Treasury Tax Review

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Given its importance it seems worth reproducing the Treasury's announcement on the UK Tax Haven review in full, as follows:

The Government today announced that Michael Foot, currently Chairman of the UK office of Promontory Financial Group, will lead the independent review of British offshore financial centres announced at Pre-Budget Report 2008. The review will look at the immediate and long-term challenges facing British offshore financial centres in the current economic climate, including:

  • financial supervision and transparency;
  • taxation, in relation to financial stability, sustainability and future competitiveness;
  • financial crisis management and resolution arrangements;
  • international cooperation.

The Government has been clear that the variety of existing constitutional arrangements in place across these territories will continue to be respected, including their independence in fiscal matters and the setting of their own rates of taxation.

Welcoming the launch of the review, the Financial Services Secretary, Paul Myners, said:

"I welcome the appointment of Michael Foot who brings significant experience in financial regulation to this task. Offshore financial centres must play a responsible role in the global financial system.This review will take a serious and constructive look at the challenges these centres face in the current economic climate, and how they can best respond to these. "

The Minister for the Crown Dependencies, Lord Bach, said:

"This Review is an opportunity for the Crown Dependencies to demonstrate their strong track record in the regulation of their financial services industries. The Review will allow the Crown Dependencies to participate in an open debate about how they can best be equipped to withstand the current difficult economic climate without calling into question their constitutional arrangements. In this regard, I am pleased to see that the Review specifically excludes constitutional change from its scope."

The Minister for the Overseas Territories, Gillian Merron MP, said:

"I am impressed by the positive discussions I have had with the Overseas Territories on financial services regulation recently, and hope that the review may be helpful to those overseas territories, with significant financial services industries, to prepare for the challenges of the future."

Michael Foot said:

"After working as a financial regulator in the UK and overseas, I have direct experience of the achievements of the Crown Dependencies and Overseas Territories. I am looking forward to working with them to see how best the important contribution of their financial sectors can be underpinned and strengthened for the future in these challenging economic times."

I remain unsure about the tenor of this statement but take comfort from one thing, and that is that this is described as an 'open debate'. I am hoping to take part in that.

The rest, I hope, is usual diplomatic mood music which is hard to interpret.

But what I hope, and I see no reason to doubt this, is that the UK has not done this to whitewash the havens. The international mood would not stand for that. I know from reason diplomatic activity I and my colleague John Christensen have been doing that the mood in Germany, France, Norway, and elsewhere remains extremely anti-haven and pro-reform and the OECD is undoubtedly back on the case. If the UK is simply planning to exonerate the havens it is definitely out on a limb, and heading for a bruising.