Terry le Sueur, Jersey's finance minister recently assured Jersey's business community that it's new zero ten tax system had met with approval by the EU.
There's one problem with the assurance. It's wrong. The EC will not have considered this issue as yet; it's time scale would not allow that to have happened. As a result John Christensen and I had the follwoing letter in the Jersey Evening Post on Saturday:
So you meet the EU code? Says who?
From John Christensen, director and Richard Murphy, senior adviser, Tax Justice Network
WE note Treasury Minister Terry Le Sueur's claim (reported by Christine Herbert) that the zero-ten tax regime is fully compliant with the EU Code of Conduct for Business Taxation. Since the zero-ten regime has only recently come into effect it cannot, to the best of our knowledge and belief, have been considered by the European Union for compliance purposes as yet.
Remember, the Isle of Man government was only informed in October 2007 that their new regime, which came into effect in 2006, was not compliant. We anticipated that the Isle of Man measures would be rejected by the EU, and for similar though not identical reasons, we likewise anticipate that the Jersey regime will be deemed non-compliant with EU requirements. At this stage it would be unwise to rely too heavily on the Treasury Minister's assurances.
Published 18/4/2008
Sometime soon these people are going to have to realise that their only option is active compliance. But it certainly hasn't occurred to them as yet. When it does the game will stop, and the people of Jersey will suffer. Le Sueur will have retired. If one person will not carry the responsibility for this it is him. I admit, that annoys me.
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Terry Le Sueur can carry part, but not all, of the blame for the island’s predicament. Equally culpable are former Finance and Economics Committee presidents Reg Jeune, Pierre Horsfall and Frank Walker, all of whom promoted rapid growth of Jersey’s tax haven activities and ignored warnings of the crowding-out effect. Like Le Sueur, Jeune, Horsfall and Walker had conflicts of interest arising from bank directorships and legal partnerships (in the case of Jeune), and took the attitude of ‘apres moi le deluge’. In too many cases their advisers were weak and complicit. Their disregard for the harm caused to poor people by tax havens like Jersey is made all the more disgraceful by the way in which Jeune and Le Sueur have publicly paraded their claims to hold Christian values.
I agree with your point about active compliance, but let’s face the truth here: if banks, trust companies and company administrators were to comply with the SARS regime they would pretty soon have no clients left in Jersey since tax evasion is a major reason for using the island’s facilities. Likewise if the ring fences introduced into the 0/10 regime are struck down, the opportunities for using non-resident entities for avoidance would be removed, leaving the island’s avoidance industry high and dry.