I welcome UK bonus tax escapees, says minister » Business » This Is Jersey.
RICH City workers fleeing the UK to avoid rising tax rates will be welcomed into Jersey, according to the politician who approves residency applications from wealthy immigrants.
Housing Minister Terry Le Main sees a ‘huge benefit’ to the Island if British financiers, angered by Labour’s new 50% tax rate and one-off 50% levy on all banker bonuses over £25,000, move across the Channel.
But as the print version of the paper (which I've got - miracles never cease given it was published at lunchtime) makes clear - there have been just 10 such people arriving in Jersey this year.
So this is just more completely bogus hype for something that is not happening.
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Oh dear Richard, something getting under your skin again? Just admit it, the TJN does not stand a chance now.
@Matt
Why not recognise the reality?
We’re winning the argument
lets keep this in perspective there will be some more high tax bracket wealthy entrepreneurs – and sad hedgies ( your term Richard ! per today’s Torygraph – damn fine paper) that will consider Jersey or Guernsey as an alternative to London and perhaps some may actually make the move but it won’t be significant in overall terms to the UK. Interesting to see Jersey are as ever, more aggressive – touting for business. Guernsey’s preferred approach is more low-key. In any case Guernsey is much more attractive than Jersey (St Helier could be Croydon) and arguably easier from a residence perspective.
But what are you winning? You know people will leave the UK if they think they are being taxed too much and Jersey will welcome them.
Richard,
I think the difficulty any government has arises from the fact that the world is mobile these days and interconnected. I know a hedge fund manager who lives in Jersey. To be fair to him, he had a rural upbringing and I suspect is more at home in Jersey than he would ever have been in London. And Jersey has good schools, great beaches, a higher quality of life than most of the UK etc.
But the fact remains that he probably earns, in an average year, £5m. That wealth is almost entirely derived from the success of the software he has developed that generates trades he makes that have, over the past 5 years, generated significant positive returns.
Now, you don’t like any of that. Deep down, I don’t think any of us do. It all leads to the rich getting richer through no real effort of their own. But the problem is, you either have him inside your tent peeing out or outside peeing in. You may not think he does anything of social value, but you are wrong. He pays taxes. If he has a choice of paying £2.5m (or more) in the UK and being treated as a pariah or £350,000 in Jersey, what would be his rational response?
Surely the crux of the matter is that you don’t like people in financial services and you believe the financial services should, by and large, be shut down. But even you must recognise that if you shut down things like fund management in London it will simply move elsewhere. It has nothing to do with tax avoidance – these people are happy to pay a fair amount. But a tax of 50% or more, and being treated like a scumbag in any event, is not, in most people’s eyes, “fair”. It is the tyranny of the majority, and you cannot complain if the minority decide to leave. Because that is precisely what you want them to do.
@Matt
10 have gone to Jersey
I think that tells you whop is winning
And it certainly is not Jersey
And we have the tax
@eugene
We agree – given a choice it would be guernsey every day
Much nicer
@mad foetus
The answer is regulate hedge funds our of business
It could be done
Richard
Guernsey every time, but I am biased and I digress.
Until last week I honestly don’t think too many would have actually left, but after last week there are new rules. I am in absolutely no doubt that a lot more will go shortly unless the Tories can somehow change their minds. So the figure of 10 is irrelevant at this stage. Bear in mind that the 50% income tax rate was only announced in this current tax year and it takes months to plan a move.
I’m hearing the Channel Islands, Shanghai and Singapore as the 3 likeliest destinations, with New York expected to make a big move soon. And its not just about taxes. The EU moves to regulate alternative investment funds and Britain’s reckless handing over of supervision of the City to a Frenchman are just as important in the decision-making process. The UK has no other significant economy and its just killed the City. Europe is also economically knackered and won’t recover for 10 years, so what’s the point of anybody in financial services under 45 staying in the UK ? More importantly, how is the tax contribution from the City going to be replaced ? I can 65% income tax rates for everyone left behind. Whatever the rights and wrongs of the financial services industry, the UK is now a basket case. How or when can it recover ?
@Rupert
Your whole argument is premised on the idea that transferring funds from the poorest to the richest is wealth creating
It isn’t
It is worse than a zero sum game
So we win by the loss of much of financial services
And you don’t win – because we won’t be buying them if they go
The problem with the full frontal attack on financial services is that it forces everyone to be utterly reliant upon the state. So we regulate funds out of business. Fine. We do that on the basis that putting money into funds isn’t really investing, it is asset stripping. Idealogically, you can make a case to yourself.
But what do people who aspire to be self-sufficient then do? People who want to save £50, £100 a month to provide for their retirement. There’s no point putting it in a bank account because it will lose value. They don’t have the knowledge, experience or inclination to lend it to a neighbour’s business – which you wound no doubt call proper “investment” – because that will expose them to risk. Currently they might put it into a collective investment fund or a pension fund exposed to the stock market. Yes, they will get ripped off, but by and large, they will do better than if they hadn’t bothered..
What is the alternative? Spend it all on beer and fags in the knowledge that if they do manage to save anything for their old age they will be means tested and so will lose out anyway? Pay 50% tax on it all?
And so we end up with a society where the vast majority who are forced to be dependent upon the State. And a State with the demographics skewing heavily and increasingly towards those above working age. It doesn’t take a rocket scientist to see that is unsustainable.
It sometimes looks like your policies are aimed at enforcing poverty upon the majority.
Whatever, but how does the UK finance its infrastructure and service its
debt without any significant industry to speak about ? Is it reduced to
begging for handouts from the EU ? Does the UK offer any sort of present,
let alone a future, for those graduating over the next few years ? It has
all the makings of an Australian gold rush of 150 years ago, but this time
to the likes of Shanghai. You may well say “good riddance” to them,
but the lost tax revenue will be felt.
Richard the Channel Islands will win because since 0-10 they need more tax providers and if these people shift over from the UK its Xmas for them. I guess if it was not for the UK’s general fiscal policy in the first place Jersey would never have escalated in its success so quickly anyway.
@Rupert
Real business pays
It creates value
Gambling does not
You may have noticed the cost of gambling – more than any tax ever paid
@mad foetus
Real investment
In real things
For real benefit
Like a Green New Deal
Rather then speculation
Which only benefits the fund manager
Which is why people are voting with their feet and not saving with them already
Have you noticed how badly they have done?
Richard
Has the national bank bailout figure been greater than the total cumulative contribution of the City of London’ financial services industry to the UK’s GDP, both directly and indirectly, over the past decade ? Where would the Uk have been in the last decade without the contribution from the City ? And as several US banks have already proved, the bailout money can be repaid in full pretty quickly by the participating banks.
But let’s look at this more closely. Most of the UK’s bailout money has gone to the High Street banks, covering every inch of the country from Lands End to John O’Groats, with some banks headquartered and managed from Edinburgh, not the City of London. Who was it who regulated those banks and actively encouraged them, even implored them, to keep on with their reckless lending ? I think you will find it that was a man called Gordon Brown. So why permanently kill off the rest of the UK’s financial services industry, hitting all and sundry ? Hardly any of them were responsible for the financial crisis. Most were just peripheral players, egged on by Brown and his reckless policies. You call it “gambling”. In some cases that’s undoubtedly true. But all of them ? With very low interest rates and a tax policy which heavily favours capital gains over income, of course the demand for capital growth products is going to be high. That encourages speculation. Who created the distinction between CGT rates and income tax rates ? I recall that is was a certain Gordon Brown, was it not ?
So the whole of the City of London’s financial services industry is blamed entirely for the country’s ills while Brown and Darling crow about their supertax solution. How ironic.
Richard,
Factually you are wrong. The first fund I looked up, the very well known, long established and widely held Fidelity Special Situations fund, has returned 51% to its holders over the last 5 years.
So the idea that only the fund manager benefits is simply incorrect: investors benefit as well.
That is not to defend fund managers as a class, just to make the observation that people invest in funds because by and large, in the long run, they do better than bank accounts and people do not have the time, expertise or inclination to research things on their own.
If you close them down then yes, the fund managers will lose a portion of their income, but the real losers will be those people who want to save for their retirement but do not hae enough wealth to establish bespoke schemes.
The middle class, in other words.
Surely the real response should be to encourage funds to be established that invest in a Green New Deal, and perhaps give investment in such funds tax breaks, to reflect the fact that growth expectations will be reduced, because the idea is to be sustainable in the long run, ratehr than maximise short term profits.
@mad foetus
No I am not wrong
Fidelity won
Someone else lost
Charges were made on the way
No value was created in the real economy
Money was moved
That is all