There is a piece with the above title on the Radio 5 live website. It says:
[W]ith the economies of places like Jersey and Guernsey so dependent on banking and insurance, there is concern any tightening of regulatory rules could see both jobs and income vanish elsewhere.
Some experts say up to two thirds of Guernsey's economy is now dependent (either directly or indirectly) on banking and insurance.
Paul Medea, of the Guernsey Business Association, says losing Guernsey's special status would also cost the UK dearly and would "devastate" the island. He said: "We would become a drain on the UK, people would have to emigrate and it would be a shadow of its former self. I fear that tourism wouldn't plug the gap."
Without a shadow of a doubt Paul Medea is right: tourism cannot fill the gap that will be left by the financial services industry when it does, inevitably, leave Guernsey.
Let’s talk basic facts. According to the CIA Factbook GDP per head in Guernsey was $44,600 in 2005. In the UK it was $37,400 in 2008 according to the same source. Inevitably the UK figure should be deflated to 2005, and then it is clear that Guernsey has a GDP per head at least 25% higher than the UK.
Let’s be clear: there is no economic justification for that. The excess was stolen from other countries just as it is now readily accepted that the financial services industry creamed off an excess from all ordinary people through the opacity of the products it supplied and the activities that it undertook.
The financial services sector is going to be subject to radical reform, whether Guernsey likes it or not. In the process opacity is going to be massively reduced. Guernsey's primary product has been opacity. Let us have no pretence that there is any real financial services acumen in the place that has not been imported to take advantage of that opacity.
In that case Jersey's income will fall. I have no doubt at all that is GDP per head of population will be lower than that of the UK as a whole by the time the process is complete. That is true of most British seaside towns and that is exactly what Guernsey can compare itself with. But until a benchmark equivalent to, say, Hastings has been reached then Guernsey will not need aid. There are plenty of others ahead of it in the queue for that.
As for those who emigrate, the vast majority work inside of the financial services industry, and will be temporary immigrants. They claim that they are the masters of the universe. Let them prove it.
I have enormous sympathy with the claims of some havens, and will argue that they need support. Antigua is one such place right now. But let us not cry for Jersey or Guernsey. At least, not yet.
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As you quite rightly point out, Jersey, like all these tax havens, has been effectively stealing tax revenue from the rest of us for years; not only that, I wouldn’t mind betting that since their low tax regime means they don’t have state funded welfare or healthcare systems comparable to the mainland, when anybody who isn’t stinking rich needs these they get dumped onto us, so the poor old UK taxpayer gets ripped off twice over by Jersey.
So the comment by Paul Medea is laughable; Jersey’s been a drain on the UK for years. Like all tax havens, it’s prostitiuted itself to rich tax dodgers. I’ve got no sympathy whatsoever, especially when I consider that in one way or another, I’ll be paying for the effects of the financial systems’ greed and incompetence for years to come.
Firstly, I am not a Jersey resident, however I do know for a fact that they have a state funded health system and that the UK government give them no financial help whatsoever (… and Richard says Jersey and Guernsey residents think so highly of themselves, “masters of the universe”?). In fact, Jersey (and Guernsey) pay for any treatment that takes place in the UK). Please don’t post comments before you check your facts! Furthermore, it is clear from browsing this blog that no matter what these islands’ do to meet regulatory / moral standards there are always going to be people who are hell bent on putting them down. Maybe this is a method of diverting attention away from the UK / US (amongst other global superpowers) who dragged the economy into crisis, where were their regulations and moral standards??
What about the UK and US as tax havens? People seem to be ignoring the fact that such places allow non-doms to hold property and investments there and not subject them to the same tax as people domiciled there! If such people were resident in Jersey, they would pay tax here. More than just a touch of Hypocrisy from you I feel.
No, these criticisms of the Channel Islands are not a way of diverting attention from the fact that the current financial crisis has been caused by huge institutions based in the UK/US etc. What the TJN, and others are saying, is that the activities of those institutions that brought about this crisis would not have been possible without the secrecy and lack of regulation provided by tax havens.
So as well as enabling rich tax dodgers to avoid paying their fair share of tax, they’ve now contributed to a situation where people like myself, an ordinary UK taxpayer on a very ordinary salary, are going to pay, through increased taxes and/or huge cuts in services, for the greed and stupidity of others. Well, thanks a lot.
And as for non-doms, this is something that should have been scrapped years ago, just like tax havens themselves.
Sickoftax, may I point out to you that the crown dependencies are well regulated and financialy transparent. The OECD considers us to be more transparent then both the UK and US.
May I also point out that Richard consistantly seems to be distorting what financial services we offer. It is true that we were once known for tax avoidance, but those days have passed. We know offer many financial services that are full compliant to international standards. The success of the Islands does not lay with ‘creaming off the top’ but because we have extremely good infratructure, a skilled work force, stability and believe it or not, a good international reputation.
I would also like to point out that the standards of living in the Channel Islands have historically always been greater than in the UK. Except for post WW2.