Recent Panama paper leaks by investigative journalists have exposed an open secret that elites across the board use tax haven to stash their income abroad.The source of income,purpose and method of parking money can be legal or illegal(money laundering,tax evasion etc) but most often it is illegal.
Given the string of high-profile corruption cases that we have witnessed since last 5-6 years,Panama leaks haven’t attracted much attention.There are various others reasons as to why it hasn’t got the attention that it deserved.But the more pertinent question is what we can learn from this incident.No doubt similar things will happen again,no matter how hard we try.But this doesn’t mean we should stop trying.
So the first thing that we should learn is that we should stop taking symbolic action against corruption and related issues and have a political will to tackle this menace.This can be done with simple yet efficient tax administration and give more teeth to regulatory and investigative bodies.This means we need empowered IT department,Enforcement Directorate,SEBI,RBI and so on.To check hawala transactions,strict action should be taken against banks promoting such transactions,besides erring individuals.
Further, onthe global scale,we need to collaborate more on automatic data sharing with other nations,put pressure on tax havens to make their financial institutions more transparent and remove stringent confidentiality provisions in their laws relating to financial matters.
Quite evidently,financial matters in the globalized world has become very complicated and require multi-pronged strategy.For a poor country like India, money laundering is not just a financial issue rather an existential question.This is because inequality breeds discontent and discontent may lead to extremism.In a nutshell,status-quo is not an option for us.