The International Transport Workers’ Federation (ITF) has welcomed the publication of the so-called Panama Papers, but highlighted that ‘flags of convenience’ (FOC) – ship registries in tax havens – are also a “system of tax avoidance” and must be reformed to improve accountability.
“As an FOC flag – the largest in the world – Panama is essentially a tax haven like many of the UK territories that have been mentioned in these papers,” Stephen Cotton, general secretary of the ITF, said in a release today.
“And who pays the price? Seafarers, who are subject to poor conditions and lower wages because they’re at the mercy of a system that allows for minimal regulation and the acquisition of cheap labour.”
The ITF says there should be a ‘genuine link’ between the national base of the vessel’s beneficial owner and the flag the vessel flies, in accordance with the United Nations Convention on the Law of the Sea (UNCLOS).
“FOC registries make it more difficult for unions, industry stakeholders and the public to hold shipowners to account,” Cotton said.
“The ITF’s campaign, compelling owners of FOC flagged vessels to sign agreements that guarantee certain terms and working conditions for crew and policing these through a network of inspectors, is the only thing that goes some way to redress the balance of the FOC tax avoidance scheme, and to recognise the human cost it has.”
ITF president Paddy Crumlin used Chevron as an example of how tax avoidance by multinational companies, unfettered by national governments, directly impacts the general public and what his organisation has done to shine a light on the problem.
An ITF report, published in September 2015, exposed the extent of tax avoidance undertaken by Chevron on its largest global project, the Gorgon gas project in Australia. The report claimed the oil major has over $35bn in untaxed revenues concealed in offshore accounts, and was planning a new tax scheme to reduce its tax bill by AUS$35bn ($26.4bn) or more.
“If Chevron and other multinationals paid the tax they should be paying, austerity wouldn’t be an issue. We wouldn’t be seeing cuts in funding for education, public transport, healthcare,” Crumlin said.
“The kinds of deliberate and extreme incidences of tax avoidance being run from Panama are examples of the way corporate power avoids its obligations to society, communities and workers. We’re pleased that these incidences are now being taken up more widely in a public arena so that they can be properly investigated and we hope to see action taken against those who have disregarded their responsibilities in the name of profit.”