This Is Guernsey

By Nick Mann

GUERNSEY should expect a very positive outcome from this week’s G20 summit, according to Chief Minister Lyndon Trott.

With leaders from around the globe gathering in London on Thursday, the role of so-called tax havens and offshore centres has been in focus.

Jurisdictions including Guernsey have been working to sign tax information exchange agreements to help appease those who want a blacklist of ‘uncooperative’ places drawn up.

Deputy Trott (pictured) said the three main and objective assessment criteria regarding so-called uncooperative jurisdictions should be:

• Are they transparent?
• Are they cooperative?
• Are they well regulated?

‘We clearly tick all three boxes and therefore under those clear criteria and the rule of law we cannot reasonably expect to find ourselves on any blacklist,’ he said.

‘Clearly, having 13 tax information exchange agreements is a key indicator of our commitment to international standards and cooperation.

‘Importantly, our standards of regulation embrace and often exceed international standards.’

He described the summit as one event in a long journey of debate on transparency, taxation and regulation.

‘I anticipate it and believe the advice received, which suggests such an outcome is likely to provide a very positive shock to our economy for a variety of reasons,’ said Deputy Trott.

‘I would, however, like to see more. I would like to see a very clear distinction drawn between premier league financial service low-tax jurisdictions such as Guernsey and others who have not engaged with the international community in an appropriate manner and who can objectively be declared tax havens.’

Momentum has been gathering behind a clampdown on tax havens, but some have warned against that.

Last week on Capitol Hill in Washington DC, 70 senior politicians and their advisers heard the case for the defence of tax havens.

It was organised by Dan Mitchell, co-founder of the right-wing Center for Freedom and Prosperity, and Richard Rahn, a senior fellow at influential libertarian Washington think-tank the Cato Institute.

Mr Mitchell said high-tax nations wanted to create a cartel to enable politicians to put in place worse tax policy.

Virtually everyone agreed that from an economic perspective lower tax rates were better than higher, he added.

Because of globalisation, taxpayers around the world could move themselves or their money across borders if government was trying to impose higher tax rates.

Tax competition was responsible for a reduction in domestic tax rates, he said.

‘You have a financial crisis that’s caused by bad policy in nations like the United States, reckless monetary policy, corrupt Fannie and Freddie subsidies, you name it. The financial crisis was born and bred in the big nations and yet what are politicians doing?…“It’s the fault of the Cayman Islands, or Singapore or Lichtenstein”, or something like that. I say wait, how can it be their fault? Did they have the reckless monetary policy? No. Did they have reckless Fannie and Freddie subsidies? no.’

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Article posted on 31st March, 2009 - 2.30pm