I noted a few days ago that the European Parliament has voted to include Jersey on the EU's tax haven blacklist. That does not add them; the Commission has to agree, but it has raised a storm in Jersey.
The Jersey Evening Post has noted today that:
JERSEY is not a ‘tax haven' and there are ‘no grounds' to include the Island on a tax blacklist, the head of Jersey Finance has said.
Well, of course he has. That's his job. But as they also note:
But tax campaigner Richard Murphy of Tax Research UK, a long-time critic of the Island's tax regime, said that he felt that Brexit had increased Jersey's chances of being blacklisted.
‘The UK's presence at the table meant that blacklisting, the EU code of conduct and other things which could have been used as weapons against Jersey were mitigated,' he said.
‘Now, with the EU quite worried that the UK is threatening to effectively become a tax haven itself, then I suspect there is little goodwill for Jersey, the Crown Dependencies and Overseas Territories.'
Mr Murphy said that the EU would also be more likely to blacklist British territories, as they were no longer within the bloc.
‘The EU Parliament doesn't always get its way. It tends to be more belligerent and gung-ho than the commission is and it signals its wishes is by passing motions,' he said.
‘However, the parliament is a barometer of EU mood music. And at the moment tax revenues are in short supply and there's a lack or sympathy for companies that see the opportunity to take advantage of low-tax jurisdictions.
‘They may have difficulty agreeing on whether Malta is a tax haven because Malta is a member state. But Jersey and the UK being outside means that it is much likelier Jersey will be listed.'
He added that he believed that the development could mean the Island's ‘zero-ten' corporate tax regime ends up ‘back on the table' in negotiations with the EU in relation to the level playing field issue, which involves ensuring business have common rules and do not have unfair advantages.
I haven't got much to add to that. Except for those not familiar with my one-time engagement with Jersey and the fact that it was in no small part down to my persistent campaigning that Jersey was forced to change its laws to comply with EU requirements, there are 720 posts to read here.
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Always the pessimist Richard, but I enjoy our exchanges and I may add for many years now.
Even as far back as the last recession when you said Jersey would be bankrupt by 2015.
Let’s see if Jersey is actually added onto the blacklist first though, many people in Jersey are doubtful it will happen. Me included.
The Cayman Islands were added to the black list in February 2020, but removed in October after they changed aspects of their domestic law. Rather that complaining, Jersey just need to ask the EU what it needs to do, and then do it.
Everyone knows tax avoidance activity happens in Malta, Cyprus, Ireland, Luxembourg, etc. too. But it is ambitious to expect the EU to tackle a detail like tax avoidance in its member states when they seem unable to address real threats to the rule of law in places such as Poland or Hungary. (As Apple winning its appeal in the state aid case shows, this is not so easy.)
Looking at it from an MMT perspective.
The problem isn’t that the money is going “off shore” and avoiding tax. It’s when the money comes back into the economy, it causes a problem.
Just let the wealthy squirrel away their money “off shore”, but clobber them with tax when they try and spend it.
Then, by going “off shore”, they would be tying up their money, like if they had put it in a government bond but without the interest 🙂
Emphatically no, unless that is you are happy with massively growing inequality and all that flows from it
And for the record, the wealthy do not spend all their money. That is why they are wealthy
🙂
I was being a little bit tongue in cheek but it is interesting to look at tax havens in the context of MMT.
They aren’t denying government the money to spend, by avoiding tax, as we all know on this blog, tax doesn’t fund government spending.
In a way, as long as the money stays off-shore, the government can create the new money to replace it without running the risk of inflation. That new money could be targeted to address inequality.
Have to make sure the money off-shore can never re-enter the economy though.
I’m not suggesting that this should be a policy goal, but it’s interesting how MMT alters the understanding of tax evasion.
No, No, No
You have all of this utterly wrong
Who the government reclaims money from matters
If MMT ignores that then forevermore I would have nothing to do with it: that would make it a policy for the far-right alone, as some on the left already think it is
Tax evasion distorts the allocation of resources in society – penalising the honest, and since MMT is utterly dependent on tax as a fiscal mechanism to balance the economy – and if MMT ignores the distributional impact of only asking some to partake in that process then it fails utterly to deliver social justice and is worthless as policy
What is more, MMT is utterly dependent on tax as an instrument for delivering value to money. Again, ignoring evasion destroys the effectiveness of the currency in that case
And it encourages inflation as a result
MMT cannot be indifferent to tax evasion – it is utterly dependent on opposing it to work
As I say, you quite literally could not be more wrong by following the absurd line of Neil Wilson on this – whose work and understanding I have always thought of little value.
I have to say that overall Warren Mosler is not much better on tax – where most of his comments make no sense whatsoever
And I will always be happy to say so
And tax havens distory