The House of Commons Justice Committee has published a report on the Crown Dependencies. It’s a weird and very confused document in a great many ways but then a friend in Jersey sent me an email which summarised the issue better than I could have possibly done, asking:
What do you make of this please?
"...the Crown Dependencies are democratic, self-governing communities with free media and open debate. The independence and powers of self-determination of the Crown Dependencies are, in our view, only to be set aside in the most serious circumstances...."
"...that it should be used only in the event of a fundamental breakdown in public order or of the rule of law, endemic corruption in the government or the judiciary or other extreme circumstance, and we see no reason or constitutional basis for changing that formulation..."
Which Islands are they looking at?
Should we recommend Specsavers?
It’s worse than that. This is myopia of the willing. And I know of no cure.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Read it carefully! It is actually saying the UK would intervene in the event of endemic corruption of government or judiciary. If any substance was established to the accusations that have been levelled in the last couple of years, they have given themselves the green light.
David, you have been listening to too much conspiracy theorists on the radio who seem to use “corruption” and “cover-up” for every losing argument.
Turn the record over just for once.
Richard this report shows that Jersey is independant whether you like it or not. It is surprising that you still show such bitterness against Jersey despite some glowing reports during 2009. Is this now personal do you think?
@Matt
No: rational, objective and factual
Nothing more, or less
I post all manner of nonsense on the JEP website – much of it aimed at winding people up.
But it all ends up there – only the very rude stuff gets censored. I’m probably a loose cannon, but I have never seen any corruption in Jersey. I’ve never even been asked to join the masons or either of the gentleman’s clubs there, despite being able to do a good impersonation of a pompous ass.
The Guernsey government has just unanimously passed legislation for making LLPs more flexible. It was reported that one of those elected representatives questioned the fact that it was likely that the decision was made in ignorance of what it was they were actually voting for. It was said that the supporting documentation was highly technical and that the argument that it would further improve the ability of the hosted finance industry to gain a competitive advantage was all that was needed to ensure its promotion.
I have no idea what this means except that laws are being made in my name, proposed by vested interests with great influence, in a jurisdction whose population can not question the motives, nor will be interested in wider causality as a result of blatant propaganda.
As with some other States of Guernsey issues, why wasn’t the proposition commentated on by the local media, and those politicians that are mandated with public responsibility?
What else is going on?
So Richard, where exactly do you think the islands fall short? Proper evidence please.
“Fundamental breakdown in public order or of the rule of law” ? Nope, or if that’s the case then its certainly passed me by and I think I might have noticed it.
“Endemic corruption in the government or judiciary”? Nope. Not aware of that either.
“Other extreme circumstances”? None that I’m aware of.
I cannot see how you as an outsider can make statements like you do about the Channel Islands without any evidence to back it up. As Matt says, it must now be personal. No matter which external, independent body investigates the islands, they all keep drawing conclusions which are totally different from yours. None of them give any credence to your views but you still persist with your unsubstantiated claims. About time I think that you came out with firm and unequivocal facts to counter what all these external bodies are saying.
Arnald,
With respect, that is just the way of the modern world. Virtually all legislation that is passed these days is almost incomprehensible to anyone who is not a specialist in the field. This does not apply just to finanial services, it also applies to telecommunications, shipping, public health etc
One of the real reasons for the “democratic deficit” is that it is no longer possible for an educated man in the street to have a reasonable knowledge of the laws of a country. There are so many laws and regulations that do not have a logic that a non-expert an work out.
Most laws these days are passed by either over-zealous civil servants or as a result of commercial lobbying. This applies beyond financial services: my favourite hobby is gardening and as a matter of law it is illegal to sell plant varieties outside a prescribed list. So if you want to buy the seeds for old heritage varieties you have to join a club.
And I see the Spanish EU MPs tried to reinstate the ban on bendy fruit and veg this week (thankfully they lost but what arguments could they even propose in support of that?). And a load of Labour MPs led by that nice Tom Watson managed to fillibuster the proposed changes to the libel laws.
The problem isn’t unique to the Channel Islands. Lawmaking has by and large been handed over to vested interests in all areas, from local councils up to supra-national bodies.
Arnald
In any democratic country, the people get the elected government that they elect. They elect their politicians from amongst those candidates who are willing to stand. Any elected politician should query anything which he doesn’t understand before approving it. The elected politicians are representative of the population in any jurisdiction – nobody can be forced to stand for election and we can only elect those willing to stand.
The island’s dominant industry, producing the bulk of the GDP, is clearly very well-resourced, and is full of intelligent, well-educated, professionally qualified people. The House contains many elected representatives from a diverse range of backgrounds, and for many of them the technical issues are frankly way beyond them. They cannot reasonably be expected to be experts on everything technical. But you need to remember that any new laws passed by the House still have to be approved by the Privy Council in order to be effective, and the Law Officers in the islands draft the legislation knowing that to be the case. In reality, the members of the House know that the Privy Council process acts as a “check and balance” of any proposed new legislation.
The fact that the local media may or may not choose to cover any new legislation is entirely up to them. Every resident of the island is able to read each Billet d’Etat and question any of the elected representatives ahead of it being heard in the House. That’s democracy. Nothing can be debated in the House if its not in the Billet d’Etat so its easy for any islander to find out what’s being proposed and to ask as many questions as they like of their elected representatives. Like many places, apathy rules, but that’s down to the electorate, not the system. Each and every one of us can ask whatever questions we like, if we can be bothered.
@Rupert
1) No proper information exchange under the European Union Savings Tax Directive and no intention to do so (weasel words are offered, that’s all). So the island promotes tax evasion
2) A tax system that does not meet regulatory requirements – deliberately constructed although this was clearly known
3) Absolute opacity on companies registered in the island
4) Complete absence of any effective regulatory regime on trusts – as no one knows that they are
5) Trust law that knowingly promotes sham arrangements
Shall I go on?
The whole business model is corrupt
If you cannot see it it’s because you’re part of it
Richard
Richard
That’s ridiculous. None of that constitutes “endemic corruption in the government or judiciary”.
Every single law passed in Guernsey has been approved by the UK’s Privy Council.
1) If you think that the islands accepting an option offered by the EU to withhold tax under the EUSTD rather than automatically exchanging information is “corruption” on the part of the Channel Islands then you’ve lost your marbles.
2) The tax system did meet regulatory requirements – it was approved by the UK and the EU at the time. Only since have they changed their mind. That is not “corruption”.
3) In that case the UK and virtually every economy is als “corrupt” – I can’t find out the beneficial ownership of a UK company from Companies House.
4) There is a very effective regulatory regime on trusts. Its carried out by the GFSC and the JFSC by heavily regulating the trust providers. The fact that you can’t access the information doesn’t make it “corrupt”. But hang about, where’s the regulatory regime on trusts in the UK and everywhere else ? Even the trust providers aren’t regulated in most onshore jurisdictions ! That’s not “corruption”.
5) I know where you are coming from here but I disagree with you, and clearly so did the Privy Council. “Reserved powers” trusts have many legitimate uses, and indeed can be abused. But so can any financial instrument in the wrong hands, whether onshore or offshore, for example US, UK, Irish and Icelandic banks ! Corruption which is “endemic in the government or the judiciary” ? I don’t think so.
No Richard, the whole business model is not “corrupt”. It just doesn’t meet your own personal views. You are fully entitled to those views, but “corruption” it most certainly isn’t.
@Rupert
Rupert
Talk a straw poll of the world and I’ll tell you which of us would win, by a very long way
With good reason as well
The world does not like cheats, free loaders and those who promote abuse
Richard
Richard
The morals of offshore finance are not the issue at all. That’s a matter of opinion and you are of course fully entitled to yours.
The issue is that you are openly accusing the islands’ “government and judiciaries of endemic corruption” – a serious allegation which is totally unsustainable and you have not a shred of evidence to substantiate your claim. Or if you do, then you haven’t shown it.
Rupert
I am saying that
I am saying that the evidence is abundant, open and apparent
Guernsey refuses information exchange
Isn’t that evidence enough of supporting tax evasion
And isn’t that corrupt?
I rest my case
Richard
Richard
Guernsey currently operates a system endorsed by the EU and offered to several EU and related member countries which expressly allows for withholding tax in lieu of information exchange. For the record I do not personally support the decision to take up that option, but merely accepting something expressly offered by the EU cannot be construed as corruption. And no, it doesn’t mean that it “supports tax evasion”. It just means that it does not automatically exchange information.
If that’s your case “rested”, then it really isn’t very well rested at all.
If Guernsey and Jersey are corrupt, why do the IMF, the OECD, the Edwards Report, the Foot Report etc not spot it and report on it ? Very simple – because it doesn’t exist. Or are you next going to say that we’ve obviously bribed all of them to reach their nice conclusions. Now that would be corruption !
Rupert
Because the politics of accommodating Switzerland did in the past require toleration of the corruption they persist in permitting did not require Guernsey to join them in the trough
It could have chosen to stop evasion
It did not
The fact that diplomacy does not let some say this does not prevent me doing so
And diplomacy does not stop the reality that it happens
You have no case – you chose the option that permitted corruption
It was a choice
My case is proven
Richard
Richard quote:
rational – straight;
objective – easy;
factual – no debt.
Richard, now be honest here, do you not think the UK would be better of now if using the Jersey model?
Richard
But its not just about Switzerland is it ? Its also about Belgium, Luxembourg and Austria, three full-blown EU members who also took the offered withholding tax option.
The decision to join those three EU members in accepting one of the two offered options clearly does not constitute “endemic corruption of the government of the judiciary”.
Let’s look at it from another viewpoint. If your assertion of “endemic corruption of the government or judiciary” was correct, who exactly has committed the corruption ?
Something that permits corruption does not mean that corruption actually exists. My car can apparently do 130 mph and I chose it over slower models. Does that make me a law-breaking citizen just because I have
a fast car ? No – only if I drive it at 130mph. And are you seriously saying that the OECD, the IMF, Edwards and Foot are all too diplomatic to say anything other than what they actually found when they looked under the bonnet – something which
you are not ablw to do ?
Case not proven at all. If that’s your case then you’ve lost. Absolutely nothing there to substantiate your argument and you well know it.
[…] commentators seeking to claim Jersey and Guernsey are as clean as a whistle please […]
@Rupert
Billions of tax revenues lost to the UK aren’t evidence?
What else is?
Candidly, you couldn’t spot corruption if it was standing in front of you
Because you’d willingly turn your back to it
That has always been the tax haven way – as has been proven time, and time, and time again
@Matt
So you’re arguing that the promotion of crime should be the objective of major states?
An interesting idea
Not likely to catch on, I think
But come indication of how warped your thinking is
Richard
If money is lost by the UK as a result of legitimate tax avoidance, not tax evasion, then are you seriously saying that this is “corruption”, let alone “endemic corruption of the government and the judiciary” ? If you are then you’ve seriously lost the plot.
If you are saying that the islands are costing the UK “billions in lost revenue” due to illegal tax evasion then it would be very useful to see some evidence please. Just because we use information exchange rather than automatic exchange does not mean that widescale tax evasion is actually taking place. Some evidence of your allegations might add some credibility to your allegation. Has it not occurred to you that any money which shouldn’t have been here may by now have left these shores ? After all, you have on other threads highlighted the significant drop in bank deposit levels.
Richard
I have a question in the 1970s Import Tax duty was removed and put into the cost of an item of goods ie a car £5000 pounds in the UK would show as £6000 pounds here in the Isle of Man before VAT is added, yet I see on the your other debates we are not supposed pay import tax duty and we the end user still do. This is on everything we buy, why then have the UK government not taken this off under common purse agreement.
Can you advise to why
The below is pasted directly from the FCO website.
Support for British Nationals Abroad — A guide
We cannot:
> get you out of prison,
> interfere in criminal or civil court proceedings
> give you legal advice,
> get you better treatment in hospital than the
treatment that is given to local people
> get you better treatment in prison than local
prisoners
> pay any bills or give you money from public funds
> make sure you will be safe in another country —
safety and security are matters for the government
concerned
> provide compensation if you are affected by a
major catastrophe or terrorist attack.
There is no right to receive emergency financial
help from us.
It is up to us to decide whether we grant these
loans — a lack of other ways for you to return to
the UK does not mean that we will automatically
agree to a loan.
That doesn’t leave very much to justify a non-resident paying tax.
The US has the rule you mention. That does not mean that it is justifiable.
As a US citizen, my cousin can tell you from a lifetime of working in countries around the world that authorities overseas don’t give a hoot that you are British. Hence the FCO’s statement that they can do nearly nothing. Actually, the authorities overseas don’t even care that you are American, as the execution of US citizens overseas quite clearly shows.
The reality is that, in those countries where the authorities listen, you don’t need help. In those countries where you need help, the authorities don’t listen to the FCO or the State Department either. As the FCO site explains, most people going to live abroad never even bother to register with or contact the consulate. Hardly surprising under the circumstances.
A tax is just a charge for services rendered. Non-residents get nothing or almost nothing. By the de minimis rule, they should pay nothing.
Here’s just an example of why the rule is nonsense.
Smith is a US citizen. However, he has never set foot in America. He was born and has spent his life overseas. He got married and set up a business. It happens that this took place in a country with a higher tax rate than the US. Therefore the obligation of US citizens to pay US tax regardless of their location did not penalise him.
Sadly, his wife’s father died early and Smith now feels an obligation to move to his wife’s parents’ country so she can look after her mother. However, the girl he married comes from a island whose government collects its revenue not by means of an income tax but from unusually high sales tax and import duty. If Smith moves to this island so his wife can look after her mother, he will have to pay the abnormal level of sales tax and the level of import duties that the US does not have and also income tax in the US, because the US gives relief only if the foreign taxes are called ‘income tax’. The authorities are apparently are unaware that not having to pay income tax does not mean that you don’t contribute to the costs of the country you live in. You still have to pay tax. Smith will have to pay taxes twice.
Why? Because the US, like you, believes that every citizen should pay tax to his home country even if he is not living there or benefiting from its services. Like you, the US government says that the non-resident is paying for the ‘privilege’ of being an American and that he has the ‘protection’ of being an American. Unless you are George Bush, very few people who know about living abroad believe that means anything except a bit of patriotic bluster. The same problems apply to your idea of UK nationals paying tax to the UK. The idea is misguided.
Under your scheme all a person gets from paying the tax that you say is his duty is the meaningless ‘bail-out’. Everybody in the home country is enjoying subsidised education, subsidised healthcare, subsidised transport and everything else that residents get from what taxes are supposed to be for.
Yet you want overseas residents to contribute to all this. There is just no logic here.
You will say that it is a person’s choice to live overseas or move to the type of place I mentioned . Well, a person also has a choice as to whether he proposes policies that penalise people unfairly.
@Steven Jones
You make the entirely false assumption that paying tax is a payment for services
It is not
It never has been
It is the price for living in and being protected by society
We won’t let you opt out because you’re wealthy
And anti-social