In the light of the Chief Minister of Guernsey's claim that the deal he has done with the UK is wholly voluntary and in the best interest of Guernsey the following statement issued only three months ago, a week after I drew attention to the UK's plans is interesting:
The following joint statement has been issued [on 7 December 2012] by the Chief Minister of Jersey, Senator Ian Gorst, and the Chief Minister of Guernsey, Deputy Peter Harwood, on developments relating to the Foreign Account Tax Compliance Act (FATCA) and the UK Government:
“As communicated last week, officials from Guernsey, Jersey and the Isle of Man continue to engage with US officials, aimed at concluding Intergovernmental Agreements under the US FATCA regulations.
“We also share a common commitment with the UK to combat tax evasion and to participate in international efforts to combat financial and fiscal crime. We have long made it clear that neither Island has any wish to accommodate those engaged in tax evasion.”
Senator Gorst added: “The UK Government is seeking to promote more widely as a new international standard the principles of the US Foreign Account Tax Compliance Act (FATCA). Jersey considers that it is important that in doing so the UK Government mirrors the approach of the US FATCA in being global in its application, ensuring a non-discriminatory approach for all jurisdictions.
“In our ongoing discussions with the UK Government we will be pressing them to make clear the steps they are taking to promote the adoption of automatic exchange of information worldwide to ensure that a level playing field is achieved for all finance centres competing in the global market place.”
The message was clear at the time: it was defiance in the face of accusations of tax evasion.
Now the demand has been acceded to. What's been agreed then:
a) there is tax evasion that needs tackling after all?
b) a level playing field is not needed?
c) automatic information exchange is now acceptable?
Or is it all three? What's said now in St Pewter Port?
And any word from Jersey?
Or shall we just agree that I'm right, and Guernsey was, as ever, dragged kicking and screaming to the table?
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I think you will find that it was due to a realisation by Guernsey that it was on a different wavelength from Jersey, despite the joint statement 3 months ago, and so needed to break rank as Jersey is determined to plough a different and confrontational furrow.
Thanks for your candour
I suspect on this occasion your are right
And Guernsey does deserve credit for changing its mind
So I give it
A bigger question is why Jurisdictions like Guernsey or Jersey need FATCA inter-governmental agreements (IGA) in the first place. After all, the US are currently negotiating IGAs with 50 or so jurisdictions, which means that another 150 or thereabout countries/jurisdictions feel they have no urgent need to get their own IGA agreed.
A simple way for Jersey or Guernsey to deal with FATCA would simply to allow their respective financial institutions that so desire to register directly with the IRS and provide whatever information the IRS requires. That does not require an IGA framework and in fact can be largely accommodated under existing OECD standard administrative assistance procedures.
I’m sure every institution would be delighted to do it alone
Heard of economies of scale
Economies of scale are irrelevant. The compliance costs do not decrease significantly once an IGA is signed; a financial institution must still gather and prepare all relevant data regardless of whether it is passed directly to the IRS or to its home government that then transmits it to US authorities.
In fact, under the second model of IGA (IGA2) which both Switzerland and Japan, two countries with very large financial services industries, the banks will continue to report directly to the IRS, as would be the case if the agreement did not exist.
Don’t worry about us Richard when the European banks open tomorrow I suspect Guernsey finance companies will be inundated with calls from people wanting to do business with us. Especially those with accounts in Cyprus, Spain, Italy, Portugal, France and possibly the rest of the EU.
The Euro is heading for collapse as all the intelligent financial commentators predict, it is only the communists in the EU who think they can save it, now it would seem by government theft of peoples bank accounts.
Dave
You do speak a load of twaddle
Richard
Your comment ” You do speak a load of twaddle ” is astonishing.
I am sypathetic of your ideals as I believe everyone should shoulder their share of the burden which the state (yours or mine) places upon them. You lose me, and I’m sure many others, when you act like a child. Shame on you. Go and sit in the naughty corner and then step down in favour of someone who won’t compromise the validity of their argument in such a shameful and pathetic way.
He does speak a lot of twaddle
Quakers use plain speaking
That was plain speaking
If you have a problem – then it’s your problem – not mine
You think its twaddle Richard,
Well people in the EU know one thing, they can no longer trust their own governments not to rob their accounts when the mood takes them and I suspect many people will be looking for more secure banking facilities outside the EU in the future.
The back lash on this has not even begun yet and when trust breaks down in the banks in the EU then it will be years before they will win that trust back.
Dave
In Guernsey you could not actually guarantee a penny of depositor’s funds – and you limit your liability to £100 million
Tell us how much is actually in your banks Dave as a % of GDP, will you
Then we ‘ll see what protection you provide
Richard
Richard
Over 93 per cent of our deposits are institutional. Not retail in nature.
It should be clear to any balanced analysis that such protection is more than adequate as it relates to a small fraction of the deposit base.
With reserves in excess of 30 per cent of GDP as opposed to the UK borrowings of circa 70 per cent of GDP and a balanced revenue budget its hardly surprising the Islands enjoy an exceptional stabilty rating by the IMF.
You’re less stable than Cyprus
What you rely on – and you know it is the the implicit guarantee of the UK
And that’s galling
Richard
Read the IMF report on Guernsey, it states quite clearly that we are one of the most stable juristicttions and best regulated finance centres on the planet.
Are you now saying that you know better than the IMF?
I am saying that is very clearly because of a UK guarantee
And yes, I do think in some respects the IMF is wrong
Richard
The UK do NOT back our guarantees, we are not part of the UK or great Britain or thankfully the EU. You really need to check your facts.
In 2008 the National Audit Office made it explicitly clear that the UK does guarantee the liabilities of all its dependencies of which you are one.
You are not sovereign. The UK is your guarantor.
It would help if you knew about the place you represent about which I clearly know more than you do
Richard
I stand by the accuracy of everything I have posted on this site, our deposit protection scheme is ours and ours alone, there is most definitely no UK guarantee of this scheme whatsoever.
Do you understand the word ‘implicit’?
I do Richard.
You are doing what you always do, which is trying to get your argument to fit the facts. By the way the phones were very busy yesterday as money starts to pour out of the Europe.
Dave
I do not believe you
Not for one minute
Richard
Richard
Once trust has broken down between the people and their institutions it is gone forever, if you don’t believe me, then at least believe the column inches in the European and UK papers that predict a run on the banks and significant movements of money from the grasp of the EU.
Sky news and other news channels are screening the views of economists from around the globe predicting the same thing. Being in denial will not change that.