WITH Tax Information Exchange Agreements already in place between Jersey and communities as diverse as the United States and the Faroes, it clearly makes sense for a similar understanding to be signed with the United Kingdom. That Guernsey and the Isle of Man have already agreed to share information reinforces this principle.

However, the announcement that Chief Minister Terry Le Sueur will be meeting UK Chancellor Alistair Darling in London tomorrow to ratify a tax information agreement will not necessarily be greeted with whoops of unconfined joy by the Island’s financial services industry. Quite realistically, industry professionals fear that damage will be done by the agreement – particularly in respect of deposits lodged here by UK-resident non-domiciled individuals.

But this is without doubt a ‘lesser of two evils’ situation. Jersey and its principal source of income have more to gain by signing a mutual tax information agreement with the UK than they have to lose. In the present climate of increasing suspicion about and hostility towards offshore finance centres, only those which can demonstrate the highest levels of probity and regulation are likely to prosper.

In addition, signing the agreement before the April meeting of the G20 London summit of finance ministers and before the planned Foot Review of the Crown Dependencies amounts to good timing. When, at the G20 event, talk turns to offshore centres and tax havens, it will be easier for delegates to accept that this Island falls into the first category but not the second if we have pledged openness and transparency as widely as possible.

There is, nevertheless, one feature of the agreement that remains unsatisfactory – though it is difficult to see how either Jersey or the UK could be in a position to do very much about it. The issue concerns the old problem of the level playing field and jurisdictions such as Switzerland, Singapore, Andorra and Liechtenstein, where banking secrecy is still one of the key rules of the game.

The concern, of course, is that there will be a flight of money to these places as certain categories of investor attempt to keep the veil of secrecy drawn over their financial affairs. Fortunately, the Jersey finance sector now has many strings to its bow and although the effects of any such flight of money should not be underestimated, it could well be of less significance than some currently fear.