This is from the Guernsey Press and such is its importance I make the rare case of copying almost in its entirety and trust they will forgive me, but I think even they would admit I have played a role in this story:
JUST how wrong can you be?
Within hours of Jersey’s Treasury minister standing up in the States to reassure his fellow deputies that zero-10 is alive and kicking, the UK government was hammering home the final nail in the discredited tax scheme’s coffin.
Senator Philip Ozouf said that ‘based on the feedback from the code group members and the UK’ it was not the end for zero-10. While there were concerns about the distribution rules of the tax regime, that was a matter which could be fixed and the good ship Jersey could sail on unhindered.
By early afternoon it was clear that the senator needs better contacts as HM Treasury stated in unusually clear political language that zero-10 is a failed concept.
Not just a part of it, but in its entirety.
Aside from a bit of Sarnian schadenfreude at Caesarean discomfort, it is evident that Guernsey can take great credit from this process.
HM Treasury goes as far as to single out Guernsey’s ‘jump before you are pushed’ approach for praise and support while making it explicit that Jersey and the Isle of Man will have to change.
Just in case there was a shred of doubt about what will happen next they added: ‘We are ready to offer support to Jersey and the Isle of Man in implementing the changes necessary.’
The challenge now for Guernsey’s strategists must be to make that European and UK goodwill work for them.
While Jersey is still openly disputing the code group’s rejection of zero-10 Guernsey must continue to concentrate on finding an acceptable alternative.
Part of that process will no doubt involve dialogue with both Jersey and the Isle of Man.
This process will have started some months ago but, with very different strategies, it is unclear how productive the co-operation has been so far.
If Jersey maintains its somewhat heel-dragging approach to the code of conduct group’s conclusions it may prove wiser for Guernsey to continue alone.
I make the genuine offer: I have been proven right on this issue. I would rather it had not come to being able to say that. But now it has I am more than willing to advise on a solution. And not a word of the advice would be blogged if it helped the process.
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Richard
I somehow suspect that your strong socialist views and endless attacks on the governments of the islands could just be a tiny barrier in preventing you from getting onto any shortlist of consultants. Its fair to say that as a marketing pitch it probably doesn’t tick to many of the right boxes.
@Rupert
Their loss….
I’m good at this stuff
Better than anyone else by the look of it
This doesn’t seem to have penetrated the Isle of Man reality distortion field yet… I think the IOM news services are focussing on matters like whether or not to Nationalise the ferry operator and the changes in the local bus timetables! Can you please provide links to follow back to actual HM Treasury release or similar when you have the time?
Richard
You know me far to well to expect that I will be a blind apologist for my compatriots, but I feel that I should say two things.
Firstly, will anyone from the newly “sweet ‘n’ cuddly” States of Guernsey tell us what they are actually going to do? Since the Billet D’Etat last year they have either back-pedalled or said that they will wait for Jersey and the IOM to go first. Super Trott (his own words) and the rest of the crew are duplicitous and they are clueless. That is challenge number one.
Secondly, we have put out a press release, http://www.gov.je/News/2010/Pages/ZeroTenEcofin.aspx, and it isn’t lying. Similarly, the IOM has said, http://www.gov.im/lib/news/cso/euassessmentofis.xml, and I doubt that they are lying either.
This is a cynical move by the UK and Guernsey to put pressure on by spinning. We know that the EU don’t like us, but expecting us to change our tax system based on spin is ridiculous.
The Guernsey fools don’t read widely enough in any case. If you look at the ECOFIN press release from yesterday (http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/118290.pdf) at page 14, can they tell us what the new ‘High Level Working Party’ is about? Even though Jersey has no friends in the EU, some member states are ethical enough to stand up for the principle that ‘rules is rules’. Zero-ten has been found to be OK. Deemed distributions are a personal tax measure and the Code of Conduct doesn’t cover that. Cheating doesn’t work, by the Code Group or anyone else.
Jersey will change, but Guernsey’s triumphalism in this instance is tragically misplaced. They are destroying themselves. As the fabulous Rage Against the Machine say –
“Just victims of the in-house drive-by
They say jump, you say how high”
The Girrl
Where is this ‘unusually clear’ political language from HM Treasury published?
Richard
You may or may not be right, but even if you are, your marketing tactics need some refinement! I cannot honestly see Messrs. Le Sueur, Ozouf, Trott or Bell being remotely interested in engaging you – can you?
@Rupert
No of course not
But still your loss
@Jersey Girrl
I know you …. sure
And I smell spin in St Helier and Douglas
And the real message in Whitehall and St Peter Port
Yes I know there are two or three states that support your view
But they’re a minority and the Code is majority voting
You’re going to lose on any definition
In the meantime it looks like the Treasury have it in for you, and rightly so
Start designing the alternative I suggest
HM Treasury quote:
“The EU Commission considered that taken as a whole, the systems were designed to offer a 0% tax rate to foreign investors (although some sectors are not taxed at the 0% rate), whilst avoiding residents benefitting from the 0% tax rate.
“Following a discussion of the Commission’s evaluation, the Group agreed that Jersey’s Zero-Ten Corporate Tax Regime and the Isle of Man’s New Tax Legislation give rise to harmful effects. This was duly noted by ECOFIN.
“Under the terms of the Code of Conduct for Business Taxation, the UK is committed, within its constitutional arrangements, to ensuring that the principles of the Code are applied in its dependent and overseas territories. Both Jersey and the Isle of Man made voluntary commitments to abide by the Code in 2002. The Government expects Jersey and the Isle of Man to abide by those commitments and implement the abolition of the harmful measures.”
Read it and weep Jersey Girrl and Rupert et all
Statement from the UK Treasury –
“On 23rd September, the Code of Conduct for Business Taxation Group discussed Jersey’s Zero-Ten Corporate Tax Regime and the Isle of Man’s New Tax Legislation.
“After an exchange of views with those concerned (Jersey and IoM reps attended the Code to make an opening statement and answer questions), the Code Group invited the EU Commission to prepare draft evaluations for the next Code meeting on 19 November.
“The EU Commissions evaluation focused on the operation of the zero/ten regimes as a whole, not merely the deemed distribution and attribution provisions in isolation.
“The EU Commission considered that taken as a whole, the systems were designed to offer a 0% tax rate to foreign investors (although some sectors are not taxed at the 0% rate), whilst avoiding residents benefitting from the 0% tax rate.
“Following a discussion of the Commission’s evaluation, the Group agreed that Jersey’s Zero-Ten Corporate Tax Regime and the Isle of Man’s New Tax Legislation give rise to harmful effects. This was duly noted by ECOFIN.
“Under the terms of the Code of Conduct for Business Taxation, the UK is committed, within its constitutional arrangements, to ensuring that the principles of the Code are applied in its dependent and overseas territories. Both Jersey and the Isle of Man made voluntary commitments to abide by the Code in 2002. The Government expects Jersey and the Isle of Man to abide by those commitments and implement the abolition of the harmful measures.
“We are ready to offer support to Jersey and the Isle of Man in implementing the changes necessary. Although Guernsey operates a Zero-Ten Corporate Tax regime similar to those operated by Jersey and the Isle of Man, its regime is not being assessed as Guernsey was deemed by the Group to have made a strong enough public commitment to move away from its current regime. The UK is supportive of Guernsey’s efforts to move towards a normal, internationally acceptable business tax regime.”
There is no ambiguity in that statement, zero ten is dead, Richard has been proven right in his predictions once again. As much as some of you don’t like his style you have to acknowledge he seems to have far more foresight than our political masters.
Having (limited) dealings with the duplicitous governments of Jersey, Isle of Man and Guernsey the PSG would place little trust in any of them. But in a league table for opacity and reticence then the shadowy world that is the Guernsey government would be the winners.
Believe nothing until it is chiselled in stone.
Jersey Girrl
I rather think that you’re letting your imagination run out of control.
Almost uniquely, I find myself agreeing with Richard’s assessment of the situation.
Guernsey would have undoubtedly been delighted for Jersey and the IoM to have been successful with the Code, but has clearly read the situation correctly.
Both Jersey and IOM have focused on the finer legal points of the Code and of the decision, but as we all were aware, it wasn’t about the strict legal points, but was clearly about the “spirit” of the Code. I firmly believe that if the matter was limited to the legal interpretation only then the need to go through this process simply wouldnt have been necessary because I don’t think that the tax system could have been found to be non-compliant.
The resulting issue now is whether Jersey and IOM keep fighting a losing battle, or instead try to look forward with a revised tax structure. My own view (and I’m not a politician by the way) is that we all have to focus on the future. Will Guernsey now wait for Jersey and IOM to go down the same shared route? I don’t know but I suspect that will depend on whether Jersey and IOM decide to “move on” or not.
One thing I do know though is that Richard’s own Plan B is not the answer. It grossly over-estimates the global demand for transpatency. Clients desire privacy (as opposed to any secrecy for illicit reasons) and without demand for a product there is no viable Market for it.
0-10 is not dead so stop making things up!
Our Treasury Minister and economists seem to always paint a less doomsday picture than your usual sour rantings, but we are used to that now.
Richard,
Is this press release from HM Treasury available to view? I can’t seem to locate this on the internet!
David,
Can you provide the link for the UK Treasury statement.
I can only find the release here:
http://www.channelonline.tv/channelonline/DisplayArticle.asp?ID=492129
I have no clue why
I believe it genuine in its entirety
@Jamie
You’ve seen the press release
When do I get the apology?
That’s the only copy I have managed to find as well.
I was hoping that there would be an official statement from the Treasury…..
See
http://www.taxresearch.org.uk/Blog/2010/12/09/zero-ten-definitely-dead-but-jersey-denies-it/
zero-ten-definitely-dead-but-jersey-denies-it
So does the Isle of Man at the moment……apparently it can still be propped up and made to look lifelike by our magicians/politicians…
Why should I or anybody else from Jersey apologise and what for?
The 0-10 debate is ongoing.
@ Jamie, have you read the statement on http://www.channelonline.tv as posted by me above? Do you seriously read from it that there is some sort of debate to be had?