WITH zero-10 dead in the water, the race is now on to replace it.
And Treasury minister Charles Parkinson said yesterday that would take a minimum of 12 months to achieve.
Yet the doomed regime that has cost the island more than £200m. to introduce was widely expected to fail, it emerged yesterday.
And Ansbacher yesterday became the latest finance business to announce it was to leave the Channel Islands with a loss of 49 jobs, 16 of them in Guernsey.
Deputy Parkinson said he would be looking for a new strategy after unnamed European states decided Guernsey’s tax regime was against the spirit of the EU code of conduct.
He said the UK no longer appeared to be willing to defend it.
Other deputies described the zero-10 gamble, which was introduced on 1 January 2008, as an obviously unsustainable mistake.
Deputy Parkinson (pictured) said the deeply concerning news came as no surprise to him and he would find a replacement.
‘I never agreed with zero-10. One of its problems was it was highly provocative and clearly we have succeeded in provoking people,’ he said.
‘We will be looking at a positive rate of corporation tax across the board – that is going to happen,’ he said.
A 10% flat rate of corporate income tax applying to all companies except exempt investment funds might be the way forward, he suggested.
‘We need to change, so the issue now is to adopt the best new system which preserves our competitiveness but which will satisfy our EU neighbours.’
Guernsey would have to work with Jersey and, hopefully, the Isle of Man, he said, until all three had similar regimes and so could not be played off against one another.
‘In Guernsey, we have given up about £100m. of tax per year – that is the cost. Jersey collected an extra year of tax by adopting the strategy later.’
Any change to Guernsey’s corporation tax could result in businesses fleeing to more competitive jurisdictions but Deputy Parkinson said that was not easy to quantify.
‘It is possible we will lose business with change but it is very hard to state what the likely fall-out may be.’
KPMG tax partner Tony Mancini said that as long as any future rate did not put the island at a disadvantage, it should be able to handle any potential damage.
Guernsey International Business Association chairman Paul Meader said it was not ideal to have to re-examine the island’s tax strategy just two years after its introduction but it could not afford to bury its head in the sand.
‘There was an inevitability that it would come under scrutiny and although it may have come quicker than we might have expected, it is just one of a number of challenges that is being thrown at us.’
Chief Minister Lyndon Trott, who led the introduction of zero-10 in January 2008, was too busy to speak yesterday.
The UK Ministry of Justice and HM Treasury would not answer when asked whether the UK’s stance could damage relationships with Guernsey.
nÊAn EU code group meeting on harmful tax practices – which could potentially make a ruling on zero-10 – takes place on 18 November.
Bank pulls out Page 2
Zero-10 Pages 4 and 5
Emergency meeting Page 8
Opinion Page 16
Article posted on 15th October, 2009 - 2.30pm
53 Article Comments
if most of the states members were against “zero 10″ why was it allowed to go a head?.now all that money has been wasted,(so whats new?) there will be more companies pulling out of guernsey,more jobs lost,and full scale missery for all of us!,
thank you leaders of our local government (so called leaders)thats another fine mess you’v got us into
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Just keep the CM from meddling with proposals this time around please Mr Parkinson!!!!
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I have long argued that zero 10 was misconceived -it is entirely reasonable for us to charge a minimal rate of tax on buisnesses benefiting from being here. 10% is probably too high though – and in any event this will only work if Jersey and the Isle of Man follow suit (and other offshore jurisdictions too hopefully).
What I find unacceptable is that our hand is being forced by the EU – and we are not even a member !
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Correction, Gloria and Paul; Lyndon did not meddle some States members were for Zero 20 but not even Charles was against the zero product which brought us into line with all our competitors. Let’s not try and rewrite history here. Zero 10 was exactly the right way to go at the time, what the EU are saying is yes it does comply but we still don’t like it, I have no doubt that whatever we do they will find other ways of attacking us, so Gloria it really is no good you blaming the States for trying desperately to keep us competitive when the UK and the EU keep moving the goal posts.
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Unacceptable CD-and you’re not alone on that.
Now perhaps you’ll see how that labour Government works, they dig by moon light-
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Personally I would not sully the reputation of Laurel and Hardy by making a comparison between them and The States of Guernsey Government. Nor would I compare the ministers who voted for zero ten to a collection of LOBOTOMISED MUPPETS, simply because the muppet show had a degree of intelligence and talent in it. Tragicially this is not the case with those GOVERMENT INDIVIDUALS who have DESTROYED 200 MILLION POUNDS OF OUR MONEY!!!!!!!!!! And now we have A hallelujah chorus of ministers saying that they thought that zero ten was not a good idea????????????????? I consider The only real person with bottle in this government at the moment is DAVID JONES who is standing alone among the states in declaring his profound opposition for the INCINERATOR PROJECT WHICH WILL DESTROY ANOTHER 200 MILLION POUNDS OUR MONEY!!!!!!!! Please can we have an island wide vote on this issue before the government make another 200 MILLION POUND MISTAKE?????
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Gloria – You should try to get a little more subject matter before commenting. Basing a view solely on an article in the GP is ill advised.
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Simplz
No taxation without representation.
Tell the EEC to go away.
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CD,
If you were having a bar b q and your neighbour hopped over the wall and nicked your kids sausages would you not do something about it.
We trade globally not just in Guernsey and what we do is unacceptable to some of our neighbours.
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Yes our so called leaders have cost us £200M plus-I wander whos pocket that money is coming out !!!!!!!!!!!!!!!!!!!!!
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Trust me. Jersey will resist any changes that will a) move the tax burden away from the general population and back onto company books and b) make Le Sueur and Ozouf look like the planks that they really are.
They may not have any choice in the long run but they will kick and scream all the way.
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You have to put this in prospective, nobody dislikes the EU more than I do but they are a club and whether we like it or not we trade with that club, what they are saying is the club has rules and if you don’t play by the rules we will prevent you from trading with our members. They are also saying we (the EU) can change the rules anytime we feel like it and it is you who will have to adjust, not us. That’s it in a nutshell. So we have a choice we can loose millions in business and not have finance bussineses in Guernsey who trade in the EU and the City of London finance centre which is in a member state, or we can continue to trade under their rules. What is happening here is a political process not a tax process the EU just don’t like low tax jurisdictions full stop.
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It is a shame that the EU Code of Conduct Committee did not move more quickly when the Isle of Man first announced its intention to bring in zero corporate taxation. IoM could afford to because its major tax source was VAT (Now under scrutiny by the UK).
Guernsey (and Jersey) hung-on for an indication as to the acceptability of that move to the EU in the hope that it would be rejected, however no announcement came forth. The silence was interpreted as acceptance and the Channel Islands were forced into following suit before all finance business disappeared.
None of this had anything to do with our constitutional position, it was purely a matter of keeping islanders employed in an industry that was already here and jobs they already had.
The cost of abandoning corporate tax was enormous and left Guernsey with about a £50m annual deficit – most of which was taxation slipping away to other jurisdictions.
Now we have a chance of reclaiming some of that tax, but only if the UK applies its lack of support for ‘zero’ to ALL its offshore territories. We can only operate on a level playing field.
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Deepthroat Donkey – the rallying cry of the American Revolution might sound good however the difference between us and the then American Colonies is they had vast natural resources and an army to back it up with! In comparison we have the Guernsey Boys who may be adept at moving old cars, I’m not sure about German and French tanks though!! ;-)
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Roy Bisson’s reference to the EU Code of Conduct Committee is interesting in the the light of my posting at 11:51am on the “EU launches tax attack” thread.
I wonder, however, if he is just recalling the reference to “EU states decided it was contrary to the spirit of their code of conduct” which occurs in the “Deputies call for an emergency debate falls on deaf ears” news item.
While I agree with Roy’s history, I disagree with Dave Jones’ comment 15 October, 5:06 PM) that “Zero 10 was exactly the right way to go at the time”.
At that time Richard Murphy was arguing that the UK’s ‘common purse’ fiddle I beg your pardon subsidy of the Isle of Man was not compliant with the EU Code of Conduct and that we should intervene to protest it.
Did we?
It was the essential background enabling the Isle of Man to launch their, what everyone now seems belatedly to agree as infamous, zero-10 policy.
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Bonaparte – Dave Jones is one of your principal “GOVERMENT INDIVIDUALS who have DESTROYED 200 MILLION POUNDS OF OUR MONEY!!!!!!!!!! ”
The one single deputy that didn’t want anything to do with any of it was Dan Le Cheminant. A lone voice for no change. Doubtless dismissed by most of his colleagues as a nut.
Dave Jones – the EU don’t hate low-tax jurisdictions, just uncompliant ones. They seem to like Eire and Luxembourg; Belgium and the Netherlands don’t they?
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So the bully boys from the EU want to change zero 10,well if the states do change things what about getting Guernsey folk an EU passport in the process.
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Consider the following which might be characterised as the “troubled Tory” perspective.
We British Tories would like to be seen to be supporting our plucky little Channel Islander cousins in their struggle against the monolithal monsters of Brussels.
However, our own political interests dictate that we should not pick a fight we cannot win at a time when our own party links with some of Europe’s more chauvanistic political groupings renders us vulnerable to negative commentary from the European mainstream.
As a “government in waiting” we need to be seen to favour responsible mainstream policies which do not alienate the chanceries of EU partners. In addition, the great British public are not currently enamoured of the banking and financial services sectors; particularly in offshore jurisdictions which remain poorly understood by floating voters in key marginal constituencies.
Thus, much as we would like to speak up on behalf of Guernsey and Jersey…..and much as we would love to have a dig at weak Labour Party vacillation in the face of apparent European bullying of our kith and kin in the Channel Islands, we will actually do…… precisely nothing.
Sorry chaps, we’re afraid you’ll just have to come into line and comply : even if compliance comes to mean exactly what Brussels decides it will mean at any particular moment. Indeed, even if it means a series of moving goalposts designed to generate and maintain a period of continued instability sufficient to destabilise your reputation for stability and continuity.
Force majeur prevails and ultimately you are expendable.
Lest readers be unsure; let me make it clear that I am not a troubled Tory….or indeed any other kind of Tory.
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We must make most on discussing options with Isle of Man and Jersey and try to agree a system that is acceptable to EU but does not make us suffer hardships of zero 10 by trying to out manoeuvre the other islands which would be crazy. There is enough business out there without this interisland competition. The main competition is from other jurisdictions. The lack of interisland dialogue before zero 10 helped get us in this mess. In mean time proposals on a system of replacement independent of this dialogue is not wise by any minister including our Chief Minister.
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First of all Bob we WERE compliant, it is the sprit of the code they accuse us of not following and as I said before you cannot run a country on the spirit of something. Tax codes and law are legal entities in their own right, recognised by governments all over the world. They are not based on the whims of a few disgruntled members of a club. I would also remind you the countries you listed are in the EU, we are not. You are right, I am one of several politicians in 3 separate jurisdictions who made the same decision, how do you explain that? Perhaps they were all wrong Bob and you were right.
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Dave Jones
Do you know why we are non compliant?
Were the EU asked in the six years of prep?
If so, were they given details of the whole package?
Jersey had independent advice to warn them that they wouldn’t be compliant.
Was a complaint ever raised about the IoM’s CPA and the advantage that gave it to be able to win the race to the bottom?
Can you enlighten me on the proven efficacy of systems that use tax competition between jurisdictions is of benefit to wider society?
Can you back up all these bold claims and statements (for instance I’ve met no one that would have taken their business out if we had have been more cautious)?
Do you believe that the public were adequately informed enough to make voting decisions at the 2008 elections, given the do-or-die canvassing when asked questions on the future?
Were we duped by the industry?
Is it not odd that Giba knew but didn’t tell anyone important enough to rethink it?
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I struggle to understand Dave Jones’s comment that “we WERE compliant, it is the sprit of the code they accuse us of not following”
Surely if you were compliant you were following the letter of the law. If so, then spirit of the law doesn’t enter into the argument.
If anyone bothers to Google the EU stance it is clear and was always clear that whilst zero 10 was seen by Guernsey as compliant it would be seen by those outside as not being compliant.
The delight of the politician’s in giving so much money away clearly clouded their judgement.
Looking back over the media blitz on this we cans see that the legals of zero 10 were subordinate in the minds of Guernsey politician’s and the finance industry to the, now silly, and very expensive, to get equal with Jersey and the Isle of Man.
It seems the eye of the island was not on the big picture but on small window of petty squabbling with the other islands.
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One thing is clear: we don’t know what ‘compliant’ means.
It is quite possible that the mysterious complaining EU countries do not understand either.
While I think a corporation tax may be the solution, and a good idea, we need to take the time to get it right.
If there is any substance in the complaint the EU, whatever Dave Jones says, will give us the time we need.
I urge our States members to take the time to get it right. Even if it means debating it six times.
Oh, and it may mean talking to the EU, and listening, this time.
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It became apparent several years ago that Guernsey would need to reform its system of company tax in order to comply with the relevant EU Code of Conduct. In particular, the EU regarded it as predatory and unacceptable that we offered lower rates of tax to non-resident companies than were available to resident companies.
We could have equalised our rate at 5%, 10%, 20% or 100%. Zero was chosen not because the EU wanted zero but because the Isle of Man unilaterally adopted zero, no doubt thinking that without a huge VAT rebate Guernsey and Jersey would be unable to reduce to zero, thereby giving IoM a significant advantage. It would have been unacceptably risky for us not to copy the IoM in adopting a zero rate, a central feature of the Policy Council’s zero-10 proposals and the unsuccessful Parkinson Amendment.
We could then have chosen, as we could now, to invite the EU to take a long walk off a short pier. They had, and have, no real constitutional power over us. However, they have infinite power effectively to block our access to the markets with which our finance industry does the majority of its business. Like it or not, by peer pressure our most powerful neighbours could probably, if they felt so inclined, squeeze most of our finance industry out of business.
This is why it doesn’t really matter whether it’s the letter or spirit of the code with which we are non-compliant. Claims that adjusting our constitutional status would somehow enable us to obviate the need to take into account the wishes of other, more powerful jurisdictions is an unhelpful diversion from the task in hand. This is about political brute force and peer pressure, not legal niceties.
I disagreed with zero-10, and stood at the last election partly on that platform, not because those tax rates on company profits were unwise but because the regime simply didn’t raise enough revenue to keep Guernsey functioning properly. The greatest single failure of the last States was in doing so little to address the principal consequences of zero-10 – its inherent unfairness and the massive shortfall it created in tax revenue. Guernsey is now running an unsustainable and totally unnecessary budget deficit of around £40m per year, and is about to consume up to one-half of its contingency reserve, simply because the last States chose to rely too heavily on the promise of economic growth filling the so-called ‘black hole’. Only now, frustratingly some time into the life of this States, are we facing up to the unfortunate truth that, while zero-ten remains, the budget deficit will be erased only by cutting expenditure and raising taxes.
I think it is possible to reconcile support for the zero product up to this point with an acknowledgement that it was always likely to provoke antagonism from within the EU. Without zero it is probable that business would have been lost, and certain that new business would have found Guernsey materially less attractive. Equally, I am surprised that anyone should be surprised that the EU has come back essentially telling us: when we said adopt a uniform rate of tax, zero wasn’t quite what we had in mind!
What the EU does have in mind is unclear. I am not high up the political food chain, but to the best of my knowledge – the unacceptability of zero notwithstanding – we don’t even know yet which particular features of our tax regime are most objectionable and least objectionable to our EU neighbours, nor which of those neighbours are doing the objecting. As for the UK, we are given to understand that their position is not so much that they necessarily find zero-10 offensive but that they do not believe there is any possibility that they could mount a successful political defence of it knowing the views of some of their EU partners. Basically, the argument is lost: zero-10 needs to be killed off.
In undertaking this task to reform again, the potential risks and opportunities are almost infinite. We cannot at this stage know what form the new regime should take, but it seems inconceivable that it will not feature a basic rate of company tax well above zero.
That would result in our collecting significantly more revenue from companies that choose to do business here. Indeed, it could wipe out our budget deficit. On the other hand, it is impossible to quantify how much business might be lost to the island, and how much future business may be dissuaded from locating here. The question then is: how much business will be left to tax at the new rate? The answer basically depends on how competitive the new tax rate will be in relation to the rates offered in other jurisdictions, both in and around Europe and worldwide.
A good starting point in re-designing the system would be to ensure close co-operation with Jersey and the IoM, especially given the recent history of the three islands entering a hopelessly unsustainable and unproductive ‘race to the bottom’ in the form of zero-10. I do not think there is any shortage of will of co-operate on this side, and it is possible that the IoM will feel rather more vulnerable than last time given that their huge VAT rebate is now under considerable threat.
So, what happens next? Well, hopefully a Billet d’Etat will be put before the next meeting of the States outlining in writing the current circumstances and the sort of measures that may need to be taken to address the EU’s objections, and proposing an appropriate negotiating position to be adopted by the States.
Clearly, this is going to be a major body of work carrying with it significant risks. It really is a very big news story for the island. However, what is needed from our senior politicians is not hysteria or rash promises – the EU isn’t going to declare war on us if we don’t announce our new tax regime tomorrow, and the finance industry isn’t going to leave the day after. What members of the States are after, in my view, is calm, reflective, informed leadership capable of obtaining consensus from within the body of the Assembly. And I am confident that is what will emerge.
If it is handled sensitively, I think company tax reform second time around could be less divisive and more constructive than it was first time around.
In the meantime, I look forward to the usual suspects telling us that all these problems could have been avoided if we had cabinet government!
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Stephen it is not us who are moving the goal posts, we altered our tax strategy to comply with the Code of Conduct groups demands that we treated island companies and off islands companies the same which would eliminate what they considered was harmful tax practices by attracting business from them to us because we had preferential corporate tax rates. We followed the IOM and Jersey who went for zero and we were informed by HM treasury that by doing so we were now compliant with the code.
The EU are saying now that they accept we are compliant but we are not entering into the sprit of what they envisaged and that was clearly a uniformed corporate tax rate across Europe. We now know from Lyndon’s meeting in London that it is some of the EU member States that are complaining about the spirit of the code, we don’t know how many countries that is and we will need a lot more information before we change anything. As I have said on other posts you cannot run a country or an economy on the whim of somebody else tax codes and tax laws are legal entities and not something that should be changed because a few people have a bad feeling about our rates.
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If change has to take place then why not look at taxes levied by other jurisdictions which have similar issues with the OECD/EU etc. but which have not been the subject of any challenges?
Dave Jones – have you looked at how Bermuda raises its revenue from duties (not a good idea for Guernsey) and its employment taxes (a very good idea if structured properly)?
A few minutes on the internet might be well spent.
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Dave Jones
I’m not totally sure about the EU wanting the same rate of corporate tax throughout, although I accept that this may ultimately be their aim. It is only very recently that they specifically agreed the 10% rate in Gibraltar and Cyprus. Mind you, they might be about to tell them that although they agreed 10%, it might not be “within the spirit”, although I think for them its a bit more cut and dried !
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The news blackout on the Isle of Man appears to be lifting. Here are a trio of quotes from an item today on http://www.iomtoday.co.im headed “Isle of Man reels from tax attack bombshell”:
On the Common Purse VAT subsidy:
“Isle of Man newspapers understands, however, that changes to the revenue sharing arrangements within the Customs Agreement could result in a loss of government revenue of between £50 million and £100 million annually.”
On zero-10:
The EU’s code of conduct group on business taxation is due to meet next month when it will discuss the position of the two Crown Dependencies.
Yes, the Isle of Man think it is compliant:
“…the Isle of Man — unlike Jersey and Guernsey — had been deemed to be compliant by the EU’s code of conduct group in 2003.”
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David C
This is where it all gets very interesting.
Did the Isle of Man get actual approval by the EU Code of Conduct in 2003, or did it just think that it had ?
Interestingly, on Murphy’s blog today he has a story called “What did Jersey know ?”, and its noticeably different from his usual tone. He is questioning what exactly the islands were told, and by whom ? His tone is usually so aggressive that he seems to be genuinely concerned that the islands might have been told something in such a manner that justifies the belief that our politicians had grounds to believe that the regimes had been specifically approved by both the UK and the EU.
This is hugely important as the population in all 3 islands are obviously questioning the decisions made by our politicians based on what they claimed to have been told at the time.
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Well David, I think we can answer your question:
“Did the Isle of Man get actual approval by the EU Code of Conduct in 2003, or did it just think that it had ?”
Richard Murphy says today that he met the European Commission in 2006 and was told: “No approval would be given until any law implementing zero-ten was enacted.”
Now, the Isle of Man’s Zero-10 strategy was put into effect on 6 April, 2006.
Thus it seems highly unlikely that the Isle of Man could have been given approval in 2003, as they appear to think.
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David C
I know that this is what Murphy claims he was told in 2006, but that’s not what I asked. How clearly were Guernsey, Jersey and the Isle of Man told that “no approval would be given until any law implementing zero-ten was enacted” ?
Doesn’t it strike you as odd that any jurisdiction would go ahead with enactment on that basis ? Surely you’d want to know in advance that it complied. No government can be expected to plan its finances for say 5 years forward on such a fragile foundation.
I can’t help thinking that the three islands were told far more formally, presumably by Dawn Primarolo who let’s not forget sat on the EU Code of Conduct as well as within HM Treasury, that it had been approved and that all three islands acted accordingly. Let’s face it, it cannot be that easy to make such a mistake so I think there is more to it than meets the eye.
And I guess that coming out now and accusing the UK of lying or misleading us wouldn’t be a great move no matter how close it might be to the truth.
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Sorry David. Your faith in the CDs for good governance is touching but deranged.
Why would anyone make the assertion of compliance when they didn’t ask the question to the people that matter?
Primarolo could not have said it was compliant because she sat on the panel and so knew the rules. Also if you ask the question “is our corp tax compliant” then on the face of it, it is. But when you examine the crude and direct shift of taxing local corps to shareholders etc then it is quite, quite obvious to even stupid and ignorant me who knows nothing etc to see, at the very beginning.
Just read what you have written.
Your ‘odd to enact’ statement shows just how gullible you are. Stop mixing with the wronguns, I would. They’re telling you lies to keep you sweet.
Shameful. I’m ashamed for the bankers and the politicians. That’s my job as a socialist. You carry on.
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David
It seems that the CI spoke to the UK, while Richard Murphy spoke to the EU.
That may explain quite a lot. Even though the CI may have spoken to Dawn Primarolo, who actually chaired the EU Code of Conduct Group on Business Taxation, she would presumably not have had the EU mandarins at her side when the CI were there. Possibly it is the mandarins who can give the correctly informed opinions.
You ask if it seems odd to me that the CI should enact legislation on the said basis. No, they had to. And that is why they should have checked and double checked that they were heading for compliance.
I will add that it always seemed to me that Zero-10 was being sold to us in an atmosphere of deceit or dissembling. In fact I attended three of the road shows because I could not believe what I was told at the first, and thought it might be inadvertent. Apparently not.
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Arnald
I’m not going to waste my time raising to your bait and insults. I’ll choose my moment for that.
Maybe Primarolo DID say that it was compliant. Were you there ? How do you know she didn’t ? After all, she chaired the Code of Conduct Committee !
David C
Yes, she chaired it. It would be natural for the chairperson to be able to convey her own Committee’s decision. But silly me, this is the EU that we are talking about. Decisions aren’t made like that are they ?
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I have long thought that the government of Guernsey missed an option when considering the taxation policy of this island. There is another island in a similar situation as us. On this island, there is no tax. No income tax, capital gains taxes, or social insurance. No inheritance taxes or withholding tax. No tax at a corporate or individual level. How do they run that island? With duties on every single item imported onto the island, lower overheads (less services) and a smaller government sector for the same population. This results in taxation on consumption, rather than income. It is progressive, fair, and builds wealth across all sectors of the economy. The name of that island, you guessed it, the biggest financial player on the offshore block, The Cayman Islands.
Guernsey could adopt this stance or slightly modify it to ensure we can meet our expenditure budgets, and guarantee the wealth and prosperity of the Island going forward in perpetuity. However it is such a fundamental shift in thinking, and such a cut in services would have to be made, that the States never would consider it. However I believe it is about time the States considered moving towards 0% across the board, rather then raising taxes. Any first year economics student can tell you that when taxes are raised, lower revenues to Government always result.
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Yes, David Cranch. Couple that with the derision that its detractors received, even during election canvassing (I was laughed at by three different ‘business friendly’ candidates who dismissed my analysis of enforced reduced public services and increased animosity, and proceeded with a shockingly similar spiel about how much the finance sector contributes, percentages, reputations, attractiveness and they do a lot of good work for charity). I then witnessed Giba force the message through the institutions in hour long ‘briefs’ about voting for the ‘correct’ type of Deputy, using language like ‘hostile to Guernsey’, ‘attacks on your way of life’, ‘they want us to be living in hovels farming seaweed’. The chitchat afterwards consisted of putting on Guernsey accents and making jokes about tomatoes. I really am not joking. I was not the only one looking around with my jaw open.
There was nothing about future development and goals for society to achieve, only “they’re lucky we’re here”.
Are we?
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David
Murphy knew it wouldn’t comply in 2006. At what stage do you think that Primarolo would have refuted that claim and gave us the go ahead?
Where is the proof she said it? Where is the proof of any of it? You’d think soemthing as important as an EU approval for trading would have had some signatures attached somewhere.
Wouldn’t you?
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Arnald
Before 2006.
And I suspect that such proof may well exist.
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Andrew
Whilst I’m a fan of consumption taxes (and Guernsey is the only jurisdiction in the Western world that I can find without one !), even I don’t believe that a model based solely on consumption taxes is feasible.
And, by the way, Cayman is bankrupt and couldn’t pay its civil service salaries without a third party loan, and has fallen out big-time with the UK as a result. Probably not the best model to seek to emulate.
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A lot of questions are being raised about what was said or not said by politicians at the time of the zero-10 debate, especially in respect of compliance or otherwise with the EU Code of Conduct on Business Taxation.
Below is a link to the zero-10 States debate of June 2006. Not surprisingly, compliance featured quite prominently.
http://www.bbc.co.uk/guernsey/content/articles/2006/06/28/tax_debate_2806_feature.shtml
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“A good starting point in re-designing the system would be to ensure close co-operation with Jersey and the IoM”
This seems to be a sensible starting point, not entirley convinced about IOM, but certainly uernsey and Jersey. I can think of a number of issues that had Guernsey and Jersey been one voice we may have been stronger.
Fulfillment: Jersey rattled the UK’s cage by state sponsoring large UK brands to fulfill out of their jurisdiction. It may have been wishful thinking but could a joint policy on fulfillment have avoided this.
Independence: (one for Dave Jones) Jersey has contingency plans for independence. Could not the UK seeing a joint move not have removed their real or imagined tanks from our lawn?
Zero/10: We went first. With hindsight, could we have not gone together?
And it goes on……
I’m becoming more inclined to believe that both Guernsey and Jersey need to get together on primary strategic issues speaking as one voice – a quasi federation. This idea is not without its complications both historical and inasmuch that we compete in certain areas.
But no doubt, we as the Channel Islands are stronger, less prone to gaffs if we can establish joint rules of engagement with the MOJ, the OECD and all other external relationships.
That’s the starting point, benefits and efficiencies becoming apparent later.
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Matt Fallaize. You write longer blugs than Dave Jones.
Can you not make them shorter and get quicker to the point.
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CM – apolgies for the delay in responding – interesting analogy.
The way I see it we haven’t stolen anyone else’s sausages – we only deal in offshore sausages – nothing to do with our neighbour’s barbeque at all.
We are being wrongly accused of stealing sausages and, to add insult to injury, our neighbours are telling us how to run our own barbeque.
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As an aside pundits, government and business groups keep stating:
“European Union member states had pulled the plug on the island’s zero-10 tax strategy”
Which ones?
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I was always at a total loss at the decision to implement 0-10, and really have to laugh (or cry) when I see the SS 0-10 sinking slowly beneath the waves so soon after launch, whilst the member’s of our government who were very vocal at that time with their support of this genius idea staunchly stand on deck, and the others leap into the lifeboats saying I told you so.
As most of us know, the CI’s were funded by piracy back on the good ol/bad ol days.
Back then, privateering was a relatively ok sort of enterprise, tolerated for quite a while, then it all got a bit out of hand, and though the pirates would have been happy to continue profiting from others misfortune, what did change was people’s attitudes and the laws, so that was scuppered.
So, here we are again, robbing from the poor to give to the rich/ tax evasion/avoidance/creative accounting central (call it what you like) – all ‘above board’ and tolerated by the rest of the world right up until it all went pear shaped on the economic front.
Now there are many countries/organisations that are beginning to be less supportive / disapproving / totally outraged (call it what you like) that are having a pop at the CI’s and have decided that this lark also needs addressing.
Of course, there’s now an imperative for ‘us’ to provide an alternative that’s suitably ‘finance friendly’ so ‘we’ can all carry on like before, but the new offering has to be sustainable AND realistic, so it’s possible that whilst placating the powers that be, we are unable to live up to certain Banks demands, and some may leave.
TIMES HAVE CHANGED, and I don’t believe our Government is suitably equipped in any way whatsoever to get this sorted out OR deal with the fall out of the possibility of many people finding themselves out of work.
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Neil Inder.
When l was in France at the height of the credit crunch. The french president was lasing into all the Channel Islands and the Isle of Mann, naming then as tax havens.
He said since France was baling their banks out,they would be keeping their money in it.
If you want the countries named, l would guess, Germany and most of the other EU ones as well.
I would think they are too powerful, to worry about us and what could we do to them.
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CD
You cant tell me no wealthy Europeans are moving their money through the Channel Islands to evade tax. Our tax laws are designed to attract the rich and I recall one wealthy Englishman taking advantage of that when Mr Brown threatened to increase tax on higher earnings.
Its all money that Europe and the UK doesn’t get and it puts us in the spotlight.
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As I have said before, an excellent solution to the tax problem is the use of employment or payroll taxes. This is especially true if the Bermuda model is used as a template. It exempts various industries (tourism, horticulture, fishing etc.) and bands the taxes so that only medium to large employers are caught in the tax net. It is therefore socially responsible in that only those who can afford to pay are caught.
It is also OECD compliant (or at least is was last time anyone looked but who knows about these things nowadays).
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It doesn’t matter if anything’s compliant. Just keep repeating it is to people and it will happen through “force of personality”.
“wot you looking at? you after my tax law eh? I’ll punch your [expletive] teeth out”
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JL Seagull – I would have thought that the fact that the EU has said that 0-10 is not compliant with just the spirit of their tax regime would show you that being compliant is, to say the lest, rather important?
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Matt Fallaize, thanks for the link.
I’ve listened twice to the Chief Minister’s summing up. Admittedly it is with the benefit of hindsight but all the danger signals were there.
Morgan paraded before the States a host of UK personalities who advised him on compliance. No mention was made of their qualification to do so, although their irrelevant positions in the UK were specified.
Dawn Primarolo apparently did not understand the political system in Guernsey, so one wonders whether she understood anything at all. If we are going to confuse people by having Ministers who are not ministers, perhaps it would be better to not mention our political system at all.
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Squak!
What did the GFSC do about any of this?
What about the lawyers? Is this what the calibre of all those award ceremonies demonstrates? Advocating fast/loose short termism is hardly intelligent. No one asks me. I is cheap.
Did our industry regulator recognise the problems and warned their politicals of potential unknown knowns and the circling of alarming known unknowns?
Hmm? Or are we being kept in the dark by a Nick Griffin style defence of the truth – there ain’t no black in white listed tax, and laughing when past quotes are paraded around like This Is Your Life, Soul Sucker.
OR HAS THE CUCKOO’S EGG HATCHED?
The Guernsey Singularity – How Cuckoo Economics Broke Society, by Arnald Probably.
Good title actually. They should pay me for doing this. Please pay me for doing this. Can I have some money? Go on.
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Edquet
Matt Fallaizes long epistle makes more sense and I feel more accurate than the rest of this forum. It was worth reading and taking in.
I sincerely doubt there were any minutes that stated that zero ten was compliant. There had been a secret meeting on the Friday 16th June 2006 between the Chief Minister, Treasury Minister, States treasurer, States Chief executive and UK Treasury Officials. I say secret, because the results of that meeting were held back from both the Policy Council meeting on the Monday following and not circulated to the policy Council until the monday after that, Monday 26th June. 10 days after the meeting with the treasury Officials and two days before the debate, no handout just a verbal briefing from notes.Too late for Deputies to assess the picture properly and cause any problem against zero ten being pushed through whatever. Remember Parkinson’s amendment was gaining momentum and another week, probably would have seen it win.
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