The reason why places like Jersey became tax havens was to raise tax revenue from third parties. The tax revenues raised were, in effect, export earnings that kept their economies afloat.
Deputy Geoff Southern in Jersey has tabled an amendment to the current Jersey budget that shatters the myth that this is still the case. As his amendment says:
Geoff is right to acknowledge there is a race to the bottom in Jersey, Guernsey and the Isle of Man. Promoted by the pinstripe infrastructure of lawyers, accountants and bankers through such coordinating bodies as the Society for Trust and Estate Practitioners (who have their single biggest branch in Jersey but who are active in all three locations) the pernicious influence of these groups has driven these three jurisdictions on a destructive path towards shattering their tax base by eliminating corporate taxes for their clients.
The result is all too apparent. The tax burden has shifted dramatically from businesses using Jersey as a tax haven to the local population who are now paying for the privilege of hosting the tax abuse industry whilst at the same time their economy is facing ruin as local politicians realise they have no idea how to plug the continuing deficits they face and are now suggesting plundering the rainy day fund - a sure sign they are on the slippery slope to running out of money, as I have long predicted.
Geoff Southern has in this case study provided the evidence of what I and the Tax Justice Network have long argued - that the 'race to the bottom' in corporate taxes is simply an excuse to shift the tax burden from those able to pay tax (let's call them the 1%) on to those less able or unable to afford them (again, for simplicity, let's call them the 99%).
This is happening everywhere but Jersey's clearly leading the way.
This is what the Tax Justice Network is about.
This is what #occupy is about.
Beating this pernicious process is what re-engagement in democracy should be about for many who feel disenchanted by it.
And this is what beating the exploitative activities of the City of London - the most undemocratic local authority in the UK - has to be about.
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[…] Murphy has a remarkable post on his blog, based on a table sent to him by Jersey’s Geoff Southern. Study the table, and the message is […]
This was the explicit intention of Zero-ten. I read the proposal before it came in and noted with horror that it openly affirmed as a principle that Jersey’s tax burden should fall on Jersey’s residents. Having thought up to then that the idea of the tax-dod-oops FINANCE industry was that it paid our taxes for us, it seemed to me to be a catastrophic selling out. And now there is the proof: They are not paying much of our tax for us anymore and we are paying nearly treble on average and more than that for middle earners with squeezed allowances.
When will the decent, ordinary people (the 99%) of the Isle of Man, Guernsey and Jersey finally wake-up to the fact that they are being screwed by an elite of bankers and local politicians (the 1%). Their government’s relentless PR campaign make believing that it is all for the good of the islands appears to have dazed them into a comatose state.
Rise-up, cast of the shackles of oppression and false information and throw these people out!
The whole world is really on your side.
Thats right PSG, you tell ’em. They don’t need the vital jobs that actually bring in the money so they can pay that amount of tax. Speak to most people in Jersey and their biggest gripe is the price of accomodation, not the amount of tax they are paying. Go with Steve’s idea of 20% across the Islands and watch all the jobs go to Dublin!
And why are houses so high?
Because of tax abuse!
A charge on ordinary people, again
“….. 20% across the Islands and watch all the jobs go to Dublin!”
Thar’s right Zaphod: Otherwise known as the “Race to the Bottom” a competition that Jersey is currently leading and doesn’t want to lose…
Which brings us to the irksome dilemma of ethics and morality, or more precisely why should a very few fat cats have all the fun whilst the remainder of the world is reduced to penury.
Or alternatively: Do you really want to live at the expense of others?
And just how long will society allow you to do this?
Zaphod
The rate should probably be 12.5%, not 20%, so that the banking jobs don’t all go to Ireland, but I’m assuming that Ireland won’t be allowed by its future German/French government to retain its 12.5% tax rate.
PSG – Everyone lives at the expense of others. That is life. That is nature. Cats live at the expense of mice, etc.
The Biggest problem in the uk at the moment is not other countries low tax rates, LVCR loopholes, etc.. It is the uk’s high tax rates. Cut these and it will stimulate the economy. It will create jobs, income and that will create taxes from which help the genuinely needy. At the moment the uk is scraping the barrel trying to feed it’s pathetic benefits culture and losing hand over fist. That is what society needs to change.
There is not a shred of evidence to support your hypothesis
Let’s put it another way
It’s wrong
As the austerity measures around the world are proving, resoundingly
How is cutting taxes an austerity measure?
Not a shred of evidence? You must have misread my post.
Ireland cuts corporation tax, attracts business and creates thousands of jobs. Ireland, Germany and France cut VAT on hotel rooms to boost tourism – and fill them – creating jobs.
Britains response? put VAT up to 20%. Idiots!!!
Oh dear
You think Ireland is a success story
Where have you been of late?
Richard
Your facts are wrong. You say that bodies like STEP are to blame for ensuring that Jersey eliminated corporate tax for their clients. I think you will find that the clients of Jersey trust practitioners have not paid corporate tax (other than the old nominal Exempt Company Fee) for about 50 years. Nothing has been “eliminated” there and there has been no loss of revenue there. What there has been is a reduction from 20% to 10% of the profits of banks and other financial services businesses. That’s where the “race for the bottom” occurred. It was the fear of loss of the major banks and trust companies to the Isle of Man, which first offered a 0% rate, funded by their now-slashed UK VAT subsidy, which caused the problem. All three islands should come to a mutual agreement to tax their banks and other financial services businesses at 20% and the problem is solved immediately, with no risk of businesses shifting from one island to the other due to tax competition.
That is nonsense – STEP has helped ensure a stable no tax situation
and it has been instrumental in promoting new forms of trust – many of which I consider highly abusive
In the process it’s members have enjoyed substantial cuts in their tax rates
Nothing has changed? Who are you kidding?
Richard
But that isn’t what you said. You stated that they had “eliminated taxes for their clients”. They hadn’t. Their clients had for many decades paid no corporate taxes! STEP membets may well have lobbied to ensure that a zero tax corporate product remained, but that’s not what your article actually says.
PSG
Your assumptions are completely wrong if you think 1% are ruining things for the other 99%. Around 40% are employed directly in finance and another 20 to 30% indirectly through support industries. They know which side their bread is buttered. The figures are probably far more like 5% are openly against finance, 15% would rather that there were alternatives, but recognise the benefits, about 15% are apathetic, and the rest are very happy with finance. Your image of downtrodden natives is a million miles from the truth !
Hiding that zero tax opportunity behind trusts is what they were doing
it amounts the same tung at the end of the day
Huh ? Trusts don’t come into the equation. Jersey companies owned by non-resident beneficial owners have not paid any tax, other than nominal corporation tax/exempt status fee, since around 1952. I don’t understand your point.
I know you don’t understand – although that’s your problem, not mine
But the point is a simple one. Zero ten was not a certain outcome. 10/10 might have been
STEP ensured the zero remained
Now is that really that hard to understand?
Ensuring 0% tax companies remained available was no means the certain outcome of the EU attack on tax abuse in the CI and IoM. Far from it in fact. The UK and EU anticipated tax being due.
So of course they engineered this.
To say otherwise is for you to deny the truth
And as I argued, they did it at cost t the people of the islands, whom they hold in contempt
You haven’t taken territorial tax systems into account. Eventually that is likely to be the outcome – 10% tax on all TRADING profits generated within Jersey. That still results in a zero tax product for non-trading companies.
Who is “they”? Do you mean the democratically elected government of Jersey whom the people of Jersey voted in? If “they” hold the people of the islands in contempt, why don’t those same people of Jersey vote them out? The answer is very simple. The majority of the voting people of Jersey don’t consider that their government is holding them in contempt.
But that’s deliberately designed to be abusive too
And that’s why the 99% will win against this
And the people of Jersey live in fear
You can not possibly justify/prove these percentage figures.
They are, to use your phrase, “assumptions (which) are completely wrong.”
The truth is that many islanders are intimidated by both the sinister so-called “government” and its agencies — and the power of the invading financial industry. At the head of these two “organisations” are the select few — the 1%.
And as you quote around 70% of people currently living on Jersey – as opposed to Jersey people – are directly or indirectly employed by the finance industry; and again as you quote “they know which side their bread is buttered on” — rather like 19th century workers on large agricultural estates or slaving in the mills for Lancashire cotton/wool barons.
This leaves the genuine Jersey people roughly divided into two equal camps —
* Those with a mistrust of the foreign invaders and the dark future that is being spawned
* Those with families and long term honest responsibilities who dare not complain
There is a saying on the island:-
“If you don’t like what is happening a boat leaves in the morning.”
Those who truly love the island and have an enduring commitment to its future will find this option too hard to take.
So they remain there. In silence.
@ Zaphod
Of course, Ireland. That was the OECD favourite country until recently.
Who are the OECD? Who formed them? Who’s shilling do they take?
Why for example in 2006 were they suggesting to Ireland that they harmonise their taxes with the rest of Europe? Why did they strongly suggest that Ireland introduce a property tax a tax utterly unnecessary and alien to Ireland as it has such a small public sector.
Suggest that you get out more and don’t be taken in by the “spin” spun by those with a vested interest in protecting evil.
I’m confused about something Richard, can you clarify it?
Is it really fair to say that the portion of tax generated by bodies corporate is just 12%?
The grouping of ‘non corporate’ includes income tax, import tax, and duty. Surely businesses are importing lots and they have to pay all the transaction taxes too?
What portions of the transaction taxes are paid by businesses active in jersey?
Consumption taxes are meant to be just that – taxes on consumption
I know that Jersey’s systems are not standard but I think you’ll find that the vast majority (but I agree, not all) of such taxes are passed on to consumers and the system is designed to ensure that should happen
So I think based on the data available the allocation is fair
It’s also consistent and that too is vital since it is the relative change that matters in this argument