The Guardian's editorial today renames the Crown Dependencies 'the loophole islands' since they have appreciated that these places are about regulatory abuse in all its forms - and not just tax.
But they also realise the blame lies on the UK too:
Easy though it would be for the British to wag their fingers at the Loophole Islands, the truth is that their existence should as often as not be the cause of shame for the UK as well as regret for the islanders. For the islands, it is easy to see the downside. Some of the smallest places are effectively overwhelmed by big and footloose capital. Entire islands run the risk of becoming "company towns", unable to provide decent careers and lives for their residents. But if the UK was tougher in cracking down on tax avoidance, it would kill off the excesses of this corrosive shadow industry.
Full automatic information exchange and a general anti-avoidance principle would kill this abuse.
We can deliver the general anti-avoidance principle. We simply sit on these places to deliver the good governance that full automatic information exchange represents - which we can, since we're responsible for good governance in them all.
It's time for ni ifs and no buts - it's just time for reform, now.
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The indigenous populations of the “Loophole Islands” are becoming financially dependent (directly and indirectly) on the interloping financial services industries – a probable intention of both the island’s so called “governments” and their unscrupulous guests whose fancy office blocks are destined to become abandoned slums and a future warning to those who place greed before humanity …
But the Crown Dependencies are an invention of the City of London and only by “cracking down” on the head of the deception will its island tenticles perish.
And then perhaps the priviledged few who have tax dodged £billions should be made to pay for the rehabilitation of the islands they have wrecked – and the “governments” invited to take a one way ticket into oblivion.
the Isle of Man would be an excellent place to start.
The Crown Dependencies are not an invention of the City of London,but an historic convention allowed for hundreds of years by the UK,and any conveniences for the City of London(or others) has been tolerated by successive UK Governments until(in some rare cases,and usually under pressure) action was taken-such as in the case of the VAT agreement adjustment by the UK vis a vis the Isle of Man,or on the VAT free sales from the Channel Islands.
Personally,I`m fine if a Crown Dependency wants it`s own Government,and the power to set any of it`s own domestic legislation for residents,after all,most Commonwealth countries started out that way,-but beyond that,it is entirely the responsibility of the UK Government to ensure that in doing that,they do not disadvantage the UK financially or otherwise,or lead it into disrepute -a responsibility by and large, they singularly and regularly abdicate. If those existing responsibilities of the the UK over the Crown Dependencies don`t come under the required “good governance”,I don`t know what does.
If the “only” effect these little Islands had on our world was to enable people to avoid/evade tax then we, probably, could live with them.
But it isn’t.
Look at the Nigerian fraudster who used Guernsey as a safe haven for his wealth. He screwed over, literally, millions of poor people who worked hard, expected something, got nothing. He ruined the lives of a lot of people in one of the poorest places on this planet & he took his wealth & hid it in Guernsey & YOU LET HIM !!
I want to repeat that, because it is every bit, yes every bit, as scandalous as arming Serbian war criminals.He thieved the money out of Nigeria & you, the bankers, lawyers, accountants & Co formation agents of Guernsey welcomed him with a Judas kiss & a slap on the back.
How do you sleep at nights, you scurvy, scummy parasites?
Richard
I hesitate, as a non-expert, to post here, now, off the cuff, as I haven’t yet read your book…[although I am ordering it now]..and as this comment is slightly off topic, but I don’t know how else to make the point.
While I agree with all of your proposals I am concerned that you seem to accept the OECD model, as it stands. As I recollect, this generally allows for interest as a tax-deductible item regardless of the doubtful analytical merit of this convention and the extraordinary consequential distortions that we have seen over the past few decades. Conn and others have commented on the deleterious effects that debt financing has had just on the football scene in the UK, but there appears to be a conspiracy of silence among those who do understand the wider point; a bit reminiscent of the long silence over PFI, that seems mercifully to be ending at last.
Twenty years ago I was asked by a deputy Chairman of Inland Revenue, as I was moving jobs, what big issues were pending in the Case III area. I said that the tax treatment of debt claims and their product, generally, was very problematic. Events have proved me right, but who knows, or cares?
To my amazement I woke last night to hear a venture capitalist on Evan Davies’ Bottom Line programme, on the World Service, asking why debt financing receives preferred tax treatment, hinting briefly at its deleterious effects, before being moved on to more important matters. [The intervention is at about minute 14; you too can listen, still.] Lunching with other retired colleagues, recently, I suggested that the reviled unitary taxation solution used by some US states was preferable to the present transfer pricing absurdities. How wedded are you to the OECD model?
I and the Tax Justice Network have just run a conference in Helsinki to expose the flaws in the OECD model and to explore alternatives – I propose the unitary metod and have done since engaging on tax issues publicly
I am not in the least wedded to the OECD model – and I say so in meetings with them