UK Prime Minister Gordon Brown yesterday gave his clearest indication yet that he intends to outlaw offshore tax havens.
Speaking before the US Senate in Washington, and with the world watching, he called for world leaders to work together to rid the global banking system of rogue practices.
‘On jobs, you the American people, through your stimulus proposals, could create or save at least three million jobs,’ he said in a speech which prompted repeated standing ovations. ‘We in Britain are acting with similar determination. How much nearer an end to this downturn would we be if the whole of the world resolved to do the same? You are also restructuring your banks. So are we. But how much safer would everybody’s savings be if the whole world finally came together to outlaw shadow banking systems and offshore tax havens?’
Similar comments have been made by both US President Barack Obama and French President Nicolas Sarkozy, and the issue of tax havens is due to be a key feature of discussions at the G20 summit of leading economies in London on 2 April.
It is also reported today that the US Treasury Secretary, Timothy Geithner, has added his department’s support to new legislation to force tax havens to reveal the identities of super-rich and major corporations which bank with them.
Pictured: Gordon Brown and Barack Obama during talks at the White House
Article posted on 5th March, 2009 - 2.56pm
36 Article Comments
I love the way these leaders are blaming tax havens for all these banking cock-ups!
I recall the Sunday Times, front page some 18 months ago…Mervyn King ‘UK interest rates on hold till at least 2010′…then some 6 weeks later the Bank Of England cut interest rates by 1.50%…being so out of touch with reality, these executive bankers/politicians only have themselves to blame!
The credit default market spreads indicated there were huge credit/lending problems almost 2 years ago now…we’ve just been waiting for all this to happen…but how could these people not see it??
I find it incredible these people are people millions for doing a job they clearly did not do…and even worse, they are still in a job and diverting the blame elsewhere!
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And as the major shareholder of RBS and Lloyds I think we can all see what he will do to show he is committed to this.
I personally don’t think we are a secretative tax-haven but we are an easy target for Brown to show others what needs to be done.
As it is obvious that the UK Government is distancing itself from Jersey recently there can only be one motive for this.
In the big world of Politics throwing a small Island or two to the wolves is a small price for Brown’s vision as saviour of the world’s economy.
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Gordon Brown said:
‘But how much safer would everybody’s savings be if the whole world finally came together to outlaw shadow banking systems and offshore tax havens?’
In response Senator Ozouf, on behalf of the council of miniatures, said:
‘We are very encouraged by Gordon Brown’s comments…’ blah…blah…blah..’the Prime minister is reinforcing what we have been calling for for a long time..’ blah..blah..blah.
My question to the council of miniatures is:
For how long exactly have you been calling to outlaw tax havens?
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The prime minister is clearly deluded and has unfortunately been duped by the equally ill-informed leaders Obama and Sarkozy. Perhaps we should ask how many off-shore jurisdictions have gone bankrupt in the past 18months, to my knowledge none. How many developed countries, at least one – Iceland, and perhaps more on the way should Eastern European emerging markets begin to fail, impacting heavily on Austria. Yes SPVs and other structured finance vehicles are administered in many of the off-shore jurisdictions, but he is a fool if he thinks that these practises and the so called “shadow financial system” would not exist if there were no “tax havens” or off-shore jurisdictions. Surely the best way forward for the governments is to look at how we can work in partnership with them, helping each other to recover/prosper in these difficult times, rather than erroneously pointing the figure of blame at the offshore jursidictions. Brown is trying to cover his back as it was his poor decision to sell the UK’s Gold reserves at under $300/oz and to relax the UK’s regulatory environment to swell the coffers of HM Treasury during the “boom years”. I look forward to the response from our own politicians, and trust that they are able to correct and educate Messrs Brown, Obama and Sarkozy. Our Chief Minister now needs to stand up so we can be counted. Over to you Mr Le Sueur.
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Well done Gordon, It may cause our island to become a bit of a mess but it may help make the island a happier place with less people, building, cars, and a more friendly community.
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God help us if it’s over to Mr Le Sueur…
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The best way forward is for every resident and business to pay whatever taxes they owe in whichever countries they have worked in or done business in. This is fair. All this shunting money around leads to confusion and possible abuse.
Tax avoidance and tax evasion cause a loss of revenue in those countries affected by these practices. One is illegal, one is legal, however both are immoral as someone has to pay for this loss as far as I am concerned. If the big boys decide to get rid of finance centres they will go no matter how well run or complient they are. What will Jersey do then?
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This whole visit by Brown to the white house seems to be riddled with hidden politics such as the tax issue amongst many other things.
Here is a video I found about Brown’s visit with Obama and how the press is covering it. It talks about the relationship of the US to the UK in the future.
http://www.newsy.com/videos/no_party_for_uk/
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Comment 5 Annie du feu – are you serious? Without finance, Jersey would lose the only profitable industry that it has and thousands of Jersey families would be without work and have no prospect of employment.
If you want to return to horse and cart economics, go to Sark.
I am staggered by the view held by some people that we could somehow remove an industry that employs over half of our workforce and somehow survive.
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Jersey should get ready for the onslaught however, I don’t think they have the balls to manage. It would be prudent to start an Offshore Banking Committee, including representatives from Jersey, Guernsey and the Isle of man to ensure there a consolidated defence and, even attack, against what is coming. Take it to them, don’t wait for it to come, because it will!
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Whenever one finds ones economic policies to have failed miserably, remember to go after the bankers and tax havens. Cos, you know, they’re the REAL problem.
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Keith, I think Annie is simply seeing the stark inevitability and looking for the silver lining. It’s not a case of ‘if’, but ‘when’ the golden goose flys.
When it happens people will have to be realistic that the island will change forever.
As for living in Sark, I think you will find certain people in Sark did very well from illegal tax dodging tactics – until it was shut down. Google the Sark Lark for more.
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In my opinion, having places for the rich to avoid paying their taxes is wrong as it affects everyone else. If this is done away with, everyone else will gain and have a better quality of life. Those paying this tax will still be left with plenty of money to manage won’t they? Why should 95% loose out for 5%? is this democracy or self interest coming into play here?
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It may not happen that the finance industry in the Channel Islands (let’s not be blinkered here and think all our problems are unique) implodes or evaporates, but we have had the chance in the past to embrace alternative and sustainable economies but we have not. Whatever the reasons are or are not, we should be looking at creating diverse employment and economy from the Green revolution which is already established and gaining momentum. The Channel Islands sits with one of the world’s largest and most regular tidal streams running between the islands and we are seeing signs that our collective governments are waking up to this by working together.
Let’s hope we can take the initiative and do it when we can, instead when we have to because we have nothing else or nothing left to work with.
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9. Keith – self interest doesn’t outway moral issues does it? A lot of people have been sucked into Jersey to keep this bubble inflating, they will all probablty go back home so the damage if one can call it that, will be less dire than the doom mungers are predicting.
If 50% of the population leaves, you only need 50% of the infrastructure and housing and taxes etc. Jersey people are very resourcefull and will get by. They managed in the Occupation when they were left to their own devices by the UK, who were too busy everywhere else to free their own people for nearly one year after D-Day. Don’t think they can’t manage again, even if they have to starve, as some did in 1944-45 awaiting liberation, they will get by.
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………….and the UK is not a low tax area ( for some!!)? – will he add the UK to the list of jurisdictions to outlaw ?- I think not!!! Apparently, Jersey had better compliance in some areas etc than the UK and the USA!!!
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Brown can do what he likes. It won’t stop the Middle East using our services and there might be some people with fewer qualms about whose money they take from that region.
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So now the offshore banking is the latest scapegoat. Has Gordon forgotten who started the whole financil mess in the first place?? Certainly NOT the tax havens. Ho-Hum, It’s the old politician’s trick of creating a diversion from the real truth, again.
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Yogie, perhaps you hadn’t noticed but the UK has rolled back the benefits of non-dom status. You can now either pay £30k lump sum after x number of years to maintain non-dom status or can elect to be taxed on world wide income.
Of course its partly a diversionary tactic by a PM looking at election defeat. Having said that, it would be extremely beneficial if there was an overarching regulatory structure to police credit originating structures including those vehicles that currently slip under the radar. This credit bubble implosion has come from within the Finance Sector worldwide as Minsky foresore, not some external shock. Offshore structures that allow banks and shadow banks to circumvent prudential requirements can’t be tolerated. Its simply caused too much damage and socialised the effects on us of disasterous lending activities while a very small minority have lined there pockets with questionable bonuses.
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If Brown wants the Channel Islands to stop doing business with the City of London then so be it. If we go down take then down with us.
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Well done Brown and Obama, about time the Channel Islands got some egg on their face, bring down these offshore tax havens. Together We Can!
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Does anyone want to buy a bulldozer with me? We could make quite a lot of money in a few years knocking down the new finance district. I will be quite fun too!
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There is a strong difference between tax evasion and tax avoidance. Jersey is fully compliant with regulations and bear in mind who was it that drove house prices up, encouraged over lending and pratted about with interest rated?
It wasn’t the offshore tax havens….
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“There is a strong difference between tax evasion and tax avoidance.”
Not to the man in the street whose life is impoverished because the rich are not contributing to the coffers in the country where the tax could be paid.
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23) Lula, “It wasn’t the offshore tax havens”. Actually it was , at least in part. By providing the structures that broke the link between the originators of credit of all types (mortgages, leveraged buyout loans, you name it)and those who held it, the offshore centres did help contribute to the collapse in lending standards. There was enough junk originated in Europe so we don’t have to go on about how Jersey wasn’t used to bundle up US sub-prime debt.
Let’s get specific, do you really think the structures legally domiciled in Jersey didn’t play a part in the reckless business and lending model that was Northern Rock? Lots more examples if need be but I’m a bit tired of “finance professionals” over here who can’t accept the part they played in these mechanisms while banging on about how they met regulatory rules which simply didn’t address the relevant issues. Still the Federal Reserve said they didn’t appreciate the extent of the risks in the “originate and distribute” model so we are in good company.
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Ok so any non US citizens who are invested in US stock shouldn’t pay 30% on all of their dividends to the US government – they should pay it to their government instead?
It all goes around – people pay tax to different governments all over the world on their investments… we don’t prevent people paying tax to their domiciled countries – we just stop countries getting what they are NOT entitled to by law and advising people on the best course of action to prevent paying too much tax.
If your gripe is about people not paying enough taxes you should look to government to form tax treaties with other governments… or try taxing people fairly on what they earn
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David as I have said before it is completely misleading to suggest that this is in any way primarily a Jersey issue. The vast majority of European CMBS and RMBS structures use ONSHORE companies incorporated in England or Ireland. In addition a large number of securitisation structures used Dutch incorporated companies. In reality the structures using Jersey vehicles were a drop in the ocean and the relevant onshore authorities were fully aware of these – indeed many are listed on the London, Irish or Luxembourg stock exchanges. It is the responsibility of the relevant onshore authorities in the UK/Ireland/EU/USA to regulate the provision of credit to their inhabitants and of the various financial entities they allow to do so. It is their failure that has brought us to where we now are. An article last Wednesday in the FT summarised the real here (”Look for onshore, not offshore scapegoats” by Avinash Persaud) – the title says it all !
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Al, look in the back of IFR for the figures by domicile, their figures not mine. I never said it was primarily a Jersey thing.
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I think the issue isnt idividuals avoiding tax, the issue is around companies avoiding tax by locating themselves in offshore tax havens.
In reality the amount of tax lost through individuals avoiding tax is much lower than that of companies that trade every day in large sums of money.
I watched a program a few months back that highlighted the problem.
A company that supplies bananas for tesco was the example given, the cost of the bananas was about £1.40 but by the time tesco sold them they made 1p on the bananas, the rest went to the supplier and various marketing companies that were all registered to offshore tax havens like jersey.
So the only money that was taxed was the 1p that tesco put on top of the price of the bananas.
Is it any surprise that people are angry, lost revenue can result in big cuts in health care, social support and education which can only be made up by cutting public spending or increasing taxes.
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Jersey – the money will go as your economy declines, your children will be forced to beg for food from the UK. Jersey people will have to leave the Island in search of work. However you wont be forced to work for 20 years before you can buy a house and will not be forced to live in squalid non regulated bedsits. For the years of your treating ‘immigrants’ appallingly and saying if you dont like it go home, you will now have to go away from your own home, your Jersey, to find work – see how you are treated I bet much better than when the other way around!
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Heres a thought, GST was brought in to fill a black hole and it seems to me that people are predicting the end of the finance industry,some on here call it immoral, so why don’t we plan ahead now, lets put up personal tax to say 40% have a capital gains and inheritance tax, put up stamp duty and have toll roads, then WHEN (as it has been predicted) the finance industry goes we will be ok! Not sure many of our children will want to live here though after being in a UK university but hey we will be ok!
Personally I think we need finance and should do all we can to keep it!(oh and no i don’t work in it but know we need it to keep our economy going!!!!
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Harold – a bit bleak aren’t you – what is with that huge chip on your shoulder?
We treat imigrants appaulingly? Go to Italy and try there. I’m sorry… do you not have any qualifications beneficial to our island? No? Well then go back to school and get some!
Nowhere and i mean NOWHERE lets you live in their country easily unless you can provide a skill needed there (teachers, optometrists etc)….if you don’t have a skill don’t bother coming as locals who can’t do the jobs needing degrees and qualifications can learn to clean tables and work in the hospitality industry – why should someone who pays half of their wages home instead of back into the economy get an easy ride?
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Lulu, when the finance industry goes, which it will, you (most Islanders) will have no choice but to go and work in the UK or elsewhere, in fact many work in London now and abroad and they have a right to complain in that country if they want to.
The point is this once the finance industry goes you will have nothing to sustain the Island and have to find work elsewhere, you will effectively be an outsider to the UK or elsewhere – will you complain then when the coin is turned, or keep your mouth shut as you seem to be telling all outsiders to do now? Most of the world has a thing called freedom of speech – you know that basic Human Rights rule!
The reality is your Island is threatened and you will need your friend the UK to help you out as it has done many many times. So I suggest you start being nicer to non locals let them complain if they want listen to them. For one day you will be asking them for a very big favour!
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It is time for the people of Jersey to start shaping up for a new era. It is time to realise that living off money that should be paid in taxes to support the people and infrastructure of other countries is fundamentally unfair and immoral. I bear the people of Jersey no animosity whatsoever – I visited the island every year for twenty-two years (1975-1996) and am a UK resident – but the reality is that greed has not been good for Jersey society and the island environment. The island has fantastic natural and historical assets and could live handsomely with an enlightened and sustainable tourism and environmental policy. I think you would be much better off with a gradual decline in GDP and some smart economic restructuring. Who knows – perhaps you might even like to join the U.K. and get some financial support from the South West Regional Developement Agency?
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Iula – you are completely wrong.
‘Nowhere and i mean NOWHERE lets you live in their country easily unless you can provide a skill needed there’ (IULA number 32)
For some time I lived in the Republic of Ireland (during the 1980s) on ‘the dole’. My skills were not needed as there was no work available. However, I lived in peace and contentment and was never told to ‘go home’. I was welcomed by my fellow man with open arms. Many have had similar experiences.
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I just came back from an anti tax haven debate at St Paul’s Gate. The usual people down there including the JDA. What utter nonsence these people speak. People started to leave after the first round of questions.
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