Tax Justice Network » Tax Research UK

Has the Isle of Man fallen in love with the Tax Justice Network?

Financial Secrecy Index, Isle of Man, Tax Justice Network 1 Response »

Oct 072011

Some secrecy jurisdictions have got very upset with the Tax Justice Network about its new Financial Secrecy Index. Jersey, Luxembourg, Cayman and the UK are amongst those getting stroppy, but then they ranked highly. The universal reaction on their part? We got it wrong.

So now let’s note the reaction from a secrecy jurisdiction that saw its ranking improve quite a lot. That was the Isle of Man. Isle of Man today has said:

It’s been among the fiercest of critics of the Isle of Man as an offshore finance centre – branding us a ‘tax haven’ and ‘secrecy jurisdiction’.

But now even the Tax Justice Network has acknowledged the work the island has done in increasing financial transparency.

Tax Justice Network had produced its latest ‘Financial Secrecy Index’ which shows the Isle of Man well down the list at number 36 behind such mainstream onshore countries as Italy, Ireland, Canada, India, Austria, UK, Germany and the USA. Of our Crown Dependency rivals, Jersey comes in at seventh on the list and Guernsey at 21.

The previous Financial Secrecy index was published in 2009 when the Isle of Man was placed at 24th on the list with an ‘opacity score’ of 83.

This time the secrecy score has been reduced to 65.

Tax Justice Network adviser Richard Murphy, who was heavily involved in the construction of the index in 2009, said in his blog that the Isle of Man and Guernsey both got credit for increasing transparency.

So let’s get this clear: we get this right if you go down the ranking and we get it wrong if we go up.

I think the conclusion is obvious: of course we get this right. It’s just some do not like the answers. Being named as the facilitators of crime is I guess always going to be uncomfortable for a place. But let me assure those who don’t like it: we’re going to carry on doing it.

I think I’ve upset Cayman. My crime today? Living in a modest house

Cayman, Financial Secrecy Index, Secrecy jurisdictions, Tax Havens, Tax Justice Network, Uncategorized 12 Responses »

Oct 062011

The Cayman Islands official news service hasn’t taken kindly to Cayman being ranked at number 2 in the new Tax Justice Network Financial Secrecy Index. They said so almost as soon as the report came out but now they’ve pretty much lost it, so deep is their anger at being given credit for what they do so well, which is to sell secrecy.

Rather weirdly, they’ve made me the villain of the whole piece. I say weirdly for good reason: as I’ve made clear, whilst I was heavily engaged in producing the first Index this time I only acted as an adviser, but heaven forbid things like facts should get in Cayman’s way when the true nature of what they do has been rumbled. The whole Cayman report is worth a read for its amusement value, but let me just highlight some of it here:

The chair of Cayman Finance and the organisation’s representative in London have both dismissed the findings of the Financial Secrecy Index published in the UK capital on Tuesday by the Tax Justice Network and Christian Aid. Richard Coles and Jack Irvine both claim that the authors of the report are advocates of global taxation, once referred to by the former Cayman Finance Chair as the ‘Tax Taliban’ who are not taken seriously. Within some 36 hours of its publication the report and its finding that Cayman was the second most secret financial jurisdiction in the world and played a key part in the global financial crises was posted on websites of more than 70 different international news houses and media organisaitons.

That last part is true. But as they say:

“It beggars belief that the Tax Justice Network still produces these canards about The Cayman Islands,” Richard Coles said in the wake of the report’s publication. “We have never been more transparent and we have never had so many tax treaties with other jurisdictions. What is deeply worrying is that some sections of the UK media take Messrs Murphy and Christensen seriously. These men are high taxation zealots and like the OECD they see nothing immoral in governments taking half or more of a man’s salary,” Coles said, adding that they would not be happy until there was a universal global tax rate.

Which is an intriguing association on Coles’ part: much of the criticism in the report is aimed at the OECD. Maybe he hasn’t read it?

But the fun then really starts:

Jack Irvine, the London based advisor to Cayman Finance’s who liaises on their behalf with HM Government, the media and Cayman’s London office … described the secrecy index report as the “same tired old song” that he said the Tax Justice Network have been turning out for years. “

There are a few facts that your readers should appreciate about this rather grand sounding organization,” Irvine told CNS. “In fact it is a tiny little outfit run out of Richard’s Murphy’s modest house in the English countryside.

Well, it’s true Jack I live in what some would call a modest house in the English countryside – and I’m very happy to do so. It suits me and my family just fine. Modest it may be in Jack’s view, but I have no desire to move. But two questions arise. First, why has he got his facts so wrong, and secondly, so what?

For his information, I haven’t been an officer of the Tax Justice Network for several years, nor even paid by it for some time. I certainly advise it and work closely with John Christensen, its director, but the international network, spread over many countries now is run by John, not me. So it looks like Jack Irvine has failed to get his due diligence right.

But even if true – the question is, so what? Does it matter that I mainly work from home? Does that make a difference to the result? I mean, surely better I say I work from home where I actually am than claim I’m based in a slot in a filing cabinet in a lawyer’s office on Cayman just to avoid or evade tax and to hide what I do from view, wouldn’t you say Jack, just to bring things down to earth somewhere new Georgetown?

Well apparently it does matter, for as Irvine continues, this means:

Nobody in the financial world takes Mr Murphy seriously. He is an advocate of punitive taxation and he would like all countries to have a common tax system. This is not a man who appreciates individuality when it comes to governments.”

That’s pretty odd. The financial secrecy index isn’t about tax rates. They just don’t feature Jack. The clue is in the title. Nor have I advocated punitive tax. And what a common tax system is baffles me: by definition even within the EU such things don’t exist. I wonder what he means?

Irvine hasn’t finished yet though:

The TJN is actually an alliance of a number of individuals and non-aligned coalition of researchers and activists with a common interest in what they believe are the harmful impacts of tax avoidance, tax competition and tax havens. Murphy is just one of the individuals who blogs regularly on the subject.

He’s got something right. I blog regularly. I accept that!

By this point even Cayman News Service was getting a little weary of Irvine’s rant. Even they noted:

The secrecy index which was published on Tuesday which ranked Cayman as the world’s second most secret jurisdiction was written and researched by seven people including John Christensen who is the director of the Tax Justice Network International Secretariat.

But Irvine had not finished:

Irvine said that Murphy has the support of what he described as “politically motivated charities” such as Christian Aid and Oxfam, which others would describe as one of the largest and most respected charitable organizations in the world. But he said it was Murphy that was forever “claiming that tax neutral administrations such as Cayman, BVI or Jersey are responsible for the deaths of children in the developing world, in particular Africa.”

He said there will always be sections of the British media who would “dance to Mr Murphy’s tune” and went on to say that it was “no surprise that the left wing Guardian is always willing to repeat Mr Murphy’s tirades without question or attempting any balance.”

My guess is that this is said to support Irvine’s case that I’m not taken seriously? It’s a compelling case you make Jack based on this evidence. The trouble for him is that Cayman News added:

However, Irvine didn’t comment on the stories run by the Daily Telegraph, known as a more politically right wing daily newspaper, or those in other more neutral news houses such as Reuters and Bloomberg.

Why not Jack? Being a little selective in your take, maybe? No, not at all, he claimed:

Irvine said: “The Cayman Islands should be comforted by the fact that the UK government takes no notice whatsoever of either the Tax Justice Network nor The Guardian’s regurgitation of their fantasies and indeed the current UK regime and the House of Commons All Party Parliamentary Group have repeatedly signalled their support of Cayman and its robust financial and legal systems.”

Ah, that’s all right then. The current ‘regime’ in the UK is on Cayman’s side. So life’s all right then.

Why the tirade then Jack? Could it be you’ve got something to hide? And maybe, just maybe you don’t like a few honest people pointing it out?

Either way, thanks for taking it seriously. I appreciate that. Oh, and send a signed picture. I’ll put it on the wall of the room where I work. I can’t call it an office by the way – I share it with my sons’ model railway.

Which I guess proves Jack’s right though. I really am a lightweight cheapskate who can’t even get a slot in a filing cabinet all of my own.

Jersey flips its lid

Financial Secrecy Index, Jersey, Tax Justice Network 3 Responses »

Oct 052011

Jersey has, according to the Daily Telegraph, not taken kindly to the Tax Justice Network Financial Secrecy Index, in which it came seventh. As they report:

The CEO of Jersey Finance has criticised the 2011 Financial Secrecy Index, in which Jersey ranks seventh, as ‘nonsensical’ and nothing more than ‘lobbying disguised as research’.

Geoff Cook added:

The report is presented as though it is based on accepted international standards. The reality is that it is a selective interpretation of subjective information designed to further the Tax Justice Network’s specific agenda.

Sure it is Geoff: why should we use someone else’s when we’re more than capable of creating our own.

But Geoff doesn’t get that point. He added:

Jersey’s ranking in the Index is nonsensical. Jersey is one of the safest and best regulated international finance centres (IFC), as demonstrated by credible, independent assessments by internationally accepted organisations like the OECD and the IMF.

But we criticise the OECD, and rightly so: it’s laughable that having 12 tax information exchange agreements makes you compliant in their eyes. So we point out the weakness in their agenda, which was to exonerate these places far too easily for giving a sop to the OECD.

Although we’d also agree with them on one issue – Jersey has almost no experience of information exchange which is exactly why we say it’s secretive.

But let’s see just how daft Cook’s opinion is. As the Telegraph notes:

The new index contradicts the findings from last week’s Global Financial Centres Index, which ranked Jersey as the world’s top offshore finance centre according to how it performed against its competitors and how it is rated by financial services professionals.

So by using a simple rule of thumb - asking a select group of people who are looking for secrecy on behalf of their clients – Jersey comes out top and Jersey is proud of the fact but when we point out t comes on top with these people because it sells the what they want – which is secrecy – we’re told we’ve got everything wrong.

You can’t have it both ways Geoff. We’re either right that you’re secretive or the Global Financial Centres Index is right that you’re really secretive. But whichever way you spin it Geoff we’re still right.

And you’re wrong.

Now admit what it is you sell (because, let’s be candid Jersey has nothing to offer London hasn’t but secrecy and tax abuse) and stop wasting journalists time with your false cries of protest which no one believes.

London is the consolidated #1 secrecy jurisdiction in the world

Cayman, City of London, Financial Secrecy Index, Guernsey, HMRC, Isle of Man, Jersey, Secrecy jurisdictions, Tax Havens, Tax Justice Network, Uncategorized 11 Responses »

Oct 042011

London features heavily in the Tax Justice Network’s new Financial Secrecy Index. Whilst the UK comes in at number 13 places for which the UK is wholly responsible also feature prominently on the Index. The overall scores for London and its satellite offices are:

RANK Secrecy Jurisdiction FSI – Value Secrecy Score Global Scale Weight

2 Cayman Islands 1646.7 77 0.046

7 Jersey 750.1 78 0.004

11 British Virgin Islands 617.9 81 0.002

12 Bermuda 539.9 85 0.001

13 United Kingdom 516.5 45 0.200

21 Guernsey 402.3 65 0.003

36 Isle of Man 230.4 65 0.001

38 Turks & Caicos Islands 218.9 90 0.000

43 Gibraltar 174.6 78 0.000

65 Anguilla 36.0 79 0.000

Pu that lot together – and that’s the fair treatment of them since ministers in the UK and these places always say their value is as conduits to the City – and London is number 1 secrecy jurisdiction in the world.

But the Treasury denies it of course. As the Guardian notes:

The UK, with the City of London and a network of overseas tax haven territories and dependencies including Jersey, Bermuda, the British Virgin Islands and the Caymans, also features prominently in the index’s dirty dozen of top offenders.

The UK Treasury said it did not recognise the picture presented in the index, adding that the UK government had demonstrated a clear commitment to tackling all forms of tax avoidance and evasion.

And as it added:

A spokesman for the Treasury defended the UK record on tax havens, saying: “At the budget this year we published Tackling Tax Avoidance, on tackling avoidance at the root. The Global Forum on Tax Transparency set up by the G20 in 2009 now has over 100 participating jurisdictions and over 600 bilateral tax information exchange agreements have been signed. The world has changed over the past three years and continues to do so, and the government is committed to keep up momentum.”

Respectfully, that’s nonsense. The document in question is a weak re-hash of what was already being done: the one thing it actually made clear was that nothing had changed at all. And much of secrecy jurisdiction activity is evasion anyway.

As for those bilateral tax information exchange agreements: as the Guardian TJN notes saying:

The problem with many of the new tax information agreements, according to TJN, is that they have taken the weakest form possible, in effect requiring tax authorities to know what they are looking for before they ask for information, rather than requiring full disclosure.

Precisely so. And that’s a choice on the part of the UK and others: a smokescreen to hide what’s really happening – as the Treasury and tax authorities well know.

Indeed, as Dave Hartnett once said to me, he thought he had to sign the deal he did with Liechtenstein because the a standard OECD style tax information exchange agreement would never have produced any data at all, and on this occasion he was right – which is exactly why the Treasury know that what they’re saying is wrong and deliberately wrong.

So for those looking to tackle tax havens in the UK the problem is near at hand – and focused in London EC3.

The 2011 Financial Secrecy Index top slot goes to Switzerland

Financial Secrecy Index, Secrecy jurisdictions, Switzerland, Tax Havens, Tax Justice Network Comments Off

Oct 042011

The top slot in the 2011 Financial Secrecy Index goes to Switzerland – now considered the most abusive secrecy jurisdiction in the world as a result. There is good reason for that. As the Tax Justice Network says:

Since the financial crisis emerged, Switzerland’s share of the global market in offshore financial services has increased, as a result of its role as a safe haven.Although Switzerland has signed a number of OECD-style information exchange agreements, which have allowed a limited penetration of Switzerland’s fabled bank secrecy, we consider these operationally ineffective, so they have only a limited impact on our ranking (what is more, many other jurisdictions competing with Switzerland in our rankings have signed significant numbers of information-exchange agreements too.)

Switzerland also continues to resist automatic information exchange — the effective kind – and its widespread involvement in the administration and use of trusts, foundations and offshore companies remain a major barrier to tackling tax evasion and illicit financial flows.

In partnership with Luxembourg in particular, Switzerland has fought hard against efforts by the European Union to expand automatic information exchange and tighten up on tax collections, preferring to play a divide-and-rule game by signing individual deals with powerful EU players countries such as Germany and the United Kingdom.

Swiss banks have also sought to mitigate the limited efforts of crackdowns elsewhere – notably by the United States – by increasing their efforts to attract illicit flows from developing countries, to make up a supposed ‘shortfall,’ and by increasing their activity in Asian centres such as Singapore and Hong Kong, where there is perceived to be less ‘heat.’

Switzerland remains a major, active and interventionist impediment to global financial transparency, and despite some recent timid improvements it fully deserves its position at the top of our ranking.

See TJN’s full report on Switzerland here.

The 2011 Financial Secrecy Index – the results

Secrecy jurisdictions, Tax Havens, Tax Justice Network 7 Responses »

Oct 042011

The Tax Justice Network has published the 2011 Financial Secrecy Index this morning. This is the new ranking:

Rank	Secrecy Jurisdiction	FSI – Value	Secrecy Score	Global Scale Weight
1	Switzerland	1879.2	78	0.061
2	Cayman Islands	1646.7	77	0.046
3	Luxembourg	1621.2	68	0.131
4	Hong Kong	1370.7	73	0.042
5	USA	1160.1	58	0.208
6	Singapore	1118.0	71	0.031
7	Jersey	750.1	78	0.004
8	Japan	693.6	64	0.018
9	Germany	669.8	57	0.046
10	Bahrain	660.3	78	0.003
11	British Virgin Islands	617.9	81	0.002
12	Bermuda	539.9	85	0.001
13	United Kingdom	516.5	45	0.200
14	Panama	471.5	77	0.001
15	Belgium	467.2	59	0.012
16	Marshall Islands	457.0	90	0.000
17	Austria	453.5	66	0.004
18	United Arab Emirates (Dubai)	439.6	79	0.001
19	Bahamas	431.1	83	0.000
20	Cyprus	406.5	58	0.010
21	Guernsey	402.3	65	0.003
22	Lebanon	397.3	82	0.000
23	Macao	389.8	83	0.000
24	Canada	366.2	56	0.009
25	India	344.0	53	0.013
26	Uruguay	331.0	78	0.000
27	Malaysia (Labuan)	319.3	77	0.000
28	Korea	317.2	54	0.009
29	Liberia	316.9	81	0.000
30	Barbados	266.6	79	0.000
31	Ireland	264.2	44	0.030
32	Mauritius	261.6	74	0.000
33	Philippines	253.9	73	0.000
34	Liechtenstein	239.2	81	0.000
35	Italy	231.2	49	0.008
36	Isle of Man	230.4	65	0.001
37	Israel	230.3	58	0.002
38	Turks & Caicos Islands	218.9	90	0.000
39	Netherlands	199.7	49	0.005
40	Belize	198.4	90	0.000
41	Costa Rica	177.2	77	0.000
42	Guatemala	174.8	81	0.000
43	Gibraltar	174.6	78	0.000
44	Ghana	146.8	79	0.000
45	Andorra	133.6	73	0.000
46	Netherlands Antilles	129.4	83	0.000
47	Aruba	124.9	74	0.000
48	Denmark	121.7	40	0.008
49	Botswana	121.3	79	0.000
50	Portugal (Madeira)	119.4	51	0.001
51	US Virgin Islands	104.2	68	0.000
52	St Vincent & Grenadines	100.9	78	0.000
53	Spain	98.8	34	0.016
54	Malta	98.6	48	0.001
55	Seychelles	95.0	88	0.000
56	Hungary	94.8	47	0.001
57	Latvia	88.9	45	0.001
58	Antigua & Barbuda	88.5	82	0.000
59	St Lucia	78.7	89	0.000
60	Maldives	78.5	92	0.000
61	Grenada	57.6	83	0.000
62	Montserrat	50.1	86	0.000
63	Brunei Darussalam	45.8	84	0.000
64	Monaco	37.7	75	0.000
65	Anguilla	36.0	79	0.000
66	St Kitts & Nevis	31.2	81	0.000
67	San Marino	30.9	79	0.000
68	Samoa	27.5	85	0.000
69	Vanuatu	14.3	88	0.000
70	Cook Islands	13.4	75	0.000
71	Dominica	12.5	80	0.000
NA	Nauru	0	93	NA
NA	France*	0	NA	0.008

*Temporarily withdrawn pending legal interpretation

In 2009 I was heavily involved in the construction of this index. This time the work has fallen to others, and a bigger, more refined, more deeply researched index has been delivered this time. I take my hat off to all concerned together with their partners, including Christian Aid.

As TJN says this morning:

World leaders at a G20 summit meeting in April 2009 promised that“the era of banking secrecy is over” and put the OECD, a club of rich countries, in charge of implementing its wishes. Many people hoped this marked the start of a serious crackdown on tax havens, or secrecy jurisdictions.

But they have let us down. The rhetoric is trillions of dollars away from reality. The Financial Secrecy Index (FSI) reveals that financial secrecy is as entrenched as ever.

We’re not going to get out of our current financial crisis unless this issue is tackled.

The corruption of secrecy jurisdictions is the corruption that is holding back the reform of finance that is driving the world towards increasing poverty.

A tipping point has been passed in that process. Only real reform can stop this change happening. And one such reform is sweeping away secrecy.

This is one view of the world’s top financial centres – but a better one is coming soon

Financial Secrecy Index, Tax Justice Network, Uncategorized 1 Response »

Sep 262011

Today the Z/Yen Group publishesdthe tenth Global Financial Centres Index (GFCI 10) covering 75 financial centres. The GFCI Top 10 were:

Centre	GFCI 10 Rank	GFCI 10 Rating	GFCI 9 Rank	GFCI 9 Rating	Change in Rank	Change in Rating
London	1	774	1	775	0	-1
New York	2	773	2	769	0	4
Hong Kong	3	770	3	759	0	11
Singapore	4	735	4	722	0	13
Shanghai	5	724	5	694	0	30
Tokyo	6	695	5	694	-1	1
Chicago	7	692	7	673	0	19
Zurich	8	686	8	665	0	21
San Francisco	9	681	13	655	4	26
Toronto	10	680	10	658	0	22

GFCI 10 uses 28,604 financial centre assessments completed by 1,887 financial services professionals.

Interesting stuff.

But next week the new Financial Secrecy Index from the Tax Justice Network is out and that will be much more telling.

Look for the overlaps I suggest!

Holy cow, it’s Christensen

Tax Justice Network 3 Responses »

Jul 082011

There’s a profile of my Tax Justice Network colleague John Christensen in the Guardian this morning.

It’s good.

But it does say he has a sweet smile and I have to say in nine years I’ve never noticed. Perhaps I never will!

TJN conference day

Tax justice, Tax Justice Network 2 Responses »

Jul 052011

In general I don’t do excitement. I, at best, look forward to things, and don’t go over the top when they go well, by and large. Very staid, very chartered accountant, if you like. And I’m happy about that.

So I can’t say I’m excited by the fact that today marks the start of the two day Tax Justice Network conference at Essex University. But I can say I’m thoroughly looking forward to it.

Tax Justice Network has come a long way since it started, and few could deny its impact has been substantial, especially given the fairly limited resources it has commanded. There’s no doubt that we have changed technical and academic debate on many issues, as well as the language of political economy and the politics of tax in the UK and elsewhere. I do take some pleasure in each of these achievements. I doff my hat to John Christensen, TJN director, especially for all he has achieved.

And today’s conference is another step forward. Scholars have come from considerable distances to take part: I hope we all increase our understanding as a result.

It will be my pleasure to chair a session this afternoon, featuring a great Canadian lawyer and philosopher, Peter Dietsch whose company and work I have enjoyed before, plus sessions from thinkers whose work is new to me. They are Peter Latham who is talking about ‘Land Value Taxation, debt and human rights: A Gramscian Perspective’ and Ayse Nil Özbakan Tosun and Oytun Canyas who are talking on ‘The Effects of the European Convention on Human Rights on Turkish Tax Policy and Administration’.

Now you may not got excited by that, but I’m certainly looking forward to it.