The letters sent by Gordon Brown to the leaders of the Crown Dependencies and the Overseas Territories are of such significance that they appear to need a name of their own. Given the day on which they were sent the title ‘The Maunday Thursday letters’ seems appropriate.
That to Jersey, of which identical copies were sent to Guernsey and the Isle of Man is here.
That to the BVI, of which again I understand identical copies have been sent to the leaders of the Cayman Islands, Bermuda, The Turks & Caicos Islands, Montserrat, Gibraltar and Anguilla, is here.
As I have noted, these letters are epochal.
The Guardian also received the letters from Downing Street, I know. They have commented here. The FT is the only other major paper that I have so fra noted has picked up the story. It bare analysis is here.
I expect that there will be considerably more reaction next week. But I am now convinced that these letters mark the end of British tax havens. Not yet of course, but over the next few years.
The debate is not now about why this is necessary, but about how it will be done and how to manage the consequences. This is a quantum leap forward.
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I know this may be a simplistic question, but as someone relatively new to this debate, can I ask whether you think that tax should be a on a “residence” or “source” basis?
If a UK multinational goes overseas to do business and the economic activity is genuinely conducted overseas, who should get the tax for that portion of the profits pertaining to the work done overseas?
The letter looks like political pandering to me. Downing Street knows that the crown dependencies are doing everything in their capabilities to become more ‘transparent’ and ‘regulated’. For me the letter is there to appease the left wing.
Perhaps a letter should be sent to Boris Johnson?
…And just how will it be done? Those juisdictions that have got themselves rid of the pejorative label ‘tax haven’ by getting themselves onto the OECD’s ‘white list’ are now strutting around crowing that they are ‘transparent’, ‘squeeky-clean’, whilst the word on the street is they have a new cloak under which they can continue ‘business as usual’ with their secret tax evasion banking practices craftily designed to look ‘kosha’. It needs whistleblowers to reveal the hypocrasy & deceit, but I believe that the people ‘in the know’ are carefully selected, security screened & paid huge salaries to ensure they keep their mouths forever firmly shut.
Too many of their clients are ‘mandarins’ in high places who have a vested interest in ensuring that official intentions to be rid of illicit banking practices have more form than substance. When politicians fiddle their expense accounts one can hardly expect them to be enthusiastic about rooting out corruption in the banking system.
Mick
Answer: both and neither.
The problem with both residence and source is the artificial allocation of profit.
A unitary basis is better than either
Richard
Richard
Sorry, but what is the unitary basis (simply) ?
http://www.taxresearch.org.uk/Blog/2007/09/14/tjn-propose-unitary-taxation-for-the-uk/
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@Mick
Dear Nick and others,
You can find a good analysis of Source vs Residence taxation in the Briefing Paper on this subject for the Tax Justice Network, at http://www.taxjustice.net/cms/upload/pdf/Sourceresidence.pdf
This helps to explain why, as Richard says, a unitary approach is better
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