I note the Jersey Evening Post reported yesterday that:
EUROPE could force Jersey to introduce a capital gains tax, one of the UK's foremost critics of tax avoidance has warned.
The introduction of such a tax, which could mean Islanders would have to pay tax on the sale of property and businesses, could be the ‘sting in the tail' of Europe's ruling on zero-ten, says Richard Murphy, of the Tax Justice Network.
He said that a source within Europe had told him that tax officials were still not happy with changes Jersey had made to the its zero-ten company tax policy.
However, Treasury Minister Philip Ozouf dismissed the claims as nonsense. He said that Mr Murphy would not stop attacking Jersey until it was fully integrated into the UK and that he had been proved wrong many times in the past
All I can say is that I have been told what is reported: of course my sources may be wrong. To date they have proved very reliable.
As indeed have I. Philip Ozouf may like to say I'm wrong but the list of things I've got right about Jersey is long:
- The first zero / ten proposal would fail. It did
- The revised zero / ten proposal would fail. It did.
- 20 means 20 would not raise significant funding. It did not.
- The introduction of zero / ten would leave a black hole in excess of £100 million which Jersey always denied. It did leave a black hole of that size.
- GST would not stay fixed at 3%. It did not.
- The States would not be able to cut spending to fix the black hole. They haven't been able to do so.
I'm sure there is more, but that will do.
Indeed, my problem is that I'm having a problem thinking what I've got wrong so far in the predictions I have made over many years. And if the capital gains information is right (and all I can say is it has come from a reliable source) then my latest prediction that issues would still be raised with zero / ten will prove to be right too.
It's juist a shame Philip Ozouf does not enjoy the same record of success on predicting what will happen in Jersey. If he had they wouldn't be in the mess they're in now.
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First read: –
http://www.lrb.co.uk/v27/n19/john-christensen/hooray-hen-wees
Then say how any decent person would want to invest or bank (or recommend that others do)a single penny inside this shameful jurisdiction.
Or for that matter go within a hundred miles of the place.
Please-can we have a little balance in these comments? I`ve never been to Jersey,and probably never will,but I suspect it is a very pleasant holiday destination.We are discussing tax avoidance here I thought. No doubt many honest upright Jersey folk rely on tourism for their income,so I would think it reasonable to encourage the same,whilst discouraging some other practices. In fact probably mostly “decent” people do go to Jersey.
I’ve always made it clear it is the finance industry I criticise
But it is half of GDP
Richard, I bet you wish your country was in the same mess, Jersey has no discernable national debt (remind us all again what the UK’s level of debt is?) Jersey still has a sound business base low taxes and charges and low levels of unemployment. A buoyant property market with house prices maintaining growth, together with many other attributes you can only dream of. Guernsey is doing even better with the added bonus of having no GST or any other sales taxes.
Dave Jones
That’s why you’re both running massive deficits that you show no signs of controlling is it?
Richard
I think you will find that Guernsey’s budget deficit is not “massive” at all, and is being eroded on schedule exactly as was projected when Guernsey adopted zero-10, through prudent public sector cost savings and modest economic growth.
Operating an intentional and planned budget deficit is hardly one to be concerned about when there is no government debt and several hundred million pounds of reserves in the coffers.
If there was no sign of Guernsey’s economy growing, or if the planned public sector savings were not actually happening, then your comment would be a fair one. But that’s not the case at all and so your comment is way off target.
I cannot speak for Jersey though!
That’s the pure fantasy version built on an assumption of growth that is not happening
The reality is you have a massive hole because you can assume all the growth you like but it is not gong to happen and that’s the only way your brushy works
“A buoyant property market with house prices maintaining growth”. Please tell me how that is a good thing, or rather for who it is a good thing.
For Home owners and those who intend to use the equity in their property to help fund their retirement, this situation is far better than negative equity and re-possession that we hear about in so many other jurisdictions.
Ask the young people who will never buy a home about that
The best con trick of the lot. Encourage people to take out more debt on their property and make them believe they have riches tied up in their house. My parents got involved in an equity release scheme and ended up having to pay rent to a private firm when the firm that brokered the equity release went bust. So they ended up paying rent on a property that they had a mortgage on for years.
They were lucky not to lose the house altogether.
But Dave we are now running a deficit, and having to rely on the Rainy day fund to cover it. We jumped far too early and should hav waited at least a year and we may not now be running that deficit. We jump as soon as the UK Treasury or EEC winge. At the moment we don’t know where we are until the EEC have commented on Gibralter. The finance industry don’t know where they stand and if the EEC have their way we will still be dangling on a string in time to come.
We are on the fence and can’t make a decision. Biggest mistake was zero ten in the first place.
Quaint that you still think there’s an EEC…..
Tax avoidance is at least partly created by historic diversification of tax law across international boundaries. However, it’s not good enough to say that this is just the BCDs problem and they should just change. Small countries, such as the BCDs, had to do this to survive the protectionism of the past, and the relative geographical remoteness. A well-established result of import tariffs is that they allow firms in the larger countries to effectively set prices. Free trade, on the other hand, favours the country/region closest to the economic centre of the market.
The whole question of the British Crown Dependencies is quite complicated. The BCDs have taken advantage of administrative independence to create environments which appropriate tax base which, frankly, isn’t theirs. The result is a reduced tax base for countries that allow trade with these Islands, which in turn causes the same countries to attempt to expand their tax base.
This results in tax base competition as it simply causes the same response by similar jurisdictions. The resultant pattern is escalation, meaning more tax code, more complexity and more diversified tax codes as countries attempt differing solutions to recover their tax bases (e.g. see the UK Finance Act for an example of escalation). The global tax base deminishes at an accelerating pace – meaning either less publically provisioned services, Sovereign debt or a combination of the two.
Furthermore, direct anti-avoidance measures also escalate – as the complexity of the code mean more – different – opportunities for avoidance activity across national boundaries (e.g. see Bowler of the IFS, 2009).
To summarise the connection – OFCs are a catalyst to tax base competition between developed nations which is an escalating dynamic, therefore increasing Sovereign debt within developed nations.
So, it is equally not good enough for an OFC to suggest that Sovereign Debts are a problem for the developed countries.
Apologies, if you feel like your heads have been banged together! 😉
Richard our structural deficit is in the region of 27 million, hardly massive and very manageable with the fiscal; restraints we have put in place on government spending. I would much prefer to have our very small problems than the massive debts your people will have to face for decades to come. We are also attracting lucrative business from China and India, as well as some from the Middle East, South Africa and Canada, all outside the EU and its control. We are happy that Zero 10 is compliant and we can generate further income from broadening the 10 part of the product if we make any further adjustments. We are still building Schools. New hospital facilities, improving our Airport and Harbours, all paid for with our own money. We have just passed legislation this very day to form an Aircraft registry and laws to protect image rights that will generate even more income. We are in good shape and we will continue to run our affairs in the best interests of our people.
You have no approved zero 10 scheme – you said you were abandoning it
The EU expects
And your deficit is much bigger than the UK’s in proportionate terms
And you don’t have your own currency – making you much like Greece
Happy days for you, eh?
As for running business in the best interests of people – you remain a secrecy jurisdiction and as such a blot on the face of humanity
Richard
I am sorry Richard but we have the Zero 10 regime and it is in operation at this time. We never said we would abandon it, we said we would look at it but do nothing that would put us at a disadvantage to our competitors which in the main are Jersey and the Isle of Man.
The Chief Minister of Guernsey made statements in our parliament to that effect on several occasions over the last two years. The Code of Conduct group has relayed to Jersey very recently that if it addresses the issue of deemed distribution then Zero 10 is acceptable and no longer harmful so we need to do very little. As for comparing us to Greece, we are outside the Euro and we do not have Greece’s debts, nor do we require anyone to bail us out, so we are as unlike Greece as you can get. We run our parliament in the best interests of our people who elected it and I am afraid that Her Majesty’s Government the OECD and the IMF do not agree that we are a “secrecy jurisdiction” and have told us so on several occasions.
Dave
That is nowhere near what you told the EU
You said you’d be doing 10% tax and that’s what they now expect
Please stop making things up
As you are this correspondence is closed
Richard
Richard, mais let the man speak, why cut him off?
Is 0-10 in place ou non?