The Tax Justice Network has submitted to the US Senate Finance Committee hearing on tax havens. Jersey and Guernsey both submitted evidence to that hearing on 17 May. In doing so Senator Walker, Chief Minister of Jersey claimed:
Jersey is a long standing international finance centre providing a wide range of financial and professional services and in compliance with international standards. It is no part of Jersey's policy to assist directly or indirectly the evasion of taxes properly payable in other jurisdictions. Such business is actively discouraged. (Emphasis in the original).
This claim cannot be supported by the evidence, and we felt we had a duty to rebut this claim using the ample evidence that is available to do so. We clearly demonstrate in our 33 page submission that Jersey is dedicated to maintaining all the hallmarks of tax haven activity as identified by the OECD. More worryingly, the six authors of the report of whom I am one and three of whom UK based professors, identify a significant trend in recent changes in law and regulation that suggests that Jersey is doing all it can to make life harder for regulatory authorities seeking to obtain information on what happens there. At the same time it is making life for the tax evader a whole lot easier.
As I have said for TJN:
Jersey's claims do not stack. It's heading for 0% corporation tax. It's exempting its financial services industry from its new sales taxes. It's got just five tax treaties, all of them inconsequential and little used. And it's changing it's money laundering rules so that the States of Jersey no longer need to know the beneficial owners of companies. In addition banks in the Island will soon not need to prove a person's address before opening an account for them.
John Christensen of the Tax Justice Network added:
Most worrying, Jersey has introduced a whole range of new opportunities for the tax dodger. Jersey trusts are now legitimised sham arrangements. Protected cell companies incorporated in the island are claimed by some to be 'an impenetrable wall against creditors and prying eyes' and Jersey's new redomiciliation laws mean that companies subject to enquiry can flee to another jurisdiction before any action can be taken against them.
I am particularly concerned about redomiciliation:
We have been worried about capital flight for a long time. Now we have to worry about corporate flight as well. As pressure mounts for tax havens to exchange information they are ensuring that they either do not have that information, or by providing new mechanisms make sure that data is harder to secure and that it is easier for it to flee. The result is that corruption in places like Jersey can no longer be tackled at the transaction level because that data will soon be unavailable or in perpetual transit between tax haven locations. As such, offshore corruption can now only be tackled at the systemic level. This requires a changed approach. The corrupt user of tax haven services is no longer the problem; the corruption of the tax havens is the problem now. And Jersey is a key player in this process of degradation.
It is time to tackle the suppliers of corruption services if the integrity of the world's economy, taxation systems and democracies is to remain intact. Tax havens are at the heart of this challenge to the way we live. And tackling them systemically is the solution to this problem.
The havens use weasel words to claim that they are 'cooperative' with the international community on issues such as tax evasion and money laundering. But their actions tell a different story. It's that one that we tell in our submission. And we suspect that the Senate will rumble Senator Walker for what he is.