The Tax Justice Network has a blog highlighting the abuse caused by the Channel Island’s VAT abuse. As they say:

Today, bang on cue, TJN was contacted by a retailer in England's west country. She opened her business twenty years ago. It thrived for the first 15 years. Now she will be closing the shop in February 2011 and laying off her three staff. She places the blame for this closure entirely on the VAT loopholes, saying that "the imminent rise in the VAT rate from 17.5 to 20 percent was the straw that broke the camel's back. Her shop was in a town which suffers from high unemployment and few amenities for young and old. Its closure will be another step towards Clone Town Britain.

This is the reality of unfair tax competition. And as they note:

As a postscript its worth noting that the west country retailer who approached Tax Justice Network this weekend told us she had originally contacted the Tax Payer's Alliance, but quickly realised they aren't interested in tax avoidance and market distorting practices. This VAT scam is costing the UK exchequer hundreds of millions of lost revenue, but that doesn't seem to be a matter of concern to the TPA. We can't help wondering why not...

I can explain that. Just as Jersey Finance has no interest in competition, real business, entrepreneurial activity, investment in jobs or the making of real profits, nor has the Taxpayer’s Alliance. They, Jersey and Guernsey are all after one thing: a quick, exploited buck.

The truth is that, as I wrote not long ago, tax justice is the best friend free markets have.