Boris Johnson is apparently struggling to find ways to give development aid to the UK Overseas Territories that are too wealthy to benefit from the aid budget. As ever, Johnson is wholly misguided in his efforts.
Of course these islands have suffered badly, and of course they need aid but their high GDP per capita is not an accident, even if not everyone who lives there will see all the benefits of it. Rather, that high GDP per capita is an indication of their tax haven activity and, in turn, their ability to fund their own recovery.
What the islands need is liquidity and resources now. So let's provide both. But let's not worry about digging into the aid budget. Just as £1bn could mysteriously be found for Northern Ireland when needed so too can the money for these islands be found now. But better still, we don't even need to find a budget to take the money from. Just lend it instead. Nothing could be easier to do: after all government can create money at will for that purpose just as banks can.
Charge interest on this loan by all means, but make it modest.
Be fair and require repayment over the life of the assets.
And build in incentives to give up tax haven activity into the loan conditions. So waive part of the capital for accounts published on line, and more for trusts doing the same. Then add another waiver for public beneficial ownership data and maybe a bit more for having a corporation tax. Give the islands a choice. But make opacity cost.
That way help is given now and tough decisions can be deferred. But international tax abuse gets a local price. And those in these places can either pay it or elect politicians who reform their practices. Now what could be fairer than that?
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:
If the hurricane has opened up just how hollow the relationship with the UK is, then I hope the islanders have their own referendum in the future and choose to get out from under the yolk of Britain and choose be over seen/protected by France.
Judging by what I saw on the news last night they’d be much better off.
Is this a joke?
I remember a movement within the BVI for independence several years ago. I’m pretty sure they will be silent on this matter now that their islands have been destroyed.
And why would France want them? You can only sustain western lifestyles on islands in the middle of nowhere through subsidy (or as a tax haven). Guadaloupe and Reunion are incorporated into France, i.e. they pay French taxes, get representation through MPs and receive French welfare.
UK could conceivably incorporate these territories (something that would solve the dispute with Spain over Gibraltar), but the BVI islanders don’t want to pay UK taxes, don’t want British people to be able to have freedom of movement there, and want to determine their own laws. On the other side presumably the UK state isn’t exactly enamored at the prospect of endless subsidy to keep these places afloat.
No – it’s not a joke – just a sentiment based on a comparison between the actions of one nation (the UK) pretending it is a world power but not behaving like one and another – (France) who seems to know how to fulfill its duties and obligations to its over seas territories (in other words it takes money and a proper regard for democracy Thomas to run territories and be able sort something like this out).
But it also shows up something else.
The neo-lib UK and its ‘small state’ thinking cannot really cope with disasters of this magnitude because by hollowing the state out they reduce its efficacy in such situations. Just like we saw in the ultra neo-lib USA when Katrina hit New Orleans (which was even worse because Katrina happened in the same continent – not thousands of miles away).
As for the islanders themselves – is this their position on tax or the position of those who harbour or help to harbour money there for tax purposes?
Maybe we should now ask the islanders if they would be prepared to pay taxes (I am taking you at your word that they are resistant to this Thomas) if it meant that they got help in these circumstances from the UK (especially now that there is evidence to suggest that these events are becoming more frequent)?
But no – of course they will not be asked. Instead they will be misled whilst the UK Government continues its overseas dependency sham in order to help its elites store money off shore.
That is why I would vote to be with France if I was an islander . Even if the French territories are used for tax evasion at least they attempt to co-opt their islands into mainland democratic systems. From a democratic system POV, the BVI islanders do not seem to exist in British democracy.
What is the old saying: ‘No representation without taxation’? Tax is perhaps the key to ending the islanders woes.
I wonder – would Richard fancy a trip down there to put the local leadership in the picture?
Dear Pilgrim,
Thank you for your reply and I appreciate the detail in your follow-up.
As far as I am aware (and happy to be corrected by RM), the French islands are not tax havens or “secrecy jurisdictions”. They are incorporated into France: they have French laws, taxes and welfare. I would hazard a guess that they are net recipients of funds, i.e. subsidised by mainland France. If you are incorporated into a country, you should be able to expect every assistance from your fellow citizen.
UK citizens are not peers to BVI islanders – for example we are not allowed to move there, and they don’t pay UK taxes. IMO the status of the BVI and other overseas territories is ambiguous and unsatisfactory, they are ‘quasi independent’ — and up to now they have liked it that way.
There is an immediate humanitarian need in the BVI, and the UK should act (and is). Beyond that, does the UK have a duty to rebuild their islands? I would say “no”.
I’ve often wondered how it came about that so many UK territories became tax havens. Some on this blog have suggested connivance by the UK to act as conduits into the City. I suspect the reality is simpler, that 50 years ago the UK was looking for a way for these islands, whose economies are basically fishing and tourism, to be able to support themselves without subsidy. At the time it probably seemed like a good idea.
It’s pretty much true that the French islands are not a problem
The Dutch ones are, very much so, but surprisingly unnoticed
Sounds eminently reasonable. But a Tory government, making such a demand of one of its own tax havens? Perish the thought.
Richard
Good points, well made
Very good and more constructive than my “let the buggers fund their own repairs by levying tax properly on foreign deposits” comments I’ve been making.
Much better that practical and immediate steps are taken like those you suggest above so that ordinary islanders can get back on their feet soonest.
I have been wondering since the start why the UK didn’t simply offer them loans at a reasonable rate of interest.
BVI islanders I hope will use this time to check themselves. They treat people of the other islands so poorly – ‘down island people’. Who do you think will fix the infrastructure? Who do they wish would stay? Down islanders who are constantly being snarled at. It won’t be spoken of aloud but the false pride and air of superiority is there.