Tax Journal has just published a lengthy article on the Tax Justice Network's Financial Secrecy Index which opens with the following sentence:
The United Kingdom would 'easily' take Switzerland's place at number one in the Financial Secrecy Index if the 'British network of secrecy jurisdictions' were considered.
This is absolutely correct. The City of London is intimately connected to offshore satellites in Bermuda, British Virgin Islands, Cayman and Jersey (all of which fall in the top ten of the FSI), and if all the Crown Dependencies (CDs) and British Overseas Territories (BOTs) were combined with the UK as a single entity, there is no doubt that the UK would top the list. As Tax Journal notes:
Ten secrecy jurisdictions on [the TJN's list of 73 jurisdictions] are either British Crown Dependencies (such as Jersey) or British Overseas Territories (such as the Cayman Islands or Bermuda) while many others are members of the British Commonwealth.
These jurisdictions generally share British common law [and] deep financial penetration by British financial interests, typically use British-styled offshore structures such as trusts, usually have English as a first or second language, and mostly have their final court of appeal in London.
Here is the full list of CDs and BOTs with their [secrecy scores] and global scale weights
Guernsey [65] 0.00298
Isle of Man [65] 0.00060
Jersey [78] 0.00374
Anguilla [79] 0.00000
Bermuda [85] 0.00066
BVI [81] 0.00150
Cayman [77] 0.04622
Gibraltar [78] 0.00005
Montserrat [86] 0.00000
Turks & Caicos [90] 0.00003
Look first at the secrecy scores. They range between 65 (Guernsey and Isle of Man) to 90 (Turks & Caicos). While the average secrecy score comes out at a very poor 78, the appalling scores for Bermuda, Montserrat and Turks & Caicos demonstrate that when it comes to hiding away the truly nasty stuff, British bankers and lawyers are spoilt for choice in terms of what they can offer their dodgy clients.
Now let's turn to the issue of scale. London is already a giant in the offshore financial services market. The IMF data we used for the 2011 Financial Secrecy Index showed London as having 20 percent of global market share. Now add the estimated combined market shares of the CDs/BOTs and the aggregated figure rises to around 33 percent. One third of the global market in offshore financial services - and that doesn't include British Commonwealth countries which also feed cross border financial flows through to London.
Now at this stage we have a dilemma: should the Tax Justice Network take the UK secrecy score (45), or should it work on the basis that London can use its offshore satellites to do the monkey business (viz Bermuda: secrecy score 85) while maintaining the pretence of being reasonably transparent and cooperative? If the former, London's position on the overall ranking scarcely shifts, but if the latter, which reflects reality, then London screams ahead of the pack to number one position.
TJN's general position when assessing secrecy scores is to assess on the basis of the lowest common denominator position. If British lawyers and bankers can use jurisdictions like Bermuda, Cayman, Jersey and Montserrat (average secrecy score = 81) to hide their dirty business from UK investigators, then that's exactly what they'll do. And experience shows this to be what happens.
Meantime, successive British governments connive with the City of London in arguing that these are independent statelets with internal autonomy when it comes to setting tax rates. This argument is at best disingenuous, at worst outright mendacious. When it comes to creating secrecy mechanisms, through trusts and company laws, for example, or through cooperation in international international tax information exchange processes, the British government has complete control. As TJN director, John Christensen, notes in the Tax Journal article:
"'No law is passed in Jersey without the approval of the Privy Council,' he told Tax Journal, adding that key Jersey officials are appointed by the British monarch."
So TJN now needs to consider its position on how to treat what we call the British Empire of Tax Havens. Does it continue as present and rank them separately; or should we aggregate them into a single spider's web of interlinked financial services serving the political and economic agenda of the City of London? If you have a view on this, please drop us a line at info at taxjustice.net
And finally, the sharp-eyed among you will have noted that the common feature of the stamps illustrating this blog is Her Majesty, the Queen of England. Not long ago, HM Queen asked why no economists had seen the 2007/8 financial crisis before it hit. Of course, some of us had foreseen it, but more pertinently, some of us had also seen how secrecy jurisdictions have contributed to increased inequality, fiscal crisis, financial market instability, corruption, and a whole host of other plagues and miseries. And with due respect to Her Majesty, too many of these places carry her head on their postage stamps. We strongly recommend that she asks Santa Claus for a copy of Treasure Islands: Tax Havens and the Men Who Stole the World in her Xmas stocking this year.
NB: adapted from TJN blog with permission
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QUESTION: Does the Tax Justice Network continue as present and rank the British network of secrecy jurisdictions separately; or should they be aggregate them into a single spider’s web of interlinked financial services serving the political and economic agenda of the City of London?
As the web of deception is orchestrated and controlled from the City of London then it should combine as a single entity — and be known as the United Kingdom with the worst (highest) Financial Secrecy Index score in the world. Who is interested in knowing that Cayman is slightly less Machiavellian than Jersey?
The only (unworkable) alternative is for the City of London to declare itself an independent jurisdiction (not a Dependency or Overseas Territory) but a fully independent country — which it already behaves (when it suits it) as if it is at present.
That Guernsey gets a low score is down to the fact that it can fool even the best of surveys …
The TJN is doing it quite correctly in my humble opinion.These “UK” dependenicies are self governing as you know,so largely set their own agenda. Some are learning by their mistakes,or even just might not like to be in an invidious position-others just don`t seem to give a damn. I put it to you,that the IOM is now in the former group,and Cayman the latter-the others you might work out for yourself.
I pout it you you that the veneer of being self governing is as real as the veneer that Norfolk County Council has very much choice about the services it provides when UK central government even lays down edicts on how often the bins will be collected to such authorities or their District subsidiaries
The Crown Dependencies pretend that they are “self —governing” and the British government sponsors this pretence providing the islands remain compatible with vested interest in creating wealth by tax evasion.
In fact the Crown Dependencies are powerless, trapped in a spiders web woven in London — either Westminster or the City. The best the islanders can hope for is that the intruders running their “finance industry” create some side-effect prosperity.
The TJN figures show that the Isle of Man is only comparatively less corrupt than Cayman — and no one should fall for the propaganda “spin” churned out by the island’s well oiled PR machine. This place remains a treacherous jurisdiction to either deposit or invest money.
Steer well clear.
Self governing?
Not if Goldman Sachs, Merrills, Barclays and the likes have anything to say about it…
I see we are all being pedantic. Okay,I missed out the word “internally” before self governing,and as far as the CDs are concerned,that covers most things except defense & foreign policy.This is by convention admittedly,but in practical terms,and the end result is the same-and neither the UK Gov`t OR the local populations seem that keen on changing things- they both know that “big money” is involved. Or am I missing something,and Norfolk County Council also operates as a tax haven-with it`s Statutes signed by the Monarch? Or maybe like the State of Delaware?
This is not a for or against-but if it looks like a duck,and quacks like a duck-I guess it must be one-just not the normal variety.
Your last phrase says it all
Just today we have news of a particularly smelly bit of work by the “British Empire of tax havens” – except I’m not sure that “tax havens” is a sufficiently comprehensive term for this sort of thing.
http://www.bbc.co.uk/news/business-15352799
The Tax Justice Network’s Financial Secrecy Index is well worth reading …
http://www.taxjournal.com/tj/articles/tax-haven-network-makes-uk-top-secrecy-jurisdiction-says-tjn-34401
It notes that :- ‘many jurisdictions, while merrily signing up to (information exchange agreements), have quietly been adding stronger and more devious new secrecy facilities to their already ferocious offshore arsenals’ and ‘One could argue that the UK — notably because of its role at the centre of a large global network of secrecy jurisdictions which feed business to the City — is the world’s most important secrecy jurisdiction.’
Indeed the sun never does set on the 31 secrecy jurisdictions which form the new British Empire of Tax Havens which for oblique intents and circuitous purposes are directly connected to and controlled from Britain.
“Meantime, successive British governments connive with the City of London in arguing that these are independent statelets with internal autonomy when it comes to setting tax rates. This argument is at best disingenuous, at worst outright mendacious. When it comes to creating secrecy mechanisms, through trusts and company laws, for example, or through cooperation in international international tax information exchange processes, the British government has complete control. As TJN director, John Christensen, notes in the Tax Journal article”
CITIZENS AGAINST TAX HAVENS have already reached the conclusion that all British tax havens should be treated as a single unit and are promoting a global citizens’ confrontation as follows:
Challenge to British Tax Havens
In one corner: Citizens against tax havens
In the other corner: The British tax havens
The Challenge is due to start on 15 August 2012 and is based on citizens’ consumer power as the means to pressure the UK Government by “not buying or using” UK products and/or services until the mechanisms for tax havens are closed down in:
The City of London, The British overseas territories of Anguilla, Bermuda, British Virgin Islands, The Cayman Islands, Gibraltar, Montserrat, The Turks and Caicos Islands and the Crown dependencies of Jersey, Guernsey and the Isle of Man
It is hoped that this waiting period, until 15 August 2012, is used by the UK government and British people to have a public debate, decide what to do with all the British overseas territories and Crown dependencies and confirm that their tax havens mechanisms will be closed down thus making the challenge unnecessary. For the challengers’ side it is obvious that these places are British, which cannot be masqueraded otherwise, and that only one thing is expected: the closing down of their tax havens mechanisms.
There are two choices: either impose British Law or give independence to all of them.