The Jersey lobby have been spitting fire and indignation post Panorama on Monday. Things like:
It is good to see the record is starting to be put straight once and for all on this matter. I work in Jersey finance and Panorama was just a one sided, out dated opinion of what goes on in Jersey. I also question the reasons for us actually paying the BBC License fee in they cannot even accurately report on the Channel Islands anymore. I think it is time for John Christensen to perhaps return to the shop floor in Jersey for a few months because his knowledge of our industry is now outdated and his comments actually amount to lies. Panorama over all, made the TJN look out of step with the truth and this was backed up by the UK treasury. Jersey finance and many other leading finance people have torn its allegations to shreds over the past 48 hours and rightly so.
There's more in that vein here.
I have, of course, already made the point that Jersey deliberately supports tax evasion. That is indisputable. It is proven to be true: its refusal to information exchange under the EU Savings Tax Directive is now recognised as part of the reason for the necessary reforms of the EU STD which will simply ignore for tax purposes all the structures put in place in the island for tax planning because they are known by all tax administrators to be used for abuse. If ever there was rebuttal of the pure propaganda (and it is no more) that flows out of Jersey Finance and the finance industry in Jersey then this is it.
But I'll defer to John Christensen who has made this comment:
Dear Richard
Just to correct some of your correspondents, Stephen Timms made it clear that Jersey has made some progress with cooperation with the UK government, but further progress is required.
But what about cooperation with other countries? How many TIEAs has Jersey negotiated with non-OECD countries, i.e. the developing countries that are most adversely affected by tax evasion? Why, for example, did the Jersey authorities chose to ignore a request from the Chilean government to negotiate a TIEA?
How many exchanges of information were actually implemented in 2007 and 2008? We know that the number of requests for information exchange is very small indeed, which is largely due to the nature of the TIEAs that Jersey negotiates, based on the OECD "by request" model. This model is far too timid and has virtually no deterrent effect since the burden of providing evidence is stacked against the requesting nation. In other words the TIEAs that Jersey has negotiated are to all intents and purposes, virtually useless in preventing tax evasion.
Why did Jersey opt out of the European Unions Savings Tax Directive automatic information exchange process? The latter in particular demonstrates that Jersey has engaged in window dressing rather than serious efforts to curb tax evasion.
Why aren't the details of beneficial ownership of Jersey registered businesses publicly available?
Why is there no information whatsoever available about trusts?
Until we can see clear progress on all of the above, and in particular on acceptance by the Jersey authorities to fully engage in automatic information exchange with all countries, OECD and non-OECD, we will continue to treat Jersey as a tax haven that engages in facilitating criminal activity.
Best wishes
John Christensen
That is cool, reasoned analysis based on facts. The sort of thing you don't get from Jersey itself.
And I'll just add this: it's not good enough to say 'we're doing all that's expected of us' when that standard was set by criminal states such as Switzerland where one of the leading banks is now clearly shown to be engaged in systematic tax evasion, hiding behind the bank secrecy laws which Jersey reproduces through the use of nominees and trusts. That's just saying 'we're happy to be part of the criminal class that set these rules'. Jersey could opt, for example, to be a full member of the EU STD. It did not do so. It shows no signs of doing so. That's why every single thing we say about it is wholly justified.
The place is clearly dedicated to supporting illicit activity that undermines financial stability, denies tax to the countries that rightfully are due it despite which Jersey Finance has the nerve to say they're not a tax haven. I'll tell you: I've looked at every list of tax havens I can find for the last thirty years. There isn't one which hasn't got Jersey on it (or Guernsey and the Isle of Man come to that). So this claim is the action of a state in denial of the widespread perception of what is the truth.
Rather like Jersey Finance as a whole.
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Benefical ownership does not have to be made public. If you set up a trust and none of your children know about it and are not supposed to know about until death then it goes against ones wish for confidentiality. You two can rant away about tax evasion until the sun goes down, but more qualified and reckognisable people out there know otherwise. The rumour in Jersey at the moment is that John Cristensen’s brother runs a trust company. Is this true?
Richard
Please publish an exact extract of precisely what Stephen Timms said on Panorama. I think you will find that he did not say what John Christensen claims that he said.
From what you are saying, Jersey (and Guernsey and the Isle of Man) need to opt to change their position under the EUSTD from taking the withholding tax option to automatic exchange of information. I see no major downside in that as only one of three outcomes can result. Either (a) it will become clear that there is no or limited tax evasion taking place currently under the EUSTD, (b) business will disappear from the islands, which would give credence to your views and it would be business which the islands shouldn’t have anyway, or (c) more worringly, legitimate and fully tax-compliant offshore business will move to places like Geneva where an environment of privacy, rather than tax confidentiality, remains. That last factor is the one of the three which should and does naturally worry the islands. It is evident that many HNWI clients desire privacy even when fully tax-compliant, a factor which you seem to under-estimate.
I do take issue with some of John Christensen’s comments.
Firstly, re. a register of trusts, there are no such lists in the UK, the US or anywhere else onshore for that matter. It is totally unreasonable to demand that offshore centres adopt far higher standards than that. The US is a tax haven as far as US trusts for non-US persons is concerned. That’s a total non-starter.
Secondly, re. public disclosure of beneficial ownership of companies, it doesn’t happen anywhere else in the world. Again it is totally unreasonable to demand this of the offshore islands when it doesn’t happen elsewhere. The US (Delaware ?!), the UK, Germany, France, elsewhere in the EU – none of them have public disclosure of beneficial ownership. If they all do the same thing, then fair enough. But until then it is totally unreasonable to expect it of the offshore islands. Until very recently, Jersey and Guernsey were to the best of my knowledge the only two jurisdictions in the world where the names of proposed ultimate beneficial owners (inlcuding beneficiaries of trusts) had to be disclosed to the government as part of an application process. Those standards were far higher than anywhere else in the world. Others failed to replicate those same standards and showed no sign of doing so. Where did that get the islands by being ahead of the game ? No, that information wasn’t available on public record but at least its regulators had the information available to them and so were capable of exchanging that information. Can the US or the UK or Germany or France say that ? Of course not.
Thirdly, why criticise the islands for signing what the OECD pressured them into signing ? Being attacked for not voluntarily doing more than is required under those TIEAs is totally unreasonable. If the OECD wanted more then they should have insisted on something different. They didn’t.
Attacking the islands for their stances on certain things may well be fair comment in some weak areas. But attacking the islands for not operating to standards which would be far in excess of those of the G7 countries is not fair game. Let them put their own houses in order first or at least simultaneously if they are demanding that we do the same. That can hardly be claimed to be unreasonable or unfair but I just don’t see it happening. The G7 countries need to have the moral high ground before they demand change of offshore finance centres but they fail spectacularly on that point at present.
I have just read John Christensen’s open letter to “Planet Jersey” as he calls it, on the TJN website.
One can only reach two possible conclusions to John’s comments about Jersey today.
Either:
1. His friends and contacts there have a similar chip on their shoulder and are like-minded to John, not accepting that things have really turned around over the past 10 years as many of us believe.
or
2. There is a two-tier financial services industry operating in Jersey today, with one tier running highly professional and highly responsible, fully tax-compliant businesses which would have nothing to fear from enhanced exchange of information, and a second tier running shady, tax-evasion driven, sanctions-busting businesses who would have everything to fear from enhanced exchange of information.
We may never know about scenario 1 sufficiently to draw a conclusion, although I know many who believe it to be the case, so let’s focus on Scenario 2.
Richard and John have made their views crystal clear re. the STR position and the stance of the banks in not reporting as suspicious those of their customers who have opted for withholding tax rather than exchange of information. Its a fair point, and is one which the islands could easily change by moving to automatic exchange. There are those who believe (wrongly in my view) that those customers are merely taking advantage of an option offered to them under the EUSTD, and so complying with it cannot be a breach. But it does suggest that they are deeming the withholding tax suffered to be full and final settlement of their home tax liability, which of course is unlikely. I have also heard it said that some banks haven’t even offered exchange of information as an option to their customers, so that withholding automatically applies. What we don’t know is how many of those customers who had withholding thrust upon them still declare that income and merely claim a credit against their final tax bill for the withholding tax suffered. Some no doubt will, but how many ?
But outside of the banking sector, the sort of shenanigans described by John Christensen would appear only to be able to be focused around the fiduciary sector, and this in itself raises some interesting questions. Firstly, the JFSC has a comprehensive regulatory regime, including fairly regular and far-reaching inspection visits to Jersey registered fiduciaries. One would assume that this sort of thing would quickly picked up if it was going on. But that doesn’t seem to be the case. It can only mean that either (i) undesirable activity is taking place but the JFSC regulatory regime is highly deficient in picking it up, or (ii) that undesirable activity isn’t taking place. I know of many top-drawer fiduciary businesses in Jersey who do things absolutely by the book, and have enough high quality business not to need to even contemplate lower-calibre business. I have little doubt that this makes up the vast majority of the fiduciary services industry, at least in terms of numbers employed. But there are lots of much smaller fiduciaries with only a handful of staff who, frankly, one knows really nothing about. One assumes that the Jersey regulators know all about them and are closely on top of them. Its only a theory, but is that where there might be a weakness ? Is there a low-quality underbelly in Jersey’s fiduciary sector which risk ruining it for the rest who are thoroughly responsible and professional ?
The same could well apply to both Guernsey and the Isle of Man, so it would be wrong to limit this discussion to Jersey, although that’s where the thread started due to John Christensen’s link.
Its got to be food for thought, because there are far too many of us who read and hear the allegations from John Christensen and Richard Murphy and simply don’t recognise them as being remotely reflective of the businesses in which we work. Naturally the larger fiduciaries have a much higher profile and so one is able to get a feel for where they get their clients from, and they feature heavily as competition in discussions with leading London law firms who refer their top-drawer clients to them. But the two-man band with 3 or 4 support staff who get their clients from very small law firms or accountancy firms almost by definition have a very different client base and, let’s be honest, are far too exposed to economic pressures from their own larger clients to turn a wilful blind eye to anything underhand.
Its quite possible that, apart from the bank STR situation under the EUSTD, the above scenario may just be why Richard and John have an opinion of the offshore industry which is so different from the ones which so many of the rest of us have. We KNOW that our own businesses are very different from those described by John and Richard and, frankly, that’s why we go out of our way to fiercely defend ourselves on blogs like these. But is there a sub-sector operating to very different standards ? If so then its obviously in everyone’s interests to drive them out, but is the secenario that I paint one which actually exists ? I honestly don’t know, but I do know that I want to believe that its not true.
Does anybody else have a view on this ?
To Rupert and Matt
If you want to be taken seriously, please (a) identify yourself properly – its hard to take anyone at face value when they refuse to disclose their identity; (b) stop pretending that we are only targeting small islands like Jersey, we have very publicly included the major OFCs like London, Zurich and Delaware on our tax haven list; and (c) answer our point about the EU STD: why did (do) the Crown Dependencies not cooperate with automatic information exchange?
best wishes
John Christensen
To Rupert
I have no idea whether you and I have ever met: I suspect not. What gives you the right to make personal remarks about me? Chip on the shoulder? Whatever
People who know me, know that I am very content with my lot, am happily married with two marvelous children; have enjoyed a fascinating and fulfilling career; enjoy working with a dedicated and high-achieving team; in short I have no chip on my shoulder and neither do my friends in Jersey. They and I understand that tax havens are harmful in many ways and should be closed down without delay. I have pretty much dedicated my entire career to studying this phenomenon and as you undoubtedly know already, I am not alone in coming to this conclusion.
I would like to think that I would have campaigned against the slave trade for similar reasons, and there are many parallels between the anti-slave traders and the tax justice campaigners, not least the endless ad hominem attacks on our characters and motives.
Best wishes
John Christensen
John
Re your 4.15pm post:
a) No – I decline to reveal my identity, as is my right. It would be much harder to contribute meaningfully to this blog if I did so. Some of us have businesses to run and one never knows who is watching this blog.
b) Where are you actively targeting the US, UK and other G7 countries to amend their transparency and ownership disclosure rules in the same away that you are with the Channel Islands ? When you go to Washington, how often are you pressing their senators to end the Delaware lark ?
c) No idea, and if you read my posts then you will quickly see that I don’t agree (with hindsight) with the stance that the islands took, even though I understand the “level playing field” rationale at that time. But let me ask you this…why did the EU offer the option of offering withholding tax or information exchange if they knew that the former would facilitate tax evasion ?
Re. your 4.25pm post:
I know many, many people in Jersey who say that you have a huge chip on your shoulder and that you are hell-bent on destroying the island. Some of them have no hesitation in questioning your sanity. I have read your articles over the past few years and that’s the consistent view that I have formed of you. I do respect the fact that you are prepared to be very open about your views, and also the fact that you openly state your motives. But I think that you substantially exaggerate your claims and therefore misrepresent the true position, as I think does Richard by over-relying on the “accuracy” of your “inside track on Jersey”. I have heard it said that there would be 500 people in Jersey who think you are totally wrong for each one who supports you. Admittedly they may have a vested interest in saying that, but equally they know what they see and/or don’t see in their work on a daily basis and they simply don’t recognise what you seem to infer is all round them. Statistically they can’t all be wilfully blind.
The extremely arrogant manner in which you and Richard respond to anybody who dares have a different view to the two of you does not help. It only inflames people to become personal, which is no different to some of the personal responses from Richard as editor. Numerous contributors have commented on this in recent days. Maybe we should all chill out, but when people from opposite ends of the spectrum are so passionate about what they believe they know to be the case, its inevitable that things get personal. For what it’s worth, I do sincerely apologise for that, as its not intended to be personal. But it must be remembered that you and Richard are the ones who are accusing people like me of acting unlawfully, ie. being criminals, based mainly on your moral views rather than on the law, and that’s very hard to take when I and other contributors to this blog go out of my way to do everything 100% lawfully in every aspect of our lives. If I accused somebody of being a criminal without any evidence then I would probably and quite reasonably expect to have my face re-arranged, which is rather a good reason for not doing it !
Regards
Rupert
John do all the other crown dependencies cooperate with automatic information exchange? Is there a level playing field here?
With regard to your fight back on the “chip on shoulder” argument. I have spoken to a number of people who know of you in Jersey and they more or less say the same thing, you just want Jersey’s finance industry to collapse. Its your only objective. Until people see you in a different light it will remain the case. You are now asking people to attend a talk you are doing in March. I wouldn’t hold your breath on that one. If people think you already have an inaccurate view of Jersey’s finance industry now, which you must admit, came across that way on Panorama, how can they take any further comments as legit?
Even if I was a politician I wouldn’t bother getting into discussion with the TJN, their information , especially when they come up with figure like $18,500 Million is just pie in the sky.
Matt I doubt that rumour is true although I note Mr Christensen has not answered it !
This is only my second post to this site so please excuse if I cover old ground. However I would like to ask Mr Christensen (or Mr Murphy) if they believe that Guernsey or Jersey have made improvements to their systems in the past 10 years. I certainly hear the same things as Rupert has referred to above.
I would also like to ask why the EU gave an option to withhold tax if it was believed that this would be a sign of evasion ?
Thanking you
Henry
Dear Richard
May I make the following disclosures in response to various personal comments made on your blog.
1. I worked in the finance sector in Jersey between 1975 and 1977. I returned to the island in 1986 and worked in the finance sector throughout that year until September 1987, when I took up employment with the States of Jersey.
2. My brother Robert is employed as director of a trust company based in Saint Helier, Jersey.
3. My brother Richard is employed as an auditor in Saint Helier, Jersey.
My views about the role of tax havens in the global economy are entirely my own and cannot be attributed to my siblings.
Those who choose to cast aspersions on my motives or my sanity are welcome to read the chapter I contributed to the book “A Game As Old As Empire” published by Berret-Koehler in 2007.
best wishes
John
Rupert
Delaware -http://taxjustice.blogspot.com/2008/11/obama-and-stop-tax-haven-abuse-act.html
UK -http://www.taxjustice.net/cms/upload/pdf/Red_Pepper_-_The_Tax_Avoiders_Chancellor_-_AUG-2006.pdf
Satisfied?
As for the reactions you suffer to what we say – try Schopenhauer:
Every truth passes through three stages before it is recognized. In the first it is ridiculed, in the second it is opposed, in the third it is regarded as self-evident.
http://www.famousquotesandauthors.com/authors/arthur_schopenhauer_quotes.html
You’re in stage one or 2. The 500 are in stage 3.
The reality is we aren’t personal at all. I have nothing against you whatsoever. I do oppose what you do. I do, in my opinion entirely correctly say Jersey has chosen to support tax evasion – a choice it did not need to make. The anger and personal reactions are all yours: you project the sentiments onto us. That is your problem, not ours. Perhaps deep down you know it is true that the truth hurts.
Richard
JTM
If Jersey politicians had any sense they’d take us head on.
They would, of course, lose.
But at least the world’s press could decide if we were right or wrong then.
Right now their cowardice lets the press presume we’re right
Their choice
Just get them to call
Richard
PS As for the £18.5 billion – please provide a critique or, again, the world will believe we’re right
Henry
In the last ten years:
a) Jersey has scrapped tax on companies rather than comply with the EU Code of Conduct. It has built an alternative abusive ring fence to ensure its own people pay tax. That is constructive non-compliance
b) It has stopped collecting data on beneficial ownership of companies
c) It has stopped collecting tax returns or accounts from companies within the States so this cannot be information exchanged – a deliberate move, I am sure
d) It has chosen to facilitate tax evasion under the EU STD
e) It has created sham trusts to facilitate abuse of the EU STD and other taxes
How much more abuse would you like?
Richard
Richard
So are you telling me that your attack on Delaware is on the same scale as your constant attacks on the offshore finance centres ? Sorry, I don’t believe you. I accept that you have criticised the US for it. But its hardly a sustained attack is it ?
As for your preaching to me about Schopenhauer – your conclusions are based only on the premise that there is a truth in the first place to what you are saying. I don’t accept your version of the truth so Schopenhauer is irrelevant. I guess you’d call that the pre-Schopenhauer denial.
Re. your response to JTM. Why £18.5 billion. Why not call it £100 trillion ? That would be no less credible.
Finally, in response to your comments to Henry:
a) Its a tax structure which the EU approved. The Code of Conduct applies to corporate tax. A nil rate is not considered non-compliant and was accepted as such.
b) The States of Jersey may not collect that data any more, but its regulated businesses certainly do and that information is available to the regulator at any time. Jersey and Guernsey were until recently the only two jurisdictions in the world who were collecting such information. Consider this – Jersey applies to the UK under the relevant TIEA for information about the beneficial ownership of a UK company. The UK government cannot give it because it doesn’t require to hold that information. Hmm…that’s fair isn’t it ?
c) With a zero rate of tax for companies precisely why would Jersey companies be filing accounts with the Jersey tax authorities ? There can be no resulting tax liability. Hardly an efficient use of tax office time to collect company accounts when the companies are not assessable to tax.
d) Perhaps. I’ve already conceded that point. I wouldn’t use the word “chosen” but yes, that could well be the effect of that decision.
(e) Arguably, yes. But as I’ve already pointed out, there are other perfectly lawful non-tax reasons for using that same legislation.
If that’s the best that you can come up with then its far from compelling.
I am intrigued that you choose to label Switzerland as criminal. Does not sound like a particularly reasoned argument to me!
Alastair
See here and read the Guardian
http://www.taxresearch.org.uk/Blog/2009/02/05/switzerland-anti-democratic-or-criminal/
Richard
Rupert
It would appear that nothing is good enough for you
And evidence persuades you least of all
Richard
I don’t think that technically a country can be criminal. Usually you have to find an individual or individuals or perhaps a representative group to charge. I would guess you mean the swiss bankers?
Alastair
My friend Jack Blum said Liechtenstein was criminal on Panorama
Jack’s a great lawyer
I go with his opinion
But I’ll settle for bankers and the politicians who enable them if you want
Richard
Richard
Re you post number 16 above, you have simply ignored my points without debating them. Points (a), (b) and (c) are extremely relevant but I didn’t think you’d be able to answer them.
I’ll take it therefore that you’ve conceded my points.
Rupert
a) Jersey has probably (not confirmed yet) complied with the letter of the Code whilst retaining the ring fence for local residents. I do not call that compliance. I call it constructive non-compliance. In fact it is a perfect example of the abuse inherent within the place and its attitude to regulation- which is to subvert it wherever possible
b) Jersey has no reason to make that applciation to the UK. Why would they? But you’re right – the UK is at fault and we have lobbied hard for change. Stop being paranoid
Richard
Richard
a) Where is the ring-fence for local residents ? All companies (whether owned by residents or not) pay 0% tax other than specific regulated entities. That structure has been deemed compliant. The system of personal taxation is that local residents are subject to tax on their income from Jersey sources, including Jersey companies, whereas non-residents are not. Many, many countries allow dividends to be paid gross to non-residents without any local tax including the UK ! I think your comment is wrong on this point.
(b) Wrong again. Of course Jersey would have a reason to make such an application to the UK. Jersey resident individuals are subject to tax on a worldwide basis and many would have interests in UK companies. There is every chance that the Jersey tax authorities could seek the equivalent information about beneficial ownership of a UK company by a Jersey resident as HMRC will seek about beneficial ownership of a Jersey company by a UK resident. The fact is that UK does not hold that information and so would be incapable of exchanging it under the TIEA. This is extremely relevant to your frequent criticism of the Jersey/UK and Guernsey/UK TIEAs.
c) You haven’t commented on this point. Do you concede it ?
Rupert
a) You may recall that I was quite heavily involved in the process of Jersey trying to become compliant with the EU Code of Conduct. It and the Isle of Man have always shared one objective which has been to rebuild the ring fence by look through taxation and then claim that as the ring fence is now in personal not business tax they comply. That is tax avoidance as I define it: as the EU defines it. Not tax compliance as we both define it. They are not amused. I know.
b) The UK has the right to get that information – our tax inspectors can ask as they have reason to need to know – unlike yours.
c) I concede nothing. What I do say is Jersey did this deliberately to ensure it did not have information to share – in direct breach of the spirit of information exchange and another abuse of its subside compliant status
You won’t win Rupert. Sorry: you haven’t a hope
Richard
Richard
(a) It is a question of fact that corporate tax is corporate tax and personal tax is personal tax. Any country is allowed to exempt resident companies from tax and to tax resident individuals instead if to chooses. The EU may or may not be amused – we only have your word for it. But the tax structure is compliant.
(b) Sorry – you are wrong again. The Jersey and Guernsey tax authorities have exactly the same reason to need to know, and have exactly the same right to get that information. The UK’s own lack of transparency on beneficial ownership of companies results in exactly the same problem for the Jersey and Guernsey tax authorities as it does the other way round. Local residents are subject to local tax on UK-source income and are obliged to declare it. I’m really surprised that you don’t seem to be aware of this.
(c) Richard that’s absurd and you have lost this one. Simply defending your stance by stating that you are right “and that’s the end of it” is not good enough if you wish to maintain any sense of credibility. You have not justified this stance. Companies which are not liable to pay tax on their profits don’t need to file accounts. It would be waste of civil service resources to require them to do so as no tax liability can result. The need to file accounts with the tax authorities ended when the liability to corporate tax ended. Zero-10 did not come in to ensure that companies no longer had to file the infomation. It came in because they were no longer to be subject to tax.
If you don’t consider that you have lost these points then I’m afraid that you are completely deluding yourself and further weakening your credibility.
Richard
You refer to the EU Code of Conduct and I would like you to please remind me of its relevance to the Channel Islands, seeing as we are not members of the UK. We aren’t Ireland or Malta or Gibraltar who had to seek approval from Brussels in order to change their corporate tax regimes. Ireland and Gibraltar both, I believe, have a corporate tax rate of circa 12.5% with a much higher personal tax rate so that individuals bear a higher percentage of the tax burden. Malta imposes a 35% corporate tax rate but when dividends are paid to non-residents either 25% or 30% is repaid, but if distributed to a resident there is no repayment so that the resident individual suffers the tax burden. Interesting that those tax regimes received express EU approval.
I am sure that it was the OECD rather than the EU who pressured the Channel Islands into ending their ring-fencing tax regime for companies, terminating the Exempt Company regime. We are not obliged to comply with the EU Code of Conduct and any compliance with it is therefore voluntary.
If the islands want to apply a zero rate of tax for all companies with one or two specific exemptions then there is nothing to prevent it if we are not discriminating between residents and non residents. We can choose to have a far higher personal income tax rate. The OECD has no problem with zero tax rates if a jurisdiction can balance its books through raising taxes in other ways. The islands can easily achieve this through consumption taxes if economic growth proves insufficient to generate extra tax to replace the old corporate tax revenue.
I think the crux of the issue is that you have been hoping that the islands will go bust as a result of adopting zero 10. But you discounted the consumption tax solution which remains totally at our disposal. Its an entirely feasible insurance policy. Jersey can simply increase its 3% GST rate while Guernsey has already got GST legislation on the statute book for speedy implementation as and when needed.
As I said previously, a zero rate for companies with a 20% rate for individuals plus a GST rate of 10% or more would balance the books very nicely thank you.
Rupert
It seems to me that we have reached an ideal point at which to terminate this exchange, both on this thread and on the others which have arisen in the last week or so with commentators from the Channel Islands and elsewhere.
You, and your like, have consistently argued that I and my colleagues have a credibility problem and do not know what we’re talking about. And yet you reveal in comments 24 just how little you really know, and why, therefore, it is almost pointless to engage with you and those other commentators who wish to challenge our credibility.
It is astonishing that you do not know that the EU code of conduct has the effect of law in the Channel Islands. This is because the EU considers you to be a part of the UK with regards to the administration of tax on an international basis. The UK and was, therefore, requires to enforce the application of the code of conduct within the Crown dependencies and other territories for which it has responsibility. This it has done.
Admittedly, it did not anticipate the reaction of the Isle of Man in announcing a 0% corporation tax. N or did it anticipate, in the first instance the holy abusive approach that the Isle of Man and Jersey have adopted to compliance with the code of conduct, which has been to rebuild the ring fences which it sought to outlaw in corporate tax in personal taxation instead.
But this has not altered the fact that the only reason you have zero/ten is because you were forced to change your laws to comply with the requirements of the EU code of conduct. It is staggering that you do not know this.
You challenge my credibility when I talk about Jersey and yet you show that you have absolutely no understanding at all of the way in which your own taxation system operates, or the constraints upon it.
If you do not believe me, just search this site with regard to the Isle of Man and the EU code of conduct and you will find that its taxation system was rejected by the EU, and has had to be revised as a consequence. If that is not being subject to EU regulation I am not sure what is. I assure you you are in exactly the same position.
If this debate was about credibility it is very apparent that yours has been completely forgone. It is very obvious I know substantially more about the subject we are discussing then you do. I rest my case. You cannot win an argument when you do not know the facts. I appear to be fully appraised of them. You are not. I rest my case. The argument is over.
No further correspondence on this or the other threads that have been running this week will be accepted.
Richard
Richard
You are entirely correct in stating that I made an error in my post number 24 above. I made the fatal mistake of posting late in the evening without my brain properly engaged. You are right in that the EU Code of Conduct does of course apply to the Channel Islands (and the Isle of Man). I’m big enough to hold up my hand when I am obviously wrong.
The Isle of Man’s current tax structure was, I understand, duly revised and accepted.
But it doesn’t mean that you yourself are right on every single point upon which you opine. It is, after all, you who makes major allegations and therefore the greater onus is on you to ensure that your allegations go way beyond pure speculation. For example, on one thread you commented that your commentator (me) should not extrapolate on unconfirmed data, yet your £18.5 billion “loss” to the UK Exchequer due to tax haven activity does exactly that, as simply nobody knows or even could know the correct figure.
Rupert
I broke my note to allow you to post your correction.
Unfortunately, you have compounded it by making another error. You have confused the statistical technique of extrapolation with the rather more straightforward arithmetic process of adding up.
you have sought to suggest, using the process of extrapolation, that because a 3% tax is acceptable in Jersey a 10% tax will also be acceptable. There is no statistical data to support your extrapolation outside the range of collected data, which stops at the rate of 3%. as such, no one knows if your conclusion is correct. I disagree with it. You say is right. This is judgement. I accept that. I accept that.
This is quite unlike my calculation of the tax loss of £18.5 billion. for this I used available data from recognised reliable sources and added up the resulting calculations. My sources include HM revenue and Customs, Merrill Lynch, Boston consulting group, cap Gemini, Jersey Finance, tax analysts, the World Bank, the bank of International settlements, the the audited accounts of the largest 50 companies in the FTSE index, reports of the House of Commons public accounts committee, and so on. I think it’s fair to say the only extrapolation is involved were to reduce the figure for total losses arising from tax havens to those arriving to the UK alone which is not the extrapolation, more a reduction.
I then simply added that the resulting data, making sure there was no double counting, and ensuring that every occasion I erred on the side of caution. As such I am working well in the limits of the known data, unlike you.
By all means criticise my figure: of course it is an estimate. but please do get your mathematical concepts right and pleased to say why I am wrong. if you want to argue with a serious piece of research you do at least have to offer explanation, which on this occasion might say why the source data is also wrong. But that will is to pitch you against Jersey Finance. Do you want to do that?
note: unless the reply to posting 27 is a serious analysis it will not get on here.
Richard
I am not saying that your estimate is wrong. It could be spot on, it could be an over-estimate and it could even be an under-estimate. How you got to that figure really doesn’t matter. The fact is that it cannot be proved to be either right or wrong.
My estimate of GST revenue in Jersey was calculated very simply. The States of Jersey themselves estimated that based on their own statistics, a 3% rate on everything would generate £45m a year. It is therefore easy to estimate that a 10% rate on everything would generate a pro-rata sum of £150m a year. Obviously that calculation is made easier by not having to work out what is exempt and what is not. Now, those figures are about 2 years old, since when Jersey’s GDP has risen. A very small number of items were eventually exempted from GST, so I have ignored the combined net effect of those two adjustments. However it is not hard to see that the adjustments would be immaterial in absolute terms. Whether a 10% rate would generate £140m or £160m or something in between, its a heck of a lot more than the current £45m estimate made by Jersey itself.
Yes it assumes that peoples’ current spending habits wouldn’t change, but with downward adjustments to personal income tax rates there would almost certainly be more money in the economy to generate extra consumption. Tourists would also contribute to the overall amount raised, which they don’t at present.
Politically it would be a big challenge to get it through, but one only has to compare a maximum 20% personal income tax rate with 0% corporate tax and 10% GST with an imminent 45% top rate of income tax, 28% corporation tax, 15% VAT, 18% CGT and 40% IHT in the UK, to realise voters would probably work out that a 10% GST actually isn’t so bad after all.
The bottom line is that the lost corporate tax can clearly be replaced by a higher rate of GST is there is a will for it. Time will tell whether that is likely to happen or not but is simply bound to be a serious option for the States of Jersey to seriously consider when working out how to balance the books, along with other tax-raising options. Having only a 3% rate at present leaves plenty of headroom without falling out of kilter with UK or French rates.