Paradise Papers: Confirmation that taxes are for the little people

“It’s the rich wot get the pleasure, it’s the poor wot get the pain,” goes the old saying.

And over the past number of days we have been learning the truth about how very rich people use very clever accountancy firms and lawyers to avoid paying taxes at the rates we poor mortals have to pay.

The vast database of files (over 13 million in all) leaked from company registries and tax and legal advisers in offshore tax havens has disclosed astonishing details of how the world’s richest people use trusts, companies and banks in offshore locations to secrete billions of euro.

Our legal affairs correspondent, Colm Keena, has been trawling the database (it’s not systematic) to unearth some extraordinary and telling disclosures.

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These include the way in which big corporations such as Apple have used Irish tax arrangements to reduce tax liabilities to somewhere hovering not too far north of zero.

There have also been revelations of how Irish-based individuals - such as a number of actors on the comedy show Mrs Brown’s Boys, and Kerry entrepreneur Jerry Kennelly - have used clever schemes to reduce tax liabilities.

Such practices, while perfectly legal, give a sense of huge frustration to ordinary taxpayers who are hammered by Revenue if they don’t pay their full dues.

The latest instalment from Keena today concerns the businessman Denis O’Brien and politician Michael Lowry. He discloses that the Criminal Asset Bureau sought files in 2015 on transactions with an AIB branch in the Isle of Man.

The AIB account in the Isle of Man was used in the making of eight payments totalling 407,000 by O’Brien to a number of individuals two months after the State’s second mobile phone licence was awarded to O’Brien’s Esat Digifone in May 1996.

The account held money belonging to Mr O’Brien but was, at his request, set up by his then financial adviser, Aidan Phelan, in Mr Phelan’s name.

The Independent Tipperary TD said the money was a loan from the late businessman David Austen, while Mr O’Brien said the money was paid by him to Mr Austin for a house in Spain.

The Moriarty tribunal concluded the payment was in connection to the awarding of the second mobile phone licence fee, which was decided at the time Mr Lowry was minister.

The standard response of the Government to offshore tax havens has been to more or less say the response needs to be international. But it’s clear that our tax laws here facilitate these kinds of manoeuvres, even after the closing down of the “double Irish” tax provision.

The recent Coffey Report disclosed that many big corporates were paying tax at low single digit rate, well below the headline 12.5 rate.

Arranging a two-hour stopover for a new plane in the Isle of Man to avoid a potential VAT liability is another demonstration of the truism that taxes are for the little people.

Read the full report here.