money has been invested into an offshore tax haven. It was shown that the Duchy of Lancaster (which provides the Queen with a private income) holds funds in the Cayman Islands and Bermuda. Although nothing about these investments is unlawful and there is no evidence of the Queen avoiding tax, people may still wonder what the reason behind this is and if the Queen should be doing this.
Is there a connection to Russia?
Wilbur Ross (Donald Trump’s Commerce Secretary) was revealed to have invested money into a shipping company which is partnered with a Russian company. The shipping company earns millions of dollars a year from transporting oil and gas to a Russian energy company whose shareholders include Vladimir Putin’s son-in-law.
This causes suspicion due to the Trump-Russia inquiry. Some people theorise that the Russians rigged last year’s US election causing Trump to win, but Trump has claimed these allegations to be ‘fake news’.
Why is this significant to us?
We should care about this because of the amount of money at stake – the Boston Consulting Group says $10tn dollars is held offshore (although this may be a low estimate). People who don’t like this believe that it’s mostly about secrecy - which means there is probably more wrongdoing out there - and inequality. Many think offshore finance shouldn’t be a secret and that there needs to be more transparency.
People who invest into offshore tax havens might be doing it to avoid taxes, but tax money is important to help the country doing things such as paying salaries of government workers (such as teachers and doctors), as well as help common resources such as police and firefighters. Taxes also fund public libraries and parks.