1

Paul

If I was you deputy Trott instead of spouting off about getting your hands on high profile peoples phone numbers and boasting about being given passes as charmed you may have been at that time. It is now time to address the disgraceful mess your actions have left a lot of people in. What would interest me is if you was to address me in relation to your relationship with the EU. The French President has no time to waste to negotiate with your wishes. We want too much at te expense of others. Maybe the response you will receive from them will be:
SCHOOLS & HEALTH BEFORE ANY C.I. INDUCEMENTS. What then cry to the UK for support? See what the US President can do for you? Start doing what you are paid to do for your own electoratte and maybe, but I doubt it, you can save some face.

Shouting out to external influences is getting you and us nowhere fast. You expect people to be impressed by your rants but in reality you are advertising the fact that we wish to have things all our own way whilst still wishing to remain freindly chums with countries that in effect we are ripping off. My only wish is that someone somewhere is calculating what you are costing all of us and you are made to do community service for the rest of your life as some way of recompense. The way you are going about your business you will need armed bodyguards for you own peace of mind next. Who will pay for this Mr Trott? Err the taxpayer again!

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3

Paul

Stephen John
Youre clearly a fan of Deputy Trott. Was he one of your students at any time?
Sounds like teachers pet maybe!

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5

David

Paul
I am firmly with Stephen on this one. His summary is spot on.

I also think your personal attacks on Deputy Trott are completely unwarranted. You will be blaming him next for global inflation, global warming and the war in Iraq !

Let’s take a reality check:

1. Many of the overspends of the States which you blamed Deputy Trott for on another thread were caused prior to his appointment as T&R Minister and the blame lies with the old Board of Administration and Public Services heads. Deputy Trott just happened to be the T&R Minister when the carpets under which those overspends had been swept were uncovered.
2. Zero 10 was a collective decision of the Policy Council and had to be delivered by T&R. Whoever was head of T&R was going to be unpopular for having to drive it through. Guernsey had no choice but to go down the zero 10 route and the extra tax cost now being borne by islanders pales into insignificance with what it would have cost us all to go down an alternative route. The visits by Deputy Trott to Washington and the signing of Tax Exchange agreements with the Nordic countries are an absolutely vital element of protecting the ongoing existence of a finance industry in Guernsey. Hardly a jolly for Deputy Trott I would suggest.

3. Whoever else had been appointed to the role of T&R Minister previously and to the role of Chief Minister now would be doing exactly the same as Deputy Trott is now doing. Your personal attacks on him suggest that you think he is doing all this of his own accord without the support of the elected House, which is of course ridiculous.

I suggest that if you want to blame Deputy Trott for any gripes that you have then you would have far more credibility if you tried to focus on matters that Deputy Trott may legitimately be blamed for. Otherwise your rantings look like mere personal attacks on somebody that you dislike. Politicians don’t expect to be popular when very tough decisions need to be taken, but Guernsey is going through unprecedented tough times, created by external factors in response to which the States have no option but to make tough decisions. They need our collective support rather than be exposed to personal attacks which appear to have no foundation from the likes of yourself.

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7

Steven

On a more serious note I’m quite sure that it matters not wether it is avoidence or evasion. The outcome will be the same because the effect is the same.

Look at it this way, if the general population wished to be paid in pure silver Guernsey 25 pence pieces worth approximately £12 a shot that would be perfectly legal. What was a weekly earning of £400 could legitimately be declared as £8.33 and as perfectly as legal as tax avoidence. However it is my honest opinion that the Guernsey income tax authority would be getting their heads together with their lawyers pdq.

Just a thought but are there any Guernsey lawyers declaring remarkably low earnings over here?

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9

Stephen John

What Guernsey faces in the post US election era is the desire of the US to recover some of the $300 billion it believes it has lost in taxes due to the use of tax havens.

Of interest to Guernsey is the meaning of tax haven as seen in the long speech of Senator Levin, .in his hard hitting and uncompromising introduction of the proposed laws on tax evasion.

“A tax haven is a foreign jurisdiction that maintains corporate, bank, and tax secrecy laws and industry practices that make it very difficult for other countries to find out whether their citizens are using the tax haven to cheat on their taxes. In effect, tax havens sell secrecy to attract clients to their shores. They peddle secrecy the way other countries advertise high quality services. That secrecy is used to cloak tax evasion and other misconduct, and it is that offshore secrecy that is targeted in our bill”

On this Guernsey would appear to be doing a good job in demonstrating the transparency of its financial system. It seems that Deputy Trott and his colleagues are doing the right thing for Guernsey in allaying the fears of Senator Levin on the secrecy issue.

The next part of Senator Levin’s speech is more subjective. It says:

“Abusive tax shelters are another target. Abusive tax shelters are complicated transactions promoted to provide tax benefits unintended by the tax code. They are very different from legitimate tax shelters, such as deducting the interest paid on your home mortgage or Congressionally approved tax deductions for building affordable housing. Some abusive tax shelters involve complicated domestic transactions; others make use of offshore shenanigans. All abusive tax shelters are marked by one characteristic: there is no real economic or business rationale other than tax avoidance. As Judge Learned Hand wrote in Gregory v. Helvering, they are “entered upon for no other motive but to escape taxation.”

… Abusive tax shelters, by contrast, are often “MEGOs,” meaning “My Eyes Glaze Over.” Those who cook up these concoctions count on their complexity to escape scrutiny and public ire. But regardless of how complicated or eye-glazing, the hawking of abusive tax shelters by tax professionals like accountants, bankers, investment advisers, and lawyers to thousands of people like late-night, cut-rate T.V. bargains is scandalous, and we need to stop it. professionals like accountants, bankers, investment advisers, and lawyers to thousands of people like late-night, cut-rate T.V. bargains is scandalous, and we need to stop it”

The Guernsey politicians must have been helped in their dealings with the US by the well established stance on sharing information and removing much of the criticism seen in the hard hitting words of Senator Levin.

This openness may well prove of help in dealing with thye abusive tax shelter concerns of Senator Levin.

Perhaps those critics of Deputy Trott and his colleagues will, by seeing the words of Senator Levin; begin to appreciate the effort required to protect Guernsey and its finance industry.

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11

David

I am totally supportive of eliminating unlawful tax evasion but draw the line at anything which attacks lawful tax avoidance. Countries have the weaponry of drafting effective anti-avoidance legislation to attack tax avoidance.

But here’s something to ponder….

If a US resident or citizen (their citizens are liable to US tax even if they haven’t set foot on US soil for years) tried to evade US taxes by hiding behind a Guernsey structure or even just a bank account then our regulated banks and service providers would be reporting him to the FIU without batting an eyelid. The system would catch him and it is effective. The information is available to the US tax authorities under the Tax Information Exchange Agreement.

But if a Guernsey resident tried to evade Guernsey income tax by parking his assets in one of Delaware’s 3.9 million companies, which then held a bank account in Switzerland, there is not a soul in the US who would be sufficiently regulated to be able to report the beneficial ownership of the company to the US authorities. They simply don’t know and don’t have any systems in place to regulate the use of US companies ! Furthermore, most types of US companies being used or abused by non-US persons don’t have any liability to US taxes if they have no US income or assets. No wonder the Russians find Delaware so attractive to use.

Not quite a level playing field and the position is very little different re trusts and companies in the UK and elsewhere.

The US shows no inclination yet to address this abuse which, comparing 3.9 million Delaware companies plus hundreds of thousands of similar entities in other states with the 600,000 BVI companies and 30,000 or so active Guernsey companies, puts rather a different perspective on the role played by the offshore centres in global tax evasion. The US is arguably the biggest harbour of all for non-US tax evaders !

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13

Fast Robert

Stephen John
As Carl Levin intimates, why else would expense mitigating businesses/individuals do business through multinational finance houses with a ‘branch’ with a Guernsey postcode? All the time that that is Guernsey’s selling point, rather than its expertise (Is it expertise or is it fairweathered get-rich-quicks?), then there will be an ever increasing focus on the way we operate. I am sure Guernsey used to like the fact it wasn’t thought about, out of sight, out of mind, politicians, UK and local have said so (I wonder why). Times have moved on, the (misnamed) ‘cycles’ that drive boom-and-bust economies are being quickly negatively analysed and as a small jurisdiction with little bargaining power – the truth is, without the power of wealth, various high ranking individuals with fingers in all the Islands’ pies we would just be Guernsey, rather than Guernsey Plc – we would be better served to start letting the balloon down gently and leading a pre-emptive ‘shock and awe’ conciliatory tax merger with the UK and the EU, thus innoculising ourselves from this permanent ‘sewage on the beaches’ perception the world has of us….

So; the obvious revulsion to that proposition reinforces our raison d’etre.

Deputy Trott is fulfilling his role as a ‘doer’ for the finance industry. The corps over here know that their privileged profit-fantasy operations depend on the tax disharmonies around the world (why go to China for business otherwise?) and so need persuasive ‘political’ characters from those jurisdictions to speak on their behalf in political arenas. He may well be good at it, but what does it say for the fundamental tenet of government?

The other view is that Deputy Trott is protecting the interest of islanders by promoting our anachronistic tax status (hasn’t everything become ‘global’ now? Why is it, I wonder, that we cling on to the past?) by believing that the few rich pour benefit on the majority poor. It sells.

There is an increasing need for the public to know what their preferred elected politician stands for. Very important, long term effect decisions are being made on the pretext of democratic choice. With the current system the public have no ultimate say in how we are governed.

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15

Stephen John

David

Your comment “I am totally supportive of eliminating unlawful tax evasion but draw the line at anything which attacks lawful tax avoidance” goes to the root of the problem.
So far as I can see the issue facing Senator Levin is primarily one of secrecy. In his speech he gives a number of examples of private and corporate avoidance of tax because of the veil of secrecy that surrounds them in their tax haven.

It would seem that the concern of Senator Levin with secrecy can work in the favour of Guernsey. No doubt he and his colleagues will take comfort from the content of David’s post, which is the same as presented by Deputy Trott and his team.

The speech of Deputy Levin lays out numerous examples of what he regards as tax evasion. Some like “Sam and Charles Wyly from Texas, established 58 offshore trusts and corporations, and operated them for more than 13 years without alerting U.S. authorities. To move funds abroad, the brothers transferred over $190 million in stock option compensation they had received from U.S. publicly traded companies to the offshore corporations. They claimed that they did not have to pay tax on this compensation, because, in exchange, the offshore corporations provided them with private annuities which would not begin to make payments to them until years later. In the meantime, the brothers directed the offshore corporations to cash in the stock options and start investing the money. The brothers failed to disclose these offshore stock transactions to the SEC despite their position as directors and major shareholders in the relevant companies”

“…The Wylys were able to carry on these tax manuevers in large part because all of their activities were shrouded in offshore secrecy”

Senator Levin gives further examples:

In another of the case histories, six U.S. taxpayers relied on phantom stock trades between two offshore shell companies to generate fake stock losses which were then used to shelter billions in income. …. Moreover, the shell companies that conducted these phantom trades are so shrouded in offshore secrecy that no one will admit to knowing who owns them.

Corporations are also using tax havens to avoid payment of U.S. taxes. A recent IRS study estimates that U.S. corporations use offshore tax havens to avoid about $30 billion in U.S. taxes each year. A GAO report I released with Senator Dorgan in 2004 found that nearly two-thirds of the top 100 companies doing business with the United States government had one or more subsidiaries in a tax haven. One company, Tyco International, had 115. Enron, in its heyday, had over 400 Cayman subsidiaries.
Here’s just one simplified example of the gimmicks being used by corporations to transfer taxable income from the United States to tax havens to escape taxation. Suppose a profitable U.S. corporation establishes a shell corporation in a tax haven. The shell corporation has no office or employees, just a mailbox address. The U.S. parent transfers a valuable patent to the shell corporation. Then, the U.S. parent and all of its subsidiaries begin to pay a hefty fee to the shell corporation for use of the patent, reducing its U.S. income through deducting the patent fees and thus shifting taxable income out of the United States to the shell corporation. The shell corporation declares a portion of the fees as profit, but pays no U.S. tax since it is a tax haven resident. The icing on the cake is that the shell corporation can then “lend” the income it has accumulated from the fees back to the U.S. parent for its use. The parent, in turn, pays “interest” on the “loans” to the shell corporation, shifting still more taxable income out of the United States to the tax haven. This example highlights just a few of the tax haven ploys being used by some U.S. corporations to escape paying their fair share of taxes here at home.

Our Subcommittee’s most recent investigation into offshore abuses highlighted the extent to which offshore secrecy rules make it possible for taxpayers to participate in illicit activity with little fear of getting caught. Through a series of case studies, the Subcommittee showed how U.S. taxpayers, with the help of offshore service providers, financial institutions, and sometimes highly credentialed tax professionals, set up entities in such secrecy jurisdictions as the Isle of Man, the Cayman Islands, and the island of Nevis, claimed these offshore entities were independent but, in fact, controlled them through compliant offshore trustees, officers, directors, and corporate administrators”
End of quotes

What become obvious from these extracts is the concern about secrecy and the facilitating of non payment of tax by some offshore jurisdictions.

The extracts show why I am relatively confident that the Guernsey approach with the US authorities is spot on.

The big problem is, and it comes back to David’s initial comment “I am totally supportive of eliminating unlawful tax evasion but draw the line at anything which attacks lawful tax avoidance” where the question is, how many of the vehicles labeled as tax avoidance will be seen by the US authorities as tax evasion?

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17

Fast Robert

David
I totally agree with you here. The US is great at marching in on whatever grounds where it thinks its national interests are threatened. One large foreign funded criminal attack on home soil (people have to remember that it suffers from terrible internal criminality, the extremists bred there are just as vehement in its destruction as anything based overseas) and it bleats on that it has a right to extinguish hope in countries around the globe. The fact of the matter is that the US has a very, very poor record on anything to do with the word ‘regulation’ and it could well be taken as an absolute affront by Guernsy business leaders to attack Guernsey before it cleans up its own backyard.

It is telling that Switzerland seem always to be able to shake off any attack. The centuries of ill gotten deposits sit there burning holes in moral reality. A great many going concerns in the form of major companies still operating profited from Nazi expansionism in the thirties. No doubt the tyrannical regimes around the world (count how many have US endorsement and CIA protection) are still skimming off the good stuff into their safe-as-houses no-questions-asked but totally ‘neutral’ facades.

There are many, many better things for the US to do in order to recover the scammed proceeds of capital ‘disappearance’ than to attack Guernsey.

But let’s get down to the crux. The finance industry here only exists because it gives benefits to tax avoiders that frankly do not need it. If anyone should be avoiding paying tax it is the poor working class. If people are to be paid poorly for doing entirely essential jobs then why should they be taxed? If people are paid handsomly for gambling on markets then they should be heavily taxed.

Worth can be quantifiable. A street cleaner is worth something because they improve societal infrastructure. Wealth managers are worth little becasue they only benefit a few.

By defending our current systems, by maintaining that there is nothing wrong in the way things are being done, we are perpetuating the demise of societal vocations. Does everyone want to become a banker?

How will there be a choice?

Tax havens (sorry David Cranch [another thread] – when people say tax haven they mean somewhere they can stash cash at less expense than the jurisdiction it was earned in – it may not be semantically correct but it paints the correct picture) encourage the perpetuation of moral ignorance, let us hope that the advisors behind Levin and Obama target the worst offenders first and give Guernsey a chance to harmonise without the tar.

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19

Darren

Stephen John – you must actually be Deputy Trott’s equivalent of Tony Blair’s old advisor, JP Morgan. See my other post on another topic about taxation / evasion – this will make it all very clear.

I have seen Dep Trott (DT) operate at first hand.

I questioned his sanity when he was having fun with our money after the millenium but now I am very concerned.

He will still be in power in years to come as Guernsey is not a democracy.

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21

Letty

Whether Mr. Trott is doing a good job and/or the tax haven situation in Guernsey is under threat I don’t know. However, I do know that Obama did not ‘crushingly’ defeat John McCain. Your reporter and readers should be aware, that as in most past elections, our country is divided about 50/50, and voted very closely to that split. Our electoral college numbers may confuse some, but about half of the United States voted against Obama.

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23

Stephen John

Steven

Sorry I missed your comment first time round.

It is difficult to put any other interpretation on the rationale other than tax avoidance.

The only consolation is that Guernsey seems to be developing an accord with the Obama camp on tax evasion.

The fun will come when Guernsey claims something is tax avoidance and the US claim it is tax evasion.

I would be interested in David’s view on this.

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25

Darren

The only Accord Guernsey will have with America is probably a Honda Accord.

I doubt there will be any ‘negotiation’ on what Guernsey finds acceptable.

Either Guernsey will have the play ball or US Investors will not be allowed to invest offshore – they will make it an ‘offence’ and therefre Geurnsey will have to report all US sourced funds.

Interesting times.

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27

Peter

My college student daughter (who attended St Mary and St Michaels when we lived in Guernsey) flew to DC with a charity a couple of years ago to lobby politicians. She was 18 at the time and met face-to-face with two senators and several congressmen and women in their offices. She also got to visit the public viewing galleries.

I fail to see how a meeting with a presidential candidate’s aides last year, before the primaries had even started, and being invited to the senate public viewing gallery could possibly provide much comfort on this subject one way or another.

I hate to burst any bubbles here…but Guernsey is the size of and has the budget of a small town in this Country. Whatever the merits of Guernsey’s position, just how seriously do you think the US government could possibly take Guernsey’s concerns on this issue?

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29

Melec

Two point’s
1. Dave.. I had hoped that the S.S. had left in 1945. and we were now aloud free thinking again

2. The island Guernsey headed by Lyndon Trott. Versus the USA, the worlds greatest super power in a political battle..

Who your money on to win..

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