There was a depressing debate in parliament whilst I was away, promoted by Mark Field, the Tory MP for the City of London, in which he praised the role of tax havens. To call it a debate may be a misnomer though – only Tories took part, and so absurd was the discussion that the transparency of the British Virgin Islands was praised – which is beyond the bounds of plausibility in anything approximating to reasoned consideration of the evidence.
It is, of course, an argument often made here that places like Jersey are just branches of the City of London – and if evidence was needed, just read what he and the sycophants who took part in this staged discussion had to say.
All the usual nonsense was put out on display – including defence of zero ten in Jersey and Guernsey even though the EU has declared it unacceptable. And as usual, tax competition was defended. Mark Field said this:
Concerns about the UK's tax base being stripped by unfair competition have also been overstated. It is clear that the debate about tax competition needs to be properly redefined and any further policy initiatives need to protect the important principle of tax sovereignty, as well as adequately recognising the impact of tax regimes on the productive sector. The OECD has clearly warned about the detrimental effects of high corporate tax on productivity. In that regard, I welcome the moves to reduce corporation tax and peg capital gains tax. The recent attacks on the zero-10 tax regimes reveal a worrying trend, in which the sovereignty of independent states to set their own tax rates is undermined and high-tax countries seek to export their high tax rates around the world.
Economic models vary country by country. The adoption of a tax regime premised on the principles of lower tax burdens, efficient government and dynamic private sector activity is legitimate and some degree of tax competition should therefore be recognised as positive. Regardless of that, small IFCs have shown a willingness to engage with the concerns raised by their tax regime-for example, Guernsey and Jersey are voluntarily undertaking a corporate tax review to act within the spirit of the EU tax code.
Let’s just consider the facts:
- UK tax policy is being undermined by offshore – HMRC says so;
- The OECD has been a major critic of offshore;
- The decision on tax rates is not to be made offshore but though the ballot box in places like the UK;
- I am quite happy to see tax sovereignty – but offshore sets out (as Field implicitly says) to determine tax rates here – so undermining our tax sovereignty. His argument that we should respect their right to do so is absurd;
- There is no effective government in Jersey – that government has been captured completely and utterly by the financial services industry;
- There is no dynamic private sector activity in Jersey there is simply a business aimed at capturing the tax revenues due to states for private benefit. This is not dynamic business: this is free-riding the state;
- Guernsey and Jersey have never acted voluntarily on issues of tax compliance: they act with guns to their heads.
But now the Tories are in power and the misinformation is promoted as if truth. Thankfully the reality is known and the whitewashes are all too obvious. This is, no doubt, one of many to come.