Obama win would bring finance fears
Tuesday 4th November 2008, 2:29PM GMT.
FINANCE leaders have warned about the threat that a Barack Obama presidency could pose for Guernsey.
Mr Obama heads into today’s election with clear leads in most opinion polls over Republican candidate John McCain as the US is poised to blow away the cobwebs of the George W. Bush era.
Included in the Obama campaign is a pledge to ‘give the Treasury Department the tools it needs to stop the abuse of tax shelters and offshore tax havens and help close the $350bn tax gap between taxes owed and taxes paid.’
He co-sponsored a bill to end tax haven abuse which is currently lodged at committee stage and names Guernsey among other jurisdictions.
The Guernsey International Business Association and its members have been watching with interest the developments in the election, said its chairman Steve Le Page.
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the island has been abused for far to long by all the fat catz
end tax haven abuse start planting those flowers and spuds now ur gonna need them LOL
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Barack Obama will find plenty of eager allies in his propsed attacks on so-called “offshore tax havens”. The EU and Westminster are also keen to get their grubby little mits on money which they (usually wrongly) perceive as being theirs.
Guernsey has done much to ensure that it complies with global demands for transparency and anti-money laundering legislation, but our efforts are completely ignored by major governments when their need to raise onshore revenue is acute.
There are plenty of less well regulated jurisdictions out there who may be legitimate targets, but Guernsey isn’t one of them. If the USA, the EU or the UK think we are assistng in the non payment of taxes due to them – i.e. tax evasion – then they need to prove it. Tax evasion has long been illegal in Guernsey and is certainly not common practice.
Sadly, the legitimacy of our position counts for nothing if those major governments are determined to attack us.
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You have to ask why Guernsey is such a popular place for none residents to invest their funds when we have no protection scheme in place.
Of course a lot of them are using Guernsey as a tax haven, otherwise why do those living in Spain, Gibraltar, Cyprus etc use Guernsey when they could invest in the country of their residence.
I feel sorry for the locals who have lost their cash. but not those who live outside the island, and especially the guy from Jersey who admitted having one million pounds deposited with Landsbanki Guernsey.
The reason is obvious when there are ample banks located in his island.
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I am currently in Michigan observing the 2008 Election. Senator Levin is almost certain to be re elected and he, supported by Obama,is the architect of the 2007 proposal to stop the use of tax havens by U.S.Citizens and corporations. The proposals are far reaching and can be viewed on the internet by interested parties. It now looks as though it will be one of the first pieces of leglislation the new administration will deal with. Of course it is more political, and ideological than practical but would sit well with the electorate. The estimated amount of $100bn is only about 28% of the total amount of revenue lost each year in the U.S.A. They should really be concentrating on recovering the tax from domestic abusers first. It would be far more cost effective but would be unpopular with U.S. residents.i diont, know how much Guernsey is involved but the G.S.F.A. SHOULD . They should also make strong representations to Senator Levin to stop meddling in other countries business and ensure that the penalties for tax evasion by U.S.Citizens are such that there will be no temptation to risk offshore activities. They could surely do it by simply making everyone complete a part of their tax return which relates to transfers of money/assets to third parties. Failure to do so could foce repatriation of money/assets, hefty fines and imprisonment.
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Tax evasion or avoidance?
In my book it is all the same but worded differently often at the expense of lawyers or professional planners. Is this good or bad? For the country concerned good cos it adds to the tax take. For the country wanting to look after what it has nurtured not so. Level the fields across the board and compete on our strengths and qualities rather than back biting. We have been allowed to be extra competitive at the expense of others for far too long as far as I am concerned. It is now time where we need to look long and hard at what we have and nurture it.
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The United States has for a long time had severe tax laws concerning offshore low tax area’s which are strictly enforced by their Internal Revenue Service. Stop whinging about the UK it’s the Yanks you have to worry about after all none of their politicians have accounts in the Channel Islands.
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Paul
There is a world of difference between tax evasion and tax avoidance – for one thing the former is illegal and the latter is not.
I appreciate that our finance insustry has caused a lot of resentment among certain sections of the Guernsey population – mainly people who don’t understand what it is we do here.
The vast majority of people who work in finance are locals but this fact is ignored by those who misguidedly think Guernsey would be better off growing tomatoes again.
These petty jealousies are short sighted to say the least. Whether you work in finance, or are a mechanic, or a builder or a restauranteur – or in just about any other job – you will have enjoyed full employment and a relatively high standard of living for close on 30 years and this is entirely due to the success of our finance industry.
Despite being a low tax jurisdiction our government has taken enough revenue from the finance industry to ensure we have good schools and an excellent health service.
Yes there are problems, particularly with regard to housing, but this is a 25 square mile rock and that is always going to be an issue.
The key point is that almost all of the money that passes through Guernsey is not legally taxable in the USA, the UK, the EU or elsewhere. Those govenrments want to change the rules to cream off taxes which, at present, they have no entitlement to. Sadly I suspect that we are too insignificant in global terms to stop this attack on our legitimate businesses.
Those Guerns who resent the finance industry now will miss it when it is gone and the dole queues suddenly get bigger.
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CD
Is it right that the money is not legally taxable in the home jurisdictions? It may be legitimate but it doesn’t alter the fact that distorting capital movement affects the financial health of the world as a whole. We may do very well from it but is that enough reason to lower standards for many others that are disconnected from our world view?
I question your assertation of good schools and health service. Many of the doctors are behind the times by a few years, the schools are generating an alarming amount of barely literate adults, there is little mental health provision. You would think that with the great individual wealth here we would score extremely highly and be extremely progressive.
You are right that there is an overly negative perception of the industry, but we must not think for one minute that it is our saviour. It serves a minority very well. That minority pull the strings. There is no accountability. We rely on charity to do society’s dirty work.
It’s a fairly backward way of doing things.
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Interest points Fast Robert. I must question some of your points though.
If the money is legally taxable in other jurisdictions then we are guilty of tax evasion – which is illegal and I am sure is not common practice in Guernsey.
In what way are we distorting capital movements? We are playing by the rules as they currently exist and in so doing are boosting corporate profits and individual wealth, which in turn filters down creating more jobs and higher disposable incomes.
I have 3 kids at school here in Guernsey and a wife suffering from a severe illness. I cannot speak too highly about our schools and the healthcare my wife is receiving. I am a local but I have lived in the UK for many years and I am absolutely certain that our educational and healthcare resources are excellent by comparison. Of course we could alway spend more on this but all in all I do not feel we do too badly in this respect.
You are right, the finance industry is not our saviour. However, I disagree with your assertion that it only serves a minority. The revenue it brings in and the jobs it provides have benefited every single Islander directly – even though soem of those not directly employed in the finance industry seem reluctant to admit it.
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CD
If money is earned in one jurisdiction is should remain in that jurisdiction. The undercutting of expense that tax havens provide, perfectly legally, moves the capital earned using the hosts resources and personnel, to somewhere that hasn’t earned it. It’s a fundamental of capitalism.
I don’t think we ‘do badly’ in health services (except for mental health, where we are extremely poor), but ask those that do not have insurance and do not qualify for assistance what happens when their child gets sick ‘out of hours’. A decision is forced whether or not it is affordable. That stress alone causes knock on effects.
Trickle down does not work as a system to benefit society. If it did then the US would be a blanket success in all areas. It is not. It fails the majority to such an extent that it scores very, very low in human developmental studies. Economic growth in the short term is indeed a boon, but a quick look at the demographic make up of the service industries will highlight the lack of local wealth being created.
Mechanics will always have things to fix, builders will always have things to build. Extra wealth in the top percentages pushes up cost of living for everyone. Whether the mechanics and builders and cleaners etc earn a BIT more from the higher earners is offset by this. The reality of global tax harmonisation would probably mean less deposit business here, but there is no reason our expertise could not flourish in a more sustainable fashion.
Jobs shed would start in areas where jobs were created using foreign workforces, that would release pressure on housing as they moved back. The real issues would become apparent when the sudden lack of locally qualified people: a direct result of lacklustre educational policies. Whilst we have the chance we should be extracting as much cash as possible from the loyal wealthy in order to safeguard the future for our children.
Too much of this adoration of the finance industry is based on short term profit, not long term planning.
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Entirely agree with Fast Robert’s comments here.
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Big nations have big overheads hence their taxes are higher than small juristictions. This encourages people to put their money in such places. But if everything is above board then these small juristrictions have nothing to worry about. If not then you have an awful lot to worry about as the Americans will screw you.
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What adoration of the finance industry? There are very few people who offer anything other than criticism of our principal business sector on “Your Shout” or elsewhere, which is why I feel obliged to put forward some form of defence.
I reiterate, the finance industry has served us well – at least in material terms. There is plenty wrong with our island but, in general, this is an affluent and well provided for society.
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I’m not criticising our principal business, rather the ideology that allows global tax disharmony. If there were the same levels of tax in EVERY jurisdiction then there would no attempts at connivance based on expense mitigation.
I think a lot of the criticism is the manner that the foreign finance houses have been perceived to ‘take over’ the running of the island. The politicians seem to make decisions based on their comfort.
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Guernsey, Jersey and IOM offer lower rates of tax than the UK, fact.
In Guernsey there are a lot of houses (open market and local) that are owned by very wealthy people who live mainly overseas.
In addition to this a lot of people deposit money in Guernsey who live in the UK or ‘offshore; of Guernsey. These people are known as tax avoiders.
Whilst there will be countries, towns, regions or whatever that have different taxes there will always be people who do one of two things:
1 – reside in a place of high taxation but place their wealth within a lower taxation area; this is tax avoidance and is illegal in the UK
2 – Move to live and domicile in the region with less taxation, hence the high price of open market houses in Guernsey (do you think these people actually like Guernsey, erm . . )
All you have to do is look at Michael Schumacher, Kimi Raikkonen, and now Lewis Hamilton, they all live in Switzerland, as does Sebastian Loeb (non-motorsport fans will be going ‘who?’).
The reason they live there is the taxation rules.
Lewis argues its quieter, but this is Baracks (not Obama’s).
Guernsey sets it’s own taxation laws so forget all this international pressure nonsense, it is sensationalism. Obama cannot dictate to Guernsey about it’s levels of tax, however there could come a point were a DTA (Double Taxation Agreement) is reached and information is released to the USA regarding USA investors who reside or invest in the UK.
Anyone remember that tennis player???? Boris Becker. Well look him up and see what the German Government pursued him for.
This is as old as taxation itself – get over it.
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