Ed Miliband's announcement on tax havens, made last night is significant for a number of reasons.
Firstly, it's significant because after a week of criticism of what he's been saying from business he is making clear that he won't back down on tax. People want to hear that. I sincerely hope this is a 'line in the sand' moment.
Second, the fact that in his interview with the Guardian he has said that this is a pro-business policy is also important: I have long argued that providing business with a level playing field where tax cheating does not distort competition is one of the key features of tax justice. That message has been heard. I am pleased about that.
Third, the threat to make the UK tax havens comply is in itself significant. It challenges one of the long held but wholly untrue claims of these places that they are independent locations that can legislate for themselves. In practice they can legislate but only with the consent of Westminster. In that sense they are like Northern Ireland, Wales and Scotland at present, all of which legislate in parliaments whose existence is subject to Westminster consent. And that consent can be withdrawn: the ending of Stormont rule on occasion and the UK walking into and taking over rule of the Turks & Caicos Islands is evidence of that. The imposition of law on these places, which cannot pass any law in any case without the consent of the UK, is entirely possible.
So the question has to be asked as to whether this is the right issue to fight about? It is a surprising one to pick, and yet with appropriate political and economic significance. The failure of David Cameron to deliver obviously supplies the political significance. The economic one comes from the fact that it is about transparency, tax evasion and the willingness to act to take on the capture of these places and their legislatures by the financial services industry in a way that is a direct threat to democracy itself.
I would, of course, want more. I would want 10% ownership on public record, not 25%. And I would want accounts filed as well. But the battleground has been well chosen and I will settle for that right now.
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I hope you meant 100% not 10% !
What I mean is people owning more than 10% should be disclosed
In practice they can legislate but only with the consent of Westminster.
But what normally happens is that the law is signed off without so much as a second glance by the Privy Council, simply because most of it’s members have lunches to go to with their City banking friends :).
Two specific things relating to Jersey. One is that increasing amounts of law are made not by legislation but by ministerial decision – the law is written to allow a minister wide powers to vary it (so for example the law on unfair dismissal was recently changed – on no evidence – so that employees in post under a year cannot claim it; previously it was six months).
Second, where bad law is written, local people have made attempts to petition the Privy Council (as is their right) to ask the States to reconsider. None of these petitions have, to my knowledge, so much as been acknowledged, let alone listened to.
In practice, legislators have a largely free rein. The reason that permission to legislate was withdrawn at Stormont and in the Turks and Caicos had nothing to do with the legislation being passed, and everything to do with the fact that legal order was under threat. Until there are riots in St Helier, Douglas and St Peter Port the UK government will, I fear, do nothing to step in.
Thanks
I know what you are saying is true
It’s another reason why oversight is needed
Aren’t there some big issues here though.
Firstly there are significant obstacles in the UK (and other places like the US and Singapore) in actually identifying the parties behind companies, even by law enforcement, whereas the regimes in places like the Jersey, Guernsey, Isle of Man actually make this information more readily available to law enforcement when required.
Also isn’t there more fundamental issues about the use of structures such as LLC and LLP in the UK and the US which encourage the US of these jurisdictions for “profit shifting” – they are hardly paragons of efficiency and transparency.
With US and UK FATCA and CORS coming along, isn’t the issue/effect of secrecy going to be resolved by that process.
The publication of public registers is going to do nothing to resolve the bigger societal impact of big tech and big coffee not paying the “right amount of tax in the right place”
Doesn’t 4MLD go some way to providing a more effective solution rather than this proposed unilateral action?
Banks and others (like me as a chartered accountant) have a legal duty to determine beneficial ownership as a matter of fact. It is always possible. Nothing excists for no one
And yes LLPs can be a problem – but the aim is to identify the ownership of the members. This is also possible
I am sorry: if I have a legal obligation to do it I see no reason why it is impossioble elsewhere
You are being deliberately obtuse there Richard. The fact is the UK does not publish this information and the registries in Jersery, IOM and Guernsey do capture this data and therefore the data exists when enquiries are made by law enforcement agencies and tax authorities. The point is the UK does not capture such information and yet wants its overseas and dependent territories to also publish the information it already captures. To be honest citing tax avoidance as the reason for this information not being published online is naive. There are lots of oppressive regimes out there, Russia in particular, which has pursued political opponents with fake tax cases and other trumped up charges. The reason for owners not wanting their details published (as opposed to known and held wnich the Dependencies already do) is often more to do with their personal security to avoid state persecution, state blackmail, extortion by public officials, and attempts of bribery etc on behalf of corrupt States. As governments shift more to the ripping as a result of the financial crisis you simply cannot act as moral arbiters and assume that all states just want this data for simply hinest cases of tax evasion.
It will be publishing this information
Please keep up with what is going on
We announced we would do it when the CDs and OTs were asked to do it – which they are now refusing to do
I do keep up with what is going on. Please try to be less bombastic. I stated the UK currently does not capture that data as it does not. Surely it should be leading by example and taking action itself first before looking to impose requirements in its dependencies which it currently does not do itself? Unless, of course, the UK does not want to do this and will be using the excuse the dependencies won’t do it as its get out of jail free card? The fact remains though that the dependencies capture this data and any approach by law enforcement or tax will be answered in the appropriate way – including the disclosure of owners if that is what they ask for – because the Dependencies capture this data and the UK, currently, does not.
There is no evidence this data is captured
And the UK us doing what it is demanding
You are just offering excuses
A crackdown on British overseas territories acting as tax havens is indeed backed up by the threat of Westminster suspending their government.
That’s something we might refer to, with a bit of hyperbole, as ‘The Nuclear Option’. And, just like the real bucket-of-sunshine, it’s a last resort that has actually been used once or twice – and is best kept as a threat unspoken.
Other methods exist: and the USA’s ability to sanction non-cooperating money laundering jurisdictions is instructive: they sever all relationships with correspondent banks and, as BNP can tell you, they are getting serious about the sanctions they can apply.
It’s that ‘conventional warfare’ approach, rather than The Ultimate Threat, that gets things done. Take the recent furore over small-to-medium scale money laundering in HSBC accounts in Jersey…
…Which had more to do with international efforts on disclosure, with HMRC trailing along reluctantly, than any determination emerging from Westminster.
So it boils down to political will. And I note that the United States can make some headway against money laundering for drugs and rogue regimes, but has barely woken up to massive tax evasion by the major corporations native to America but ‘domiciled’ in Bermuda.
You are right to express optimism and encouragement on hearing Ed Milliband’s latest speeches – it is a refreshing change from a regime in which our existing Chancellor’s family trade is tax evasion – but it would be prudent to ask if that will to act is shared by the rest of the Labour Party.
Take the issue next door – the National Health Service – in which a former Labour minister with substantial commercial interests in the post-privatisation entities he used to run has made a public show of criticism and disunity intended to endanger Labour’s electoral prospects, in the hope of forcing a retreat from the Milliband policy position.
Who are the tax-evaders’ friends and paid supporters in the Labour Party?
Make no mistake: they do exist – the regulatory capture of HMRC happened on Labour’s watch, and Vodaphone’s six Billion is merely the most blatant example of an institutional corruption which met with deafening silence from the Labour front bench.
As I have said before, Boots’ criticism of the Labour stance on taxes has been criticised as greed and cynical self-interest, when they are equally to be deplored for their ingratitude.
Ed’s focus on this is very welcome, Cameron should have put his foot down a long time ago, it’s a disgrace that he hasn’t. BUT I’m wondering what the threat of international blacklisting is, given how they have worked in the past?
http://t.co/PndaxQe2Lk
I agree
The sanction is too weak
Im sure the worlds future Mikhail Khodorkovsky’s will feel their human rights will be secured through this ridiculous pressure which gives license to any rogue state to have access to public records with which to pursue political opponents to their deaths or to long term imprisonment through trumped up tax charges and other state fabricated actions. Will Ed be around as these human rights cases get heard as to why people’s rights to have their private data published have been ignored and how ofshore jurisdictions have effectively aides totalitarian regimes to pursue vendettas against wealthy people who have shown desent against their governments? As stated all this data is already captured by the dependencies, and this data is passed on when tax authorities and the police make information requests. It simply is not published online or in any other format. Just like it isn’t in the UK who don’t even capture the information in the first place. Those gulags are going to be getting very full and you do have to question if this is primarily about tax at all.
No one on earth need use a company
If they do publicity is the price
My wife works in Trust as a manager in Jersey and we are confident that the tax avoidance system of using trusts will be around for many years yet. Jersey’s future is prosperous and if it isn’t we are stuffed so this threat is worthless.
You are stuffed then
The above comment purporting to be from “Rico” is actually written by a troll who regularly targets a man in Jersey called Rico who writes a blog campaigning for justice (normally on child protection issues) whose wife works in finance.
It’s a quite a sick person who runs multiple online avatars to post this sort of inane rubbish.
That is who the right-wing rely on to do their dirty work for them. Another sign that they have just completely lost the argument.
If the tax havens had a public vote in which they declare complete independence from the UK would that then invalidate any ‘sovereignty’ Britain has? or are we chauvinists here in declaring that the UK has moral right to dictate to other quasi-independent Governments?
If so, then are we saying that democracy is not absolute – that the democratic mandate of independent regions should be usurped by the majority of another region?
They have no right to such a vote unless you think Englush counties have such a right
I believe the Isle of Man parliament has been around longer than Westminster – and from living here for a few years I know the Manx public are fiercely independent. Of course the very much less independent Scots recently had a public vote on the subject – you seemed to very much support them having this right – what’s the difference with the Scots and the (currently more independent) Manx having a vote – how you do remain consistent on your support of one’s democratic mandate, but not the other?
The Isle of Man has a parliament of sorts, I agree
But please show me where it has ever been recorded as a nation state?
Respectfully, Mr Murphy, your knowledge of constitutional matters is woeful: the Crown Dependencies and Overseas Territories are not remotely comparable to counties of the United Kingdom. The Overseas Territories have an automatic right to secede following a referendum as they are recognised as Non-Self Governing Territories by the United Nations. Bermuda held such a vote in 1995, which was roundly rejected; other former British territories such as Seychelles left after a similar vote. In the case of the Isle of Man, the agreed mechanism for severance is a referendum producing a “yes” vote of 55% or more (why 55% as opposed to a straight majority, I have no idea). Whether any of the Crown Dependencies or Overseas Territories would exercise this right, I cannot be certain, but it is my belief that Gibraltar and the Cayman Islands would never do so, Bermuda conceivably might, and in the case of the rest it would depend on how strained relationships became with the United Kingdom.
I am glad you agree that they are therefore still subject to our rule now
And that we can, therefore, legislate as we wish
I rest my case
Please also supply your sources and evidence that they have ever been followed
English counties operate only in an executive role,and are far more limited in law making powers than any Crown Dependency,quite apart from any historic or cultural differences. Even Scotland,which is a proud nation has only grudgingly been granted a “devomax” deal,and is thus still very limited in legislative power even compared to any Crown Dependency.
I think the nation/not a nation argument is a bit of a red herring if push came to shove,and total independence was a possibility being considered in a Crown Dependency,for they are far nearer that situation already,and the UK would have to accept that,unless it wished an international legal confrontation as a pariah colonial power. Having said that,I don`t think they will go for independence,or should – but you never know what the future holds.
They won’t do it because they need the UK
In which case, as I have said, we can and do dictate terms
That’s the reality
Anyone wanting to read a specific Jersey account on the subject of whether it is subservient to the UK should read “Jersey and the United Kingdom” by W.J. Heyting, which confirms that the UK does ultimately have the right to legislate for Jersey.
Usually this is done via Order in Council where the UK legislation specifies that it applies to Jersey, but there have been precedents in the past where an Order was missing (just out of error) where the Jersey courts have upheld the UK statute regardless.
Agreed
Thanks
Appreciated
Richard
The Overseas Territories may be classified as Non-Self Governing by the UN, but are internally self-governing. A better description of them would be Non-Sovereign, which is unquestionably the case. However, the fact remains that should the UK attempt to remove self-government from those territories without exceptionally good reason, it would face strong opposition from the UN.
You have also misunderstood the case of Turks & Caicos. The UK did indeed remove a (demonstrably corrupt) elected government from power, but that did not change the constitutional status of Turks & Caicos. The islands were placed under the interim administration of their Governor-General acting as a plenipotentiary before fresh elections could be called. In other words, the UK Government did not attempt to absorb them because it was well aware it did not have the legal right to do so.
As regards independence referenda in Overseas Territories such as Bermuda and Seychelles (which would technically have been a Crown Colony at the time), this is simply a matter of historical record. There have been no such referenda in Cayman, Jersey, Guernsey et al because there has been no formal demand for them.
Finally, you are not alone in your constitutional misunderstanding: the Guardian article you cited described Cayman and Bermuda as “Crown Dependencies”.
The UK is wholly responsible for tax compliance in these places e,g, to the EU whose law applies to them because they are part of EU for that purpose
And no one objected when we took over Turks & Caicos – which we did because we had an absolute right to do so. The fact we used local arrangements did not change that. Your argument is irrelevant
Bluntly, you are making stuff up, as I thought
The UK is certainly is responsible for the islands’ international relations – a double-edged sword in that the islands pay them for this service, but the UK also has an enforcement role regarding international agreements. This does indeed cover certain aspects of tax compliance, though not the one under discussion (which appears to have been unilaterally invoked by the UK Government).
You are right that there was no objection to the Turks & Caicos takeover, even from the locals themselves – it was obvious that its elected Premier was corrupt through and through. Unfortunately, you have failed to understand the nuance of my argument, which is that its constitutional integrity and long-term independence was maintained even whilst its current administration was removed.
The payment is a joke
We support all these places in various ways
And bear all the risk if they fail as the NAO confirm – another reason why we can intervene
The Isle of Man has never been governed by the UK, as you point out it is a Crown Dependancy and it makes its own laws which receive Royal assent. The Westminster Parliament does not discuss the Isle of Man, we have no representation there so please don’t think that the UK rules the Isle of Man. We fund our own health service, schools, roads, policing in fact everything which you benefit from in the UK.
It is entitled to set its own rates of taxation which happen to be lower than the UK. This may or may not always be the case. The island was one of the first to declare transparency and sign up to the Berlin Tax Agreement, voluntarily slicing its income causing some of the current fiscal issues which the island has at the moment.
If the island were to be drawn into the UK, I’d
As you can appreciate, generating income to support infrastructure for a population of 85,000 is not something which can be done through tourism, fishing and farming any more. Financial services and e gaming provide employment for thousands of island residents. If these were to disappear then perhaps the UK would like to take us over as an offshore county, part of Lancashire for example?
I would suggest that the cost would outweigh the benefit and the human misery and resentment it would cause would make it a poison chalice for the UK!
The Marine Offences Act 1967 was specifically passed to ver-rule the IoM
You had to comply with EU human rights law at UK demand
And comply with the EUSD
Let’s not mention the VAT subsidy you had for many years
Would you like to stop spouting nonsense now?
The Isle of Man has never been governed by the UK, as you point out it is a Crown Dependancy and it makes its own laws which receive Royal assent. The Westminster Parliament does not discuss the Isle of Man, we have no representation there so please don’t think that the UK rules the Isle of Man. We fund our own health service, schools, roads, policing in fact everything which you benefit from in the UK.
It is entitled to set its own rates of taxation which happen to be lower than the UK. This may or may not always be the case. The island was one of the first to declare transparency and sign up to the Berlin Tax Agreement, voluntarily slicing its income causing some of the current fiscal issues which the island has at the moment.
As you can appreciate, generating income to support infrastructure for a population of 85,000 is not something which can be done through tourism, fishing and farming any more. Financial services and e gaming provide employment for thousands of island residents. If these were to disappear then perhaps the UK would like to take us over as an offshore county, part of Lancashire for example?
I would suggest that the cost would outweigh the benefit and the human misery and resentment it would cause would make it a poison chalice for the UK!
85,000 is neither here or there
And you are all apparently very clever to make so much money
Isn’t the problem here that Man, Jersey and Guernsey are not within the UK?
The link is Queen Elizabeth II, in that those three and the UK share the same “ruler”.
Does the UK have the right to change Jersey laws, without taking it into the UK? Wouldn’t the UK have to do that by force if the Jersey population were unwilling?
I think I’m making the mistake of looking at things how they are, rather than as they should be, for which I apologise in advance.
We are responsible for their foreign affairs and law and order
We can intervene
Strictly speaking, no. The UK is responsible for their defence, international relations and “ultimate good governance”. Sorry to appear pedantic, but that’s slightly different from law and order, and significantly restricts the circumstances in which the UK could legitimately intervene.
If law and order breaks down we would intervene, let me assure you
And we have already in some areas of tax. The EUSD, for example
This is just another such case
The IoM has towed the line in deference to Europe mainly. The UK government allows us as a Crown Colony to be affiliated to the EU through its membership. It would be foolish for the island to alienate itself and risk this, that is the reason for the deference.
The VAT sharing agreement was as the name implies, an agreement, which is renegotiated and this was done when the UK found itself in dire straits. If as you seem to imply, that the IoM is governed by the UK then surely we should be given the same handouts offered to UK County Councils?
That is just untrue
You have np been told to comply and have been forced to so so e.e. With EU Code of Conduct, when you did not want to and tried to avoid the obligation
Respectfully, stop bullshitting
Since the UK law does not require the disclose beneficial relationship, will Milliband include the United Kingdom on the list countries submitted to the OECD blacklist?
It will by March
The UK agreed to do this as a G20 action andd emended the OTs do the same
They said they would consider it in June 2013 and are refusing to deliver
We pass the law next month
Richard, I have (over the course of the last twelve months) come across many dissenting voices who feel that Jersey is run as a private fiefdom for the mutually assured benefit of the very wealthy.
Many of those voices would welcome (and have called for) a greater lead being taken by the UK mainland.
As is so often the case those voices struggle to be heard over the clamour of the vested interests. Many fear that the relationship between the legislature and the judiciary precludes open criticism of the governance of the island. So I doubt whether the opinions expressed by some of the commentators on this thread are wholly representative of the population of the CD’s residents.
Mr Murphy, I am not an accountant like you and am disappointed at you saying that I am ‘talking nonsense’ and ‘bullshitting’!
I am merely saying what I am led to believe is true but you avoid answering points by trying to belittle me.
I am a small businessman on the IoM and have been hit very hard by the downturn which has hit the island. The UK recovery is not happening here and we are being warned of worse to come!
We see the UK and other powers rightly or wrongly crowing about legal tax avoidance, which it is in their power to legislate against their own citizens and companies using. At the same time the taxation system of the UK is deliberately convoluted in order to allow the foreign super rich to harvest the country to the detriment of the rest of the population.
How can there be one rule for the tiny islands and another for the UK and others?
If you try to tal for the islands get your facts straight
You haven’t
I am entitled to believe that when that is persistent my description is justified
I believe that my facts are correct! I don’t speak for anyone, I speak for myself!
You are talking about legal tax avoidance, that is a matter of conscience for the individual not you!
Perhaps they don’t want their hard earned money being taken from them and used to prosecute illegal wars in foreign countries? That is a matter of choice!
As far as I can see you are just a typical accountant who knows the price of everything and the value of nothing. You seem not to care about the consequences of what you say or do on ordinary people.
I am not a tax exile and I know very few who live on the island who are. I was born there, long before anyone thought of the term ‘Tax Haven’! I like most people just want to live a normal life on the island we were born and raised on.
It seems that your influence threatens that, despite the governments willingness to sign up to openness you continue to attack our legal finance sector!
I still oppose the secrecy your government promotes because it is used to undermine democracy
I think the ballot box is where you express matters of conscience, not on your tax return: at least not in the way you suggest
Ok, but do you feel that the Berlin Tax Agreement is not sufficient in helping to combat tax evasion?
We have a loing way to go on all aspects of beating tax evasion