WHEN, after the recent G20 summit, it became clear that Jersey was on the offshore centre ‘white list’ and was therefore not classified as a tax haven, there was considerable relief and a certain amount of celebration.

In spite of this, finance industry professionals, commentators and at least some politicians were all too well aware that our privileged position on the list was not going to be the end of the story.

Sure enough, at the end of last week a strongly worded letter sent by UK Prime Minister Gordon Brown to our Chief Minister, Senator Terry Le Sueur, opened a new chapter in the saga of taxation and Britain’s Crown dependencies.

In the past, the word ‘evasion’ was taboo in the world of tax minimisation. Mr Brown has now made it quite clear that ‘avoidance’ — which has always been regarded as legitimate — is now in the government’s sights.

He has also made it clear that the G20 process and the OECD lists were merely a beginning and that ‘genuine progress’ would be expected, particularly in terms of tax transparency.

In common with Guernsey and the Isle of Man, Jersey has little choice but to sit up and take notice of what is now being said and, implicitly, threatened. Confrontation is unlikely to produce anything but a very unequal struggle against the might of Westminster and Whitehall, with consequent grave danger to our principal source of income.

That, however, is the pessimistic interpretation of our situation. It can be balanced by a range of obvious truths about our conduct so far on the tax transparency front. The Tax Information Exchange Agreements that our authorities have already signed show that we are earnest about openness. In addition, our regulatory regime is demonstrably robust and has won praise from international agencies fighting tax evasion and other forms of financial crime.

It is, meanwhile, very much to be hoped that Mr Brown, his advisers and UK MPs who are particularly evangelical when it comes to tax matters realise just how dependent the Crown dependencies are on financial services.

It is essential that every effort is made to drive home the message that abrupt action aimed at hamstringing offshore finance would very quickly ruin us, render a great many British citizens destitute, and simultaneously inflict considerable damage on the City of London.