The Guardian has a headline this morning that says:
David Cameron says not enough is being done to tackle tax evasion
Prime minister says he is still not happy with way some British overseas territories are resisting financial transparency
He's right, of course. I admit to having said the same thing this week. I had informal, but useful discussions with very senior ministers and some civil servants from Jersey, Guernsey and the Isle of Man this week. The exchanges were courteous and even friendly (I hope) because I prefer things that way.
It was made clear to me that each thought they had made progress and I agreed. Since I began campaigning on this issue with the Tax Justice Network, more than a decade ago, information exchange has, for example, made big steps forward. Little of this has been due to the initiative of these places: all has been imposed, but it is beyond dispute that things are better.
It is also, in my opinion beyond dispute that that things could still be much better. Each of these islands is, very deliberately, a tax haven. They offer zero per cent corporation tax, even though it is bankrupting Jersey to do so.
They are also secrecy jurisdictions: accounts are not on public record, and there will be no public registers of beneficial ownership. The argument put to me by one minister that business has a right to privacy is nonsense. Individuals who trade in their own name do have that right, but they have no right to artificially relocate their activities and hide the fact that they are doing so and then claim limited liability - the right to not pay their debts - when doing so. That is just a breach of the human rights of others that these places are facilitating.
And I disagreed with the same minister when he said that his island has the right to set its own tax rates. That is true if it was intended solely to impact on his own island, but he is very clearly using that right to deliberately impact elsewhere. That is economic warfare. His defence that the UK do it is true. But that's no defence at all. A criminal can never justify their crime by saying it is commonplace.
So what of Mr Cameron? His focus was, admittedly, on the Caribean when he said when in Jamaica:
“If we're to beat corruption, we need transparency. I've taken the lead by pledging much more transparency over property and company ownership in the UK so that terrorists, tax-avoiders, money launderers and criminals have nowhere to hide their ill-gotten gains.
“Some of the British crown dependences and overseas territories are making progress in this direction. Others, frankly, are not moving anywhere near fast enough.
“I say to them all today, including those in this region, if we want to break the business model of stealing money and hiding it in places where it can't be seen: transparency is the answer.”
How can I disagree with that? In principle I can't, but if he is really not just ringing hollow and is actually serious about this let me list what he has to also deliver:
1. Public country-by-country reporting: nothing else will work as well to reveal tax haven usage
2. Real beneficial ownership registers, backed up by data supplied by banks who have to check the source data for money laundering purposes and who then share it with HMRC and the Registrar of Companies
3. Real powers in the UK to extract information from the bankers to companies who do not file tax returns
4. Sufficient staff at HMRC to use the data that such information exchanges supply
5. A willingness to prosecute
6. Public naming and shaming.
7. An end to the promotion of tax competition by the UK - which is what the 18% tax rate is.
I wrote much of this in a Bill that his government rejected.
I won't believe David Cameron is serious until he does what is required in the UK. Until then it is clear from my discussions this week that he will be ignored. And I almost cannot blame the tax havens for doing so when it is clear he aspires to be one of their number. Right now David Cameron simply looks like a desperate Prime Minister trying to spin an old line one last time. It won't work. It's time he realised leadership is by example and the UK is not providing it.
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If these Crown Dependencies wish to set their own tax rates their simplest solution surely would be to issue their own currency?
They’d sink in minutes
No one would want it
They need the pound as much as they rely on the UK legal system
I rather think they would – but that has to be the reply to the desire to set their own rates of tax.
Although Guernsey issued its own currency to a limited extent after the Napoleonic Wars I believe.
If they use Sterling they can’t (or shouldn’t) set their own tax rates.
Failing that they could of course always apply for Euro membership!
They already issue their own coinage and notes which people on the islands accept as being interchangeable with regular sterling.
The Crown Dependencies don’t need Euro membership to use the Euro, their Governments could just decide to accept payment in Euros and issue notes that they exchange for Euros. At that point the Euro would be their de-facto currency. They could do the same thing with the US Dollar or any other currency that isn’t subject to capital controls.
If they created a completely new currency it wouldn’t make any difference to companies that locate there because the Crown Dependencies will generally allow companies to account in any currency they choose.
There are places all over the world that work in this sort of way and indirectly use the currencies of their larger neighbours.
Their own notes and coins work because they are backed £ for £ by sterling
So they do not have their own currency
I don’t disagree, and similarly if they wanted to switch to using the US Dollar it would work because they could match $ for $ with a US Dollar, and the same could be said of the Euro.
“And I disagreed with the same minister when he said that his island has the right to set its own tax rates. That is true if it was intended solely to impact on his own island, but he is very clearly using that right to deliberately impact elsewhere. That is economic warfare.”
Your usual contempt for democracy showing here……..When is democracy not allowed?….When according to you if effects others or basically when you don’t like the result.
Hence your objection to the low Corporation Tax rate in Ireland or the UK or any other Sovereign Democracy that chooses low tax rates or even tax rules to attract investment at the loss of others!
I notice you would not agree with the US having a veto over UK tax rules but you seem very keen for other Countries to be able to overrule democratic states.
Of course if you decided a policy of Capital Controls or tariffs were required, even if that caused losses in other States, this would be different!……Then suddenly who cares if others object!……you hypocrite….
If upholding democracy and the right of the state to govern in accordance with a democratic mandate without deliberate interference from international capital is hypocritical I plead guilty
Jersey for example is more democratic than the UK, they at least give tax-paying EU nationals the vote in their General Elections whereas the UK does not.
As for the ‘deliberate interference from international capital’ point, corporation tax for this group was 0% until it was increased to 10% around 7 years ago and it isn’t going back to 0% anytime soon. That looks like a failure of foreign interference to me.
I think a punt is in order to help relax the mind.
You have an extraordinary ability to extrapolate from the irrelevant whilst ignoring the big picture
I think your time here is running out
We’ve got to move beyond ‘beggar your neighbour’ economics, that’s why it’s clear to me that Corbyn not singing the Anthem is much less unpatriotic than those that bellow it out while encouraging capital flight, job losses and ‘ beggar your own country’ (-10% of the population.
This is rubbish.
Local Blogger – Rico Sorda’s wife is doing alright out of tax avoidance services in Jersey –
http://www.crestbridge.com/people/chlo%C3%AB-sorda/
Crestbridge Jersey are recruiting all the time so these attacks are getting nowhere.
Ahhh this is the blogger who says online he wants Jersey to get rid of 0-10 but actually supports it all because his wife draws a nice salary from the Trust industry. He’s deluded.
“doing alright out of tax avoidance services”
Well that’s saying something. I can’t quite tell whether its an argument for, or against. Or any sort of argument at all?