GUERNSEY is braced for an investigation into its relationship with the UK in the wake of the Landsbanki Guernsey collapse.
Chancellor Alistair Darling (pictured) yesterday gave little sign of hope for depositors with savings in the bank who so far have been told they will get 30% back.
During a Treasury Select Committee inquiry into the banking crisis, he stressed again that it was not the UK’s responsibility and pointed out Iceland’s role in the situation.
The committee is carrying out a review into offshore jurisdictions and hopes to visit Guernsey soon, having already been to the Isle of Man and Jersey.
There were signs yesterday that Mr Darling also has his sights on the island.
When talking about the situation here and in the Isle of Man, he said: ‘I might just add another thing, that we actually think that having looked at what’s happened over the last few months that we really do need to have a long, hard look at the relationship between this country and the Isle of Man, a tax haven sitting in the Irish Sea, where it’s leading to perhaps people not being clear as what the different rights and responsibilities are.
‘We can’t have a situation where we have sitting there all sorts of tax advantages accrued to being in the Isle of Man and when things go wrong, people say, “what about the British compensation scheme?”
‘It’s important we take this opportunity, not rushing into it, not a knee-jerk reaction, but we need to have a look at it.’
Committee chairman John McFall ended the hearing after those comments, which he described as graphic, but added that its review was under way.
Earlier Mr Darling said that the British Government’s obligation must be to depositors who had put money into UK banks.
He spoke about the guarantees that had been given to savers.
‘If you go to the next stage and say we should take on responsibility for something that’s done in the Isle of Man or Guernsey, or indeed by extension other countries, that’s quite a significant step to take.’
He said that the Isle of Man and Guernsey operated specific regimes.
‘We would have to think long and hard before saying for the first time the British Government would go and underwrite savings made in another jurisdiction. It’s not something we’d lightly do. That said, one of the things we’ve been pressing on Iceland, right from the very start, is they really have to go and get help from the IMF.’
He added that the UK would be happy to enter into an agreement to loan Iceland money, but it would expect that to be paid back over a period of time. The Netherlands has also offered a loan.
Mr Darling said that no agreement had been reached with Iceland about its obligations to compensate savers after five weeks. He understood that it was disputing that.
Chief Minister Lyndon Trott expects to hear back this week from the Iceland’s finance minister on the issue.
It was the first time that the tripartite authority – which also includes Mervyn King, the governor of the Bank Of England, and Financial Services Authority chairman Lord Adair Turner – had appeared before the committee.
They faced more than two hours of questions which had been submitted by the public.
Article posted on 4th November, 2008 - 1.00pm
11 Article Comments
Could Chancellor Alistair Darling be asked to explain his reclassifcation of Guernsey as a “Tax Haven” (not words used in 2007 regarding Northern Rock deposits) and his washing his hands of Landsbanki Guernsey depositors in the light of the UK’s action in 2007 – as indicated below.
” The EU Regulation lays down a framework which provides for the continued use of BACs by the Islands. In this connection, the United Kingdom has made a written request to the European Commission for authorisation to conclude agreements in respect of wire transfers between the UK and Guernsey (and the other Crown Dependencies). The act of making this request means that transfers of funds between the UK and the Crown Dependencies are being provisionally treated as domestic EU transfers.
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Lesley
The LG web site did say that depositors could have interest tax free, other than EU residents who were given the choice of exchange of information or tax deducted.
As stated on another BB is this influencing Darling in his views on what is a tax haven.
What is clear is that Darling and others will be looking for tax take anyhere they can find it, even kiddies piggy banks.
What they can effectively do to tax thosewho can afford to pay will depend on the will and ability to tax such persons. I suspect both are weak.
If Senator Obama does what the Poll of Poll predicts and becomes President we may be in for an interesting time.
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What’s the problem?. If everything is above board there isn’t one is there.
What Alister Darling say’s is right,people can’t have their cake and eat it.
Perhaps the problem is that some people have been having their cake and eating it for to long and now think it’s a right!.
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Pete
Very good comment, short and to the point.
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Its an absolute disgrace. He should be shot!
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Yes Pete – cake and eating it, thats what they do. Only difference this time is the not so very wealthy have taken a hit and you have to empathise a bit.
As for the UK bailing Guernsey out – can anyone be serious about this? Why the heck should they.
Gsy 20% tax rate, self governed. The term self governed kind of tells you everything you need to know.
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Just to let you guys know that I am a Jersey resident that had money tied up. My small amount was being put aside for my daughters University fees in a couple of year’s time.
I am a hard working man with a family to support, and it does p*** me off sometimes when we are all classed as millionaires and tax dodgers, been watching too many episodes of Bergerac if you ask me!
Yes there are plenty of millionaires here in Jersey and indeed Guernsey, what you must all realise if that where there is wealth there is also poverty. Do any of you realise that if you come out of work in Jersey you don’t get any dole money, do you realise that we pay £27 to see a doctor including our children, do you realise our food bill is about 40% dearer than the UK.
Yes I do choose to live here happy in the Knowledge that my daughter isn’t going to come home with a Knife in her back and my wife is safe to walk the streets at night.
I am led to believe that the Channel Islands release millions of pounds to the UK in the way of loads to pay for new Hospitals, Schools, etc. So how can Mr Darling basically wash his hands with whole affair and refuse to help in anyway.
There are also many ex pats across the world who had no option but to invest offshore so what his he doing about these people.
I have set up an action Group here in Jersey feel free to contact me, maybe you can fly over and stay at my Mansion House!
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Both Mr Darling and those locally commenting on his statement are somewhat remiss.
The term ‘tax haven’ has no agreed meaning. Search the internet, and you will see what I mean – there are any number of definitions. We fall within the ambit of some of them, and not within others.
Thus to say that one of the Crown Possessions is, or is not, a tax haven without specifying which definition you are using is nonsense.
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Peter from Jersey
I’m sure that most people including Guernsey residents with similar small savings can’t be classed as tax dodgers, but weren’t you aware that neither Guernsey or Jersey had a fail safe system in place?
If you were not one of the Building Society long term depositors trapped by Landsbanki’s sudden takeover of that Building Society then you were putting yourself at risk by chasing 7.5% when all others were offering around 6%.
I’d love to know if any of the Guernsey Landsbanki employees were able to transfer their own funds before the crash.
Hope it works out OK for everybody concerned in the long run
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David Cranch – it might help if you speak English English instead of pompous English then maybe it would make sense to more of the audience.
In any case there is a significantly lower tax rate in Guernsey with additional benefits (Mirus style property relief, lower fuel, no death tax etc) that would make the Bailiwick by association a ‘haven’ for those who wish to maximise their tax relief. What dictionary you have been reading I have idea.
As for the Crown Possession? What are you talking about?
Guernsey is not owned by the Crown it is self Governed, and as such it should deal with it’s own problems (like debt, debt and more debt – thanks Lyndon and Dave Clark for that).
The link with the Royal family is that we have a royal representative on the island.
We operate a ‘crown’ prosecution that again is run under it’s own local laws.
Basically we are like Australia or New Zealand in that we have association with the Royal Emblem and rely on her for military response, but otherwise there is nothing. In fact Guernsey does not even carry the Union jack.
I think its time people accept that Guernsey runds itself and it should stand on its own two feet – 2 years ago everyone wanted out of the UK relationship (when Guernsey was raking in the money)…..
How fickle people are.
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Oh dear, Darren, what have I said to offend you?
You appear to be working towards your own definition of ‘tax haven’ to add to all the others. As there is already total confusion on the subject, I doubt that your efforts will significantly augment it.
As to ‘Crown Possession’, I agree that ‘Crown Dependency’ is the usual phrase these days, and that is what I had intended to write. However, if you go back to the origin of our relationship with the English Crown, then ‘Possession’ is the right word, and used to be usual until recently. We were the personal possession of King John, separate and distinct from the kingdom of England. That why we are self-governing and pay no tax to England.
And I do agree with you about the Union Flag: it has no place here except, perhaps, on Liberation Day as a sign of gratitude to the UK forces. But why do we not also fly the USA and Canadian flags?
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