{"id":12372,"date":"2011-10-13T15:57:45","date_gmt":"2011-10-13T14:57:45","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=12372"},"modified":"2011-10-13T15:57:45","modified_gmt":"2011-10-13T14:57:45","slug":"where-do-the-funds-in-jersey-come-from","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2011\/10\/13\/where-do-the-funds-in-jersey-come-from\/","title":{"rendered":"Where do the funds in Jersey come from?"},"content":{"rendered":"

Jersey's defence to the Action Aid report<\/a> on tax haven subsidiaries, broadcast on local radio and in the media is threefold.<\/p>\n

First, Jersey law has not been broken, so what's the problem (the same could have been said of those practicing\u00a0apartheid\u00a0in South Africa at one time by the way, but let's not go further).<\/p>\n

Second, using Jersey only\u00a0implies\u00a0tax avoidance, not evasion. But then, as Denis Healey said, the difference between avoidance and evasion is the thickness of a\u00a0prison\u00a0wall and to claim that using an ISA in the UK is the same as routing funds through complex structures in Jersey are the same thing is disingenuous in the extreme.<\/p>\n

Thirdly, the world benefits from Jersey, and most especially the UK benefits from all the\u00a0investment\u00a0into the UK that comes from Jersey.<\/p>\n

The first two are obvious guff (to put it nicely) so let's look at the third. This\u00a0argument\u00a0comes from a US academic called Prof Jim Hines, oft\u00a0associated\u00a0with my friends at the\u00a0Oxford Centre for the non taxation of<\/del> Business Taxation. What Jim Hines found when undertaking a study was that countries\u00a0next\u00a0to tax havens have high rates of inward foreign direct\u00a0investment\u00a0and so, he concluded,\u00a0benefitted\u00a0from the existence of the\u00a0neighbouring\u00a0tax haven. Jersey is using this argument to say that the UK beenfits from its existence.<\/p>\n

The trouble with Jim Hines work was that he never asked how the money got into the tax haven in the first place\u00a0because\u00a0(and this bit is not rocket science) the cash flowing out of Jersey was obviously not\u00a0generated\u00a0in Jersey, it flowed in there in the first place. And where did it flow from (the question Hines did not ask)? Well almost certainly from their nearest neighbouring large economy, of course. Where else?<\/p>\n

So where does all the money flowing into the UK from Jersey come from? Why, the UK, most\u00a0likely. And why does it go through Jersey on its way from the UK to the UK? To avoid tax, of course (re which, see above). In which case it costs us, and does not\u00a0benefit\u00a0us.<\/p>\n

So would Jersey now like to stop making such fatuous claims?\u00a0Because\u00a0they're really not worthy of any government or quasi-government\u00a0spokesperson who wishes to be taken\u00a0seriously.<\/p>\n","protected":false},"excerpt":{"rendered":"

Jersey’s defence to the Action Aid report on tax haven subsidiaries, broadcast on local radio and in the media is threefold. First, Jersey law has
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