HK Observer | Panama plague. Who’s losing?

Robert Carroll

The Panama papers, a la Wikileaks and Snowden bombshells, are not only embarrassing the powerful the world over but highlight the injustice and the rot that dirty money brings. It also seems to have provoked yet another major attack on press freedom here – Ming Pao anybody? Another editor disposed of.
The rich cleverly avoid income tax while the middle class, and better-off poor, bear the brunt and pay hidden taxes that black money-fuelled inflated property prices bring. The major benefactors of the latter being, of course, the property speculators who pay no income tax.
Ming Pao the influential local newspaper has lost another professional and courageous editor. This time thankfully not to extreme violence; tellingly, soon after publishing an in-depth exposition of the Panama investigation, led by the now sidelined editor. If there’s anyone out there who believes there isn’t a connection between the firing and the reports which implicated the very rich here and over the border, let’s raise our hats to you as an example of flabbergastingly impressive optimism; namely belief in the good will of the newspaper’s management. The newspaper’s journalists and staff beg to disagree and they have made their feelings felt and made sure society at large is aware of the issue.
That tax avoidance is legal and yet evasion is illegal is not under question. If avoidance were an option for the man in the street wondering how he can pay for a roof over his head and how he can to give his kids a reasonable start in life – if he can afford any – then perhaps we could be more charitable to the beneficiaries. But it’s not the case, neither here nor in economically mature democratic societies.
I am not going to be ‘holier that thou’ on this but consider the other side, beyond income tax; the fall out in societies welcoming money of dubious origin. Take Hong Kong and London for example. Since one spawned the other in terms of its modern incarnation there are many significant similarities. Yes, of course, the territory has been Chinese for many centuries – I’m not flying colonial flags here – but it was only a rural back-water. I’m talking about comparing what dirty money does to major cities.
First of all there’s no doubt that money begets money and who in the financial sector, except managers of ethical funds and those who have a squeaky clean images to burnish, want to limit offshore options – and thereby their own sources of revenue? The turning of heads and ignoring of societal issues in that world is usually not just justified by profit but lauded. But look at what deluges of money desperate for legitimization, and, equally to avoid prying eyes at home, does to communities; unaffordable housing and the breakdown of local community life.
Back to London and Hong Kong. Why is it tolerable that hundreds of thousand of empty flats bought with black money lie empty when so many cannot afford city housing; forced into rabbit-hole rooms or exiled to distant suburbs?
Is it not because the bankers and property developers in bed with government are keeping it that way, all in the name of ‘free markets’?
One of London’s major strengths used to be its vibrant local neighborhoods that spawned not just local business catering to the local community but a creative industry force renowned the world over; that became core industries. All that is under threat as London continues to welcome Russian, Chinese and Middle Eastern “investment” in property with no questions asked. Isn’t there a similar story here?
The Panama plague.