In all the debate about the future of tax havens one issue should not be overlooked. The current credit crisis is absolutely crucifying them. Take this from Accountancy Age:
In the British Virgin Islands there's something like 10,000 hedge funds registered and recent commentary has suggested that as many as 4,500 will close
I have, for some time, said that Jersey and Guernsey will both go bust within the next few years because it is quite impossible for them to survive with their current tax regimes and the current economic climate. They may not be alone.
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Richard
Not impossible at all for Jersey and Guernsey to survive. Jersey has a GST of 3% and Guernsey has none at all. In fact Guernsey is probably the only jurisdiction in the Western world not to have a consumption tax, and Jersey’s is about the lowest rate among those that do. Both could very comfortably balance their books by charging GST at rates significantly lower than the UK and Western European rates. I predict that’s exactly what will happen…..20% personal income tax rate, 10% GST and 0% corporate tax. Not exactly punitive although it would be a big sea-change for the islands’ population who will not readily welcome consumption taxes.
If my recollection is correct, Jersey predicts it will raise £45m annually from a 3% GST. A 10% rate would therefore raise £150m a year. Guernsey’s economy is two-thirds that of Jersey, so that’s circa £100m a year. That option is up the sleeves of our politicians to use whenever they think they need it. The current global recession will merely speed that up.
[…] I suggested Jersey and Guernsey would go bust. […]
[…] I suggested Jersey and Guernsey would go bust. […]