Focus on tax cheats as anger grows

Western leaders pledged to crack down on tax dodges by the rich and powerful Wednesday amid a mushrooming scandal provoked by revelations of a web of Panama-based offshore financial dealings.

A day after Iceland’s M stepped down after being named in a massive leak of 11.5 million confidential documents — the so-called Panama Papers — international attention turned to tax cheats, with Panama’s role in particular focus.

France led global pressure on the Latin American nation, saying it would put Panama back on its own list of tax havens, four years after it had been removed.

Finance minister Michel Sapin called on the 34-nation organisation for economic cooperation and development to do the same.

“Unfortunately Pana-ma has a bit of a tendency to make U-turns, to play the good guy and then the bad guy. This cannot go on,” Mr Sapin told Parliament.

Panama hit back, however, after days of being hammered in the world media. “In Panama, there is a law that sets out retaliation measures against countries that include Panama in ‘grey lists’,” Mr Alvaro Aleman, the minister for the presidency, warned France in a conference.

The retaliatory measures can include blocking foreign investment or withholding public tenders. Panama had earlier lashed out OECD head Angel Gurria, saying his description of the country as the last major tax haven impenetrable to law enforcement was “unfair and discriminatory”.

US President Barack Obama said wealthy individuals and corporations were “gaming the system” by making use of tax code loopholes to which average taxpayers had no access.

He also labelled “insidious” the growing practice of US companies merging with foreign firms just to cut their tax liabilities.

“A lot of it is legal, but that’s exactly the problem,” the United States President said.