EU launches tax attack
Wednesday 14th October 2009, 2:30PM BST.
THE chief ministers of Guernsey and Jersey held crucial talks with UK officials in London yesterday after the European Union effectively pulled the plug on zero-10.
Some member states do not believe substantial changes introduced in Guernsey and Jersey to the islands’ tax structures are in the spirit of the EU code of conduct designed to eliminate harmful tax practices.
And informed sources fear that the UK no longer feels it is able to defend the islands’ economic and taxation strategies as its own standing in Europe weakens.
Any change to a higher rate of corporation tax could lead to massive upheaval in the island with the potential of job losses as businesses flee to more competitive jurisdictions.
It has been agreed that all the Crown Dependencies will face the issues together, working together and sharing resources.
Chief Minister Lyndon Trott and his Jersey counterpart Senator Terry Le Sueur met Financial Secretary to the Treasury Stephen Timms yesterday. Deputy Trott returned to the island early in the afternoon.
He said this morning: ‘Our zero-10 strategy was always intended to be a multi-stage process to ensure our tax revenues are sufficiently sustainable in the light of changing economic uncertainties.
‘As a result of the changes in international attitudes, the terms of consultation on this issue will be broader than had previously been envisaged.’
Senior officials met at Frossard House for further talks later yesterday.
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It seems as though the CM has championed yet another disaster for Guernsey. And the man has always wanted more power????
Don’t call me president he says.
There is many names that will be on peoples lips but president will not be one of them I’m quite sure!!
If he is not asked to stand down now then I am hoping there will be a vote of no confidence.
Trott to go now!!!
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job losses will be for those foreigners who came to Guernsey with those businesses C Hyam-Mooney
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This is it, the beginning of the end for Guernsey. Lets face it our politicans are all for freedom and for pleasure, nothing with them will last forever, every one of them wants to rule the world! I have fears and am shedding tears at the prospect of our decline. This would never of happened with the great Louis Montgomery at the helm – great Odens Raven!
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I advised Jersey that this would happen in 2005 when engaged by a Shadow Scrutiny Committee.
Jersey chose to ignore my advice then, and that of my Tax Justice Network colleague John Christensen, preferring instead the siren voice of PricewaterhouseCoopers who said they would comply. Guernsey did likewise, although familiar with what I said.
Now we have been proven right – as we knew would be the case, because we took the trouble of going to Brussels to check our facts.
This was an avoidable crisis – but one which has happened because of the Channel Island’s continued belief that tax avoidance is acceptable – which is the premise on which the whole zero-ten system is built, for it is a charade that kept the abuse to which the EU objected in place at all times.
And the reason why it is failed is not, I am sure, because other states in the EU have rejected it – it is the UK that have rejected it, rightly knowing that this abuse is costing them billions.
You were warned, and I’m genuinely sorry fr the mess that this crisis will create. We at the Tax Justice Network are willing to offer advice still – we have an enviable record of getting these things right
richard.murphy@taxresearch.org.uk
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So when will we have a modern day Winston Churchill to stand up to these unelected eurocrats in the Reichstag?
How much longer will we put up with the Neville Chamberlains in HM Govt selling us out and leaving us at the mercy of the EU?
I fear that we will, as usual, collectively roll over and let them trample all over us…
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No surprise there then.
I just hope our Chief Minister and his buddies have the bottle to stand their ground.
We are not part of the EU and they have no right to push us around. The UK is in the process of giving away its sovereignty (against the will of the people I suspect – hence no referendum)so we can no longer rely on their support. Right now we need strong minded representatives – I just hope Mr Trott is up to the job.
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I fear they will be too pig headed to ask Richard – even if it does mean an end to their political careers as a result of this mess. Shame.
As for job losses being aimed at those ‘foreigners’ who came to Guernsey years ago. Well those ‘foreigners’ have put a lot of money into the Guernsey kitty annually in the form of salaries, island taxation, rents on their office buildings and providing jobs for bright school leavers on island so they can then work for and take part in the ‘foreigners’ financial industry and provide long term futures for their children.
I suspect that most Guernsey people would love for their children to be working in the finance industry making a decent wage and having nice working conditions after leaving school. Or maybe I am mistaken and they would like them to work in the greenhouses and catering business as they had to years ago. What else could they do without the finance industry?
GG
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we were warned this could happen…now look at us!
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What is laughable is the amount of time and good money the CM has spent on all the TIEAs.
And for what purpose exactly?
He has basically been helping and arming the opposition in painting the picture of truth with the facts that they so desperately required.
And doing all he can to blag the general public into thinking that this miracle waver that he is signing up to is just what Guernsey needs for future tax disadvantages towards others.
Nice one LT and don’t worry I’m not going to call you anything at all because your actions speak volumes.
What’s the next hair brained scheme to come out of the hat then???
Oh and if you would be so kind to include how many hundreds of millions it is going to cost the taxpayers that would also be a welcomed addition!!!
I just hope the general public sees him as an engineer that always has boxes of parts left over once he has tinkered with whatever he turns his hand to.
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“Any change to a higher rate of corporation tax could lead to massive upheaval in the island with the potential of job losses as businesses flee to more competitive jurisdictions.”
Didn’t we have a higher corporation tax rate a few years ago? We only reduced it because of competitive pressure from the Isle of Man. If we all worked together to bring it up to historic levels then perhaps we’d enjoy the same financial benefits as we used to.
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It’s all about competitive edge. A decision was taken on zero – ten which was right at the time. We have seen little business drift away from the Island, which it could have if we had maintained our previous system. So, zero-ten has protected our existing core business. What of the future? The best scenario I can envisage is that all our competitor jurisdictions who are also suffering a loss of tax revenue choose to implement higher corporate taxes. If they do then so can we! Happy days.
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the whole point of the eu wanting cooperation was to harmonise taxes not reduce taxes on companies based in guernesy at the expense of the people of guernsey. the age of tax havens is ending,
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How much more do we spend on advertising TAX EVASION ” Zero-Ten “
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Why is everyone so worried by this article? It is so vague in many ways.
The article says “Some member states do not believe substantial changes introduced in Guernsey “. Which member states? Why aren’t we seeing a list of them?
It also states “And informed sources fear that the UK no longer feels it is able to defend…” What sources? Labour politicians who look certain to be out of power in June 2010? Or Tories who look certain to be in power in June 2010? And these sources only “fear” the UK is no longer able to defend. So they don’t “know” for sure, they just “fear”. Again, nothing concrete at all!
To Richard Murphy, how have you been proven right? Nothing concrete has been stated or decided?
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Quote Cynthia Hyam-Mooney: “job losses will be for those foreigners who came to Guernsey with those businesses”
You are clearly ignorant of the facts. What about the many locals that work in the industry – or those supporting it…or do you honestly believe Guernsey’s largest private employment sector is staffed only by foreigners? Like it or hate it, if finance disappears many locals will lose their jobs along with the foreigners.
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Before everyone starts laying into our Chief Minister, the pressure to change our tax regime was initiated way back in around 2002/3, I believe before he was even elected as Treasury Minister. Leaving our tax system unchanged was simply not an option. The only real debate was between zero-10 and zero-20, but there was no debate between the differing parties locally of the essential need to retain a standard zero tax rate. If zero-10 is non-EU compliant, the zero-20 would have failed the very same test.
Obviously there is some confusion, which no doubt will become clearer, about the extent to which the EU and ECOFIN did or did not endorse zero-10, and the emergence of those facts will no doubt be very important regarding the roles of senior politicians in both islands. But does it really seem likely that they all got the wrong end of the stick ? There appears to be “confusion” here than seems plausible, and in view of the UK’s recent attitude towards the islands, nothing would surprise me at this stage about the UK’s stance. Its a very long time indeed since I have trusted Blair or Brown, and even more so since the Labour Government went back on its word to hold a referendum on the Lisbon Treaty.
There are “future” maps out there in the bowels of the EU which show the Channel Islands as part of France for political purposes. That’s scary stuff indeed. Remarkable to think that we were occupied by the Germans for 5 years just under 70 years ago and that millions lost their lives fighting the Germans, yet we are now about to become absorbed by an EU dominated by the Germans (and French) without a shot fired in anger.
It really hurts to say it, but we have no realistic option but to play ball and negotiate the best possible deal with the EU. Guernsey is about to change for ever and there is very little that we can do about it. Independence just isn’t feasible. no matter how tempting it is. We can’t even apply to formally join the EU as we’re not big enough to satisfy their criteria (although Malta managed it with just 400,000 people). Its going to take some time to get used to the whole idea. Maybe, just maybe, the Tory Government will pull Britain out of the EU altogether, but I don’t think even they believe that’s viable.
Isn’t it strange that the Irish people were forced to hold a second referendum on the Lisbon Treaty until they came to the “right” decision ? How many other countries who originally voted in its favour were given the option of a second referendum in case they changed their mind to a “no” vote ? Very, very worrying that not only we but also Britain are about to lose our identities altogether. Maybe the EU leopard will change its spots and present rafts of new opportunities for us. But I’m not holding my breath. President Blair ? No thank you.
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Chief Minister Lyndon Trott made the following statement for record on 31/03/09 as documented at the following link:
http://waysandmeans.house.gov/hearings.asp?formmode=printfriendly&id=7752
The relevant part of this is:
“As part of its commitment to eliminating harmful tax competition, Guernsey has complied fully with the EU Code of Conduct on Business Taxation.”
The States of Guernsey and it’s public should demand an explanation as to why the Chief Minister has mislead us.
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David’s posting gets close to the heart of the matter.
The possibility of a deal with the EU is clearly one possible solution to our dilemmas.
Which dilemmas?
Well.
1. WE are right on the EU’s doorstep both physically and in our business dealings. Yet many people seem to think the EU should ignore us.
2. We are of little use to the UK. In fact we are something of a nuisance. The UK seems to be hinting that we might be better off if we did not regard ourselves as part of the UK when it suits us, and not part of the UK when that suits us.
The First Interim Report of the Constitution Panel states that it is part of their mandate to “review all aspects of the constitutional relationships between …. Guernsey and the European Union.”
It goes on to say that, to date, that has only been considered tangentially.
So, watch that space.
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David Cranch – I am not so sure about your point 2. Those in the City know that we are a key component of its ability to generate wealth, and therefore a contributor to the UK economy. The UK financial world is very happy with what we do. The problem is that the current political climate is such that this contribution to the UK economy is overlooked and Westminster only looks at the tax that they would have if our business was all onshore (ignoring the fact that it would not be onshore, it would be offshore somewhere else and the UK would not be involved at all).
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TL, your point is very valid and true.
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Surely Guernsey should join the EU. Then when we are harmonized we can claim grants and other aid from the EU coffers to rejuvenate our defunct finance industry.
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TL
Do you really believe it is the tax issue that makes us ‘beneficial’ to the City?
You really are deluded.
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No Arnald, I am informed.
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what reason do we have to become part of the EU we need to bight the bullet and pull out stand up for the things Guernsey is loved for, Yes we may be a tax haven but how many of the people fighting to close this down have vested intrests in companys depending on that haven in Guernsey,
Close the doors and rope it down we can do this, whats the worst that could go wrong we lose what we are about to lose anyway, Your not called a Donkey for anything be strong be hard and makle this happen
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TL
Is that the same ‘informed’ as the States were about the EU, or maybe the same ‘informed’ that harmful tax practices don’t occur here, or ‘informed’ that we don’t have any criminals on the books, or the same ‘informed’ that we are transparent?
If you ask those that profit from our set up, then yes, maybe we do benefit them. But benefitting shysters is nothing to be proud about. And it’s the accountancy that makes it work. The same accountancy who we must have spend a fair bit asking to be ‘informed’.
Really, why should anyone care what ‘information’ you have, when you cannot prove anything to anyone.
It’s chronic arrogance. This is what we are educating our children to be like. Sad.
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Cynthia, if for one minute you believe that the finance industry leaving guernsey will not directly and negatively impact every single household in the Guernsey (locals and non-locals) then you are seriously deluded. Even if you don’t work in the finance industry you probably provide service to it or the people who are employed by it.
Now that we no longer have substantial tourism and aricultural/horticultural industries what else is going to bring money into the island?
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Richard Murphy – you have got some front to say that, if we had listened to you, this crisis could have been avoided. You have done nothing but spread disinformation and downright lies about our finance industry for years. Don’t now put yourself forward as “the man who could have saved our industry” – you have been complicit and largely responsible for the situtation we now find ourselves in.
The financial services we offer in Guernsey are entirely compliant the tax legislation of whatever jurisdiction we do business with. We do not help people evade taxes that should rightfully be paid in the UK or elsewher – under their own tax laws those jurisdictions have no right to extract tax revenues from our offshore clients (or if they do then we will always pay those taxes).
You have consistently ignored this fact and have spread the fundemental untruth that we are stealing from the UK or European taxpayer – we are not – I repeat, we pay onshore taxes where they are due and but not otherwise.
If the UK / Europe want to sort out their own tax legislation to try to extract taxes from our international clients then so be it, we go to great lengths to comply with their laws. What they do not have a right to do however is to tell us how to structure our own tax system. We are not a member of the EU and we have the right under our constitutional agreements with the UK to set our own taxes.
The people of Guernsey are not going to sit back and let foreign governements push us around and tell us how to run our island. Please don’t shed any crocodile tears for us Mr Murphy – we are not going to give up the mainstay of our economy without a fight (with or without your propaganda campaign).
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The clock is ticking on the channel islands tick tock tick tock,and well done to Mr Richard Murphy ridiculed by many of the sheep at GFSC,a constant thorn in the side of the tax havens Mr Murphy has exposed the islands what they are on many occasions,one of his comments in the past always stuck in my mind “Guernsey has all the pieces of papers in the right place,however that does not mean they are capable of carrying out the required role”
Time to get them tomatoes growing
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Richard Murphy talks as if we were not aware that the goal post couldn’t be moved by the EU at any time. We knew it because we know these un-elected commissars in Brussels cannot be trusted one jot. We also certainly knew that this sorry Labour administration could not be relied upon either, after all they can’t speak up in Europe on behalf of their own people let alone us. By the way RM we didn’t have to go to Brussels we already had people working for us over there. Secondly we don’t necessarily see this as a “crisis” if we increase corporation tax we will have more income, the trick will be keeping us competitive and I am certain we will be able to do that.
I have told every Policy Council since its conception that the EU and its officials will at every stage seek to interfere in our prosperity, their ultimate aim is to close us down. For the moment some EU members are not saying that we are not compliant; they are saying that we are not complying with the sprit of the code. No government can run an economy on the whim of someone else’s idea of what the sprit of something is. Tell us what you think would be compliant and we may move closer to that position but we will not change our tax structure on the impulse of anyone without knowing what the outcome will be. All of this, as I have said before is fuelled by envy and resentment that we as small jurisdictions who out perform the EU on nearly every level, we are low tax jurisdictions geographically inside one of the most predacious, controlling high tax cartels on the planet and the only way any cartel can work successfully is by denying people choice and our tax regimes give people that choice. This is all about the EU’s rabid desire for tax harmonisation across Europe. I know we will come through this and we will continue to prosper, it may be that we will do less business with the EU and much more with the tiger economies, South Africa and the Arab states and we could care less what people like Richard Murphy think about the way we set our tax rates. He comes from the United Kingdom, which has lost its ability to govern itself and is now just a region of a country called Europe, it has handed its peoples sovereignty over to Brussels and as far as we are concerned Murphy and his cohorts are consumed by the same envy we see from several quarters. Like I have told you before Richard we will still be here long after you and the other communists in the world are long gone.
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TL is advancing the conventional argument and says that it is the current political climate which is causing us to lose support from the UK.
I am afraid that is just wishful thinking. For quite a large number of years it has been apparent that the UK regards us as a net liability. The current climate may be enhancing their irritation but it is not the cause.
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Goodbye Z10 and giba and hello Brussels………AT LAST…….
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“It really hurts to say it, but we have no realistic option but to play ball and negotiate the best possible deal with the EU.” David @11.44
The French tried that in 1940. Please say no!
Osborne had a refrain in his speech at the Conservative party conference: ‘We are all in this together’. He was not referring to the EU but he should have been.
The City of London is under dire attack from the EU. The plan is to shackle the City to the high tax, heavy regulation of the rest of Europe. Of course it is killing the golden goose.
The EU is doing the same to the Channel Islands and to every other so called tax haven – that is anywhere believing in free markets and free competition.
To look on the bright side, Germany has not (yet) threatened to take over the Channel Islands as it did Liechtenstein not long ago: the former head of the European Bank for Reconstruction and Development urged Liechtenstein to comply with German orders ‘or face annexation’. Angela Merkel added chillingly: ‘The clock is ticking.’ German intelligence paid for ‘stolen’ bank client data from Liechtenstein banks.
Be under no illusion what we are all facing is vicious bullying and the source is Berlin. Think back to the late 1930s. Giving in then was the worst option.
I would like to be able to say that David Cameron and team understand but all evidence is to the contrary.
Boris Johnson, Mayor of London, undoubtedly has his finger on the pulse, as dire EU regulation is driving business outside London and outside the EU – to New York, Singapore, Shanghai. He is shouting from the rooftops.
You – and we in London – must stand up and say no. If we do business with these people it will be at our peril.
I used to go on radio on both Jersey and Guernsey with the remark ‘you will just be a pile of rocks in the sea’. The rocks are just round the corner if you turn the wrong way.
Lindsay Jenkins
Hon Director BETTER OFF OUT
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Good post Dave Jones!
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Some very good points made from most contributors.
I have no doubt that Guernsey will still be a major financial player after Zero 10 is gone.
Guernsey has a far better reputation in the international community than Jersey or the Isle of Man. The island is still a sound place to do business with.
Those of us who opposed Zero 10 for the double reason of fear it did not conform with the EU ideas, and the belief that business would not have been lost to any significant extent because of the good reputation Guernsey enjoys, will regret the loss of nearly £200 million of revenue
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CD says that Guernsey is not part of the EU. The problem is if you decide to play along with the rules of he big boys, you play by their rules and their interpretations of those rules.
Paul – your point about the TIEA’s is well put.
Rubarb also makes valid points.
I applaud my friend Dave Jones’s usual robust defence but now the usual guys are coming out and saying about the inevitability that zero 10 is dead. As expected Charles Parkinson is also of the same mind.
As I said at the start I have no doubt that Guernsey will ride this storm well, and come out of the rough weather with little damage.
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A quote from Trott in january 2009
Deputy Trott said: “Do I believe that circumstances have helped vindicate or endorse zero-ten? Absolutely.
“I’m more comfortable with it today than I was 18 months ago because of circumstances which were outside of most people’s reasonable prophecy.”
Doh
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Steven John – so if you opposed zero-10 what did you believe should be in its place as doing nothing was not an option. Did you believe that we should have introduced a tax of 10-20% on non-resident companies which would have closed down large parts of the industry or did you have a sensible alternative solution?
Dave Jones – great posts, are you the only deputy willing to stand up and fight for the Island or are there others – they all seem mighty quiet at the moment.
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I feel so many people that follow Richard Murphy and his left wing Guardian views do not realise that Guernsey relies on being more professional and adhering to the most stringent rules and regulations on finance in the World.
If the Islands did not have the finance industry thousands of people would have to leave Guernsey to survive.
Most people seem to understand this situation Murphy and his misled supporters would perhaps be more at home with the high tax areas like Germany, France etc where they could support Governments that tax people to the hilt .
Make no mistake Lindsay Jenkins is quite right and all the people that support Murphy should realise he is no friend of the Channel Islands and many times he has stated he would not mind all the Banks leaving which would mean serious job losses in every walk of life.
Many times the people of Guernsey, Jersey, and the Isle of Man have been told everything in the garden is rosy but in reality the OECD and Europe have never been satisfied and previous Dependency Governments have failed to be absolutely honest.
Guernsey’s best chance ever is with Lyndon Trott and Charles Parkinson they are the strongest team ever in this fight for survival and are head and shoulders over the people representing Jersey and the Isle of Man we need Churchill’s not Chamberlain’s at this time
In the letters column of the JEP the following comments were made by a lady. “In an interview with Sunday Business nine years ago (22 November 1998), Senator Walker made some very strong remarks, or at least he was quoted as having made them.
At the time we were delighted to read them and thought: thank heavens that someone is standing up for our Islands.
The gist of that 1998 article ran as follows.
Dawn Primarolo, MP, had been appointed to look after the EU Code of Conduct. She was going to help persuade us to change our tax system. But Jersey, Guernsey and the Isle of Man said that Britain had no constitutional say in their domestic affairs.
Also, they were not members of the EU and fiercely opposed any threat to their tax status.
Senator Walker, then president of the Finance and Economics Commit-tee, hinted that if Britain tried to interfere with our right to set our own tax he would consider declaring independence.
Senator Walker went on to say: ‘The insular authorities would in no way accept the imposition of a new tax regime.’
He continued: ‘So what is the UK government going to do – send in the gunboats?’
We haven’t seen any gunboats, but we have seen a massive U-turn in political terms. We have now implemented new taxes because of the EU and pressure from HM Government.
Paul Le Claire from Jersey called for Independence which fell on deaf ears after hearing from Christopher Booker the threats that faced the Island, which Senator Walker refuted then in turn it prompted Christopher Booker to write “the Islands have many Chamberlain’s but no Churchill’s. Even with this capitulation not once have any of the Islands asked for massive compensation from the EU for their economies to be under threat and at worst ruined”
The only good thing I can say about Murphy is he is consistent he and his mate Christensen have never made any secret that they want to see the downfall of the Channel Islands. As finance is the only business to keep the economy afloat they are relishing the thought of the doomsday scenario.
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I share Stephen John’s optimism.
A zero tax rate is fundamentally unsustainable, with the exception of some organisations on the fringe of the business world.
We did not consider zero-10 because some island in the Caribbean was offering a zero rate, it was in retaliation to the Isle of Man’s hostile zero rate, calculated to cripple the Channel Islands and the Isle of Man was only able to go down that road because of the huge subsidy it gets from the UK.
It was all a house of cards, and looks like coming to an end. Good riddance. Let’s look forward to a saner future.
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well said Stephen. I agree entirely.
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However, I am concerned that panic is the apt description for the current political process.
Would it not help if we knew what the situation was before we start devising a solution?
Take the reported items at the head of these comments:
QUOTE “THE chief ministers of Guernsey and Jersey held crucial talks with UK officials in London yesterday after the European Union effectively pulled the plug on zero-10.
Some member states do not believe substantial changes introduced in Guernsey and Jersey to the islands’ tax structures are in the spirit of the EU code of conduct designed to eliminate harmful tax practices.” ENDQUOTE
The second paragraph mentions the “belief” of “some member states”.
How many states? Which states? Is the belief well-founded?
The first paragraph seems to extrapolate the belief of some member states into the EU pulling the plug.
I hope I am not nit-picking. It does seem to me that we need some more detailed and researched account before we can assess the situation.
A worrying question is – have our States members access to better information?
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I hate to admit it but when Murphy was hired by the States of Jersey he did say at the time 0-10 was not in the spirit of the code and unlikely to succeed.
Many times Politicians claimed they had been given the OK but it would seem that many times he did warn the Islands that Europe would not agree it please refer below.. Jersey will fail the EU Code of Conduct
Terry Le Sueur, finance minister of Jersey wrote to all members of the States of Jersey yesterday telling them why he thought Jersey will be EU Code of Conduct compliant when the Isle of Man was not. His letter reached me this morning and is available here. It’s worth a read to make sense of the argument that follows.
I’m afraid I think Senator Le Sueur is wrong. To put this in context the Code says this:
To date most objections to the Code have concentrated on Section B and its five clauses as they relate to law and regulation with regard to the payment of tax. What Senator Le Sueur has not noted (and nor has the Isle of Man come to that) is that section A also relates to administrative practices.
What both now propose are rules that say if a company owned by local resident people (but not other companies) does not pay sufficient of its profit to its shareholders in dividends on which they can be taxed then the locally resident shareholders (alone) in that company will be liable to pay tax on a dividend that the company is deemed to have paid to them even though it has not done so. And the tax they will be charged will be based on the profits of that company that would have been taxed if only it had been liable to make a tax payment, even though it is claimed that no such liability exists. Lewis Carroll could be forgiven for such a plot, but this claims to be reality. And the motive is unambiguous. It’s to stop local people having the advantage of the 0% tax rate being offered to non-residents.
Let’s be clear therefore: no one is pretending there is no ring fence in the new rules put forward by the IoM and Jersey. There is. They know there is. That’s what they say they intend. All they are saying is that, to quote Le Sueur “This is [now] a personal tax measure. It is not a company tax measure.” In other words they are seeking to use trickery to get round the requirements of the Code. So much for the claims made by the islands that they comply with the Code and are, to quote Allan Bell “responsible nation[s] hosting quality international businesses”. This is untrue. Their actions are straightforwardly deceitful, and an obvious and intentional abuse of the Code.
But proving deceit is not enough to prove they are not Code compliant. They’re not Code compliant for very logical reasons:
1) A shareholder cannot pay tax on the deemed taxable profits of the company (even though it has none according to law) unless the company first of all prepares a tax computation and secondly supplies it to both the Comptroller of Income Taxes in the jurisdiction (who will otherwise be unaware of the need to demand the tax due on a deemed distribution) and to the taxpayer themselves. This action of requiring a company to prepare this computation which it would not need to do if it did not have local resident members (and Jersey has stated quite categorically that it will not need tax computations if there are no such members) is the creation of a first administrative ring fence. And since the company has to be party to this process, and the process relates solely to its activities and not to those of the shareholder, it is impossible to argue that it does not relate to business taxation.
2) The requirement that the company supply its tax computation to its shareholders, a requirement otherwise unknown throughout the OECD, is a second administrative ring fence.
3) The fact that the liability arises whether or not a dividend has been received must also suggest that the tax measure lacks transparency. After all, the tax payer has a liability over which they have no control or say. What can be less transparent than that?
4) The fact that the company has to prepare a tax computation when it is cl;aimed it has no tax liability has to be a process that by definition lacks transparency. It is so opaque it is surreal.
5) To argue that this is a personal tax charge is so obviously disingenuous that you can imagine that the Code of Conduct Group are not going to look on this matter favourably from the outset. After all, the Code is just that – a guideline for acceptable behaviour. When it is so obvious that Jersey and Isle of Man are seeking to treat it as a rule based exercise it is clear that first of all they do not understand the Code and second they have no intention of complying with it. The Code Group will be pre-disposed to reject their obvious charade as a result.
So I’ve tough news for the Isle of Man and Jersey’s – you’re still building your economic futures on sand, and time is running out for you to find an alternative when none seems available.
So what are you going to do?
Richard Murphy
Director Tax Research LLP
Visit my web log site at: http://www.taxresearch.org.uk/blog/
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Interesting post, Dominic.
Have you omitted links in lines 11 and 14?
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Interestingly, there seems to be a total blackout of news on this subject in Isle of Man media web sites.
Or are they just denying me access?
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Dave Jones – if you knew so much, so early, you will also have known that this pantomime was going to cost us £100 million more than absolutely necessary. If you knew, you would have voted to delay implementation for a year, as Rhoderick (and others) proposed. To have known and done nothing demonstrates what, exactly? Your fiscal brilliance?
What a surprise that the proponents of this embarassing fiasco are all now singing from their communal hymnsheet that they had all this planned from the outset, and that its actually great news. Good. They can give us our £200 million back that they wasted under false pretences.
What is worrying is that this will now be used as an excuse not to make efficiency savings. Everything’s OK – Lyndon and the lads have got away with it. Smile and pretend nothing much has happened.
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David below is only article I could find from the Isle of Man
http://www.iomtoday.co.im/isle-of-man-business/Economist39s-concern-for-Manx-finance.5724205.jp
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If anyone doesnt think we will be forced into the EU think again. Its an empire by the back door and well if you are not with us im afraid you are against us.
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Actually Bob we didn’t have our crystal ball at the time we were just trying to comply with the code, which we did and as I have said elsewhere I was one of several politicians in 3 jurisdictions who must have got it wrong, Luckily the States were not relying on my fiscal brilliance, we had people who knew much more about it than me, people like Charles and Lyndon, our Corporate tax advisers, independent advisors from outside the island and not forgetting of course all the people operating from these finances houses in 3 different jurisdictions. I also don’t think hanging onto our core business was an “embarrassing fiasco” We took the less risky option at the time and that has still proved to be correct because business grew strongly after that decision was taken and we still have a very healthy economy, we were left with a shortfall in our revenue as you would expect when you abolish any tax but we are still in the game which we wouldn’t have been if we had decided to do something completely reckless and become so un competitive that business would relocate somewhere else. You wouldn’t have to worry about 100 million then, because you wouldn’t have had any economy worth worrying about. Incidentally it wasn’t 100 million because we clawed huge amounts back in property taxes on the banks and office buildings of these companies and of course we still had 10% tax on some finance business.
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David Cranch (16th Oct. poses “A worrying question – have our States members access to better information?”
Answer – No. Certainly not ordinary members anyway.
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Dominic, well found!
It’s so old it must have been ignored by the Isle of Man’s censoring software.
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I hate to bring this to the attention that Murphy wrote the following which includes a letter to all States Members in Jersey around October 2007 which proves he was right and maybe worse we have all been misled. All every body wants is the truth.
I do think Lyndon and Charles have more credibility than their counterparts
Jersey running scared that it might not be EU Tax Code compliant
I’m grateful to friends in Jersey for sending me a letter sent to all members of the States of Jersey on Monday by Terry Le Sueur, Jersey’s finance minister.
Terry’s been reading my blog. And in particular the one about the Isle of Man failing to secure EU approval for its tax regime.
He says:
He’s right on 1 and 2. But then Jersey paid me to tell them that. So it’s unsurprising.
But point 3 is fascinating. Le Sueur (to use the formality he accords to me) has often claimed that Jersey’s new tax system is fully EU compliant. He and Senator Walker have said so repeatedly in public. And now he has admitted in writing that this is not true. All that has happened is that informal discussions have taken place with UK officials and they are confident that the proposals are Code compliant.
No doubt those were the same officials who told the Isle of Man the same thing.
And he should, I am afraid, place little faith in the UK opinion on this matter. Dawn Primarolo was well known in the EC to be the sole person on the Code Group, that has to actually approve these laws, who believed you could be Code compliant by pretending to shift you’re ring fences into the personal taxation domain. And she’s gone.
So I’m afraid to say you’re wrong Terry. I think you know it.
And as for from my comments adding nothing new they do the exact opposite. First they confirm that I’m a sound judge on these issues. Second they added a new criteria for review of legislation not known about at the time I was working in Jersey. That’s very new.
And while I’m making correction, I am not denigrating the Island – whether it be Jersey or the Isle of Man. I care about both. I’m denigrating those, such as Le Sueur who have sold them out to those in the financial services industry who wish to use them to undermine the world’s tax systems and the whole system of democracy that is dependent upon a government’s ability to collect the tax due to it. That’s quite different. And much more personal.
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Dave Jones. Are you completely off your head? What planet are you on???? For starters Charles Parkinson, who had a great record in local industry and actually knows something about finance, was opposed to 0-10. Secondly, I have not met one single MD who believed that businesses would have “upped and left” had we not introduced 0-10. Perhaps a few more companies incorporated here, but hardly brought a wave of revenue to the island. Dave – have you any idea of how much it costs to run a company from Guernsey? Certainly not much in property taxes when 200+ companies share a registered office!
You really need to leave this discussion, don’t you
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Mr Jones,
I don’t vote in my political representative to help run my Island from a crystal ball they may have kicking around there lounge, I vote for for them because I expect them to make informed decisions on the best ways to run the Island for the good of the majority of the people who live on this island.
0.Ten was voted in a year too early, that is a fact. It has squandered millions in precious revenue and in my opinion those members of the states who voted it in against Roderic Mathews amendment should resign as should our C.M. If this had happened in the UK heads would be rolling in Westminster now. They get upset over a few thousand squandered in expenses.
I also hear some politicians and financial commentators saying 0.Ten was right at the time. It was never Right. It may have been right from where politicians viewed it, as a way of protecting prosperity for the future and I fully understand that it would have been a brave man to have voted against 0.Ten but it was never right. It was never right from a moral point of view. It was never right for any politician no matter where they came from, Isle of Man, Jersey or Guernsey, to vote in a system where ordinary people, some of whom already live from hand to mouth, help pay for an industry that has so much money it can pay out millions of pounds in bonuses. An industry that helps wealthy people evade tax in countries where more ordinary people have to to pay more tax so that their politicians, who take their moral obligation more seriously than ours, can meet their fiscal obligations.
Its no wander the EU are on our case.
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…… ‘if we always do what we’ve always done, we’ll always get what we always got’ seems to be our Government’s mantra – ie, maintain the finance industry, and it will maintain us’.
That is a true. It’s an accurate statement, right up to the point where maybe, just maybe (as there are no certainties in life, or to paraphrase Mr Jones, no ‘crystal balls’) we CAN’T maintain the finance industry in the cushy manner to which it is well used to and demands.
So. What then? What IF finance don’t like the alternative offering, despite best effort on our Government’s part to continue catering to their many needs and wants, what IF the EU or other super powers outside our island inflict their will on us and make the CI’s less attractive to the Banks, and a large majority of them decide to relocate somewhere else..?
My question is a simple one, and it is one I’ve asking for some time – what IS plan B ?
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Look, we are damned if we do and damned if we don’t. Comply with the UK/EU bully boys or stand up to them. It didn’t do Chamberlain any good in 1939. One can say appeasement of Hitler bought the UK time however appeasement does NOT WORK in the long term.
I am a senior figure in finance and I now believe there is now nothing to be lost by taking the nuclear option, go independant.
When is the Roger Perrot meeting??
Chris
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Belinda
Charles was not opposed to the zero part of the product; he wanted ZERO 20 that was his stance, so it is you I would suggest who need to leave this discussion until you speak to Charles himself.
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Belinda,
Although I was not a supporter of the Policy Council’s proposals in 2006, it would be slightly misleading to claim that the alternative Parkinson Amendment foresaw the EU’s response to zero/10: it, too, contained the offensive zero product.
CM,
I don’t think the Matthews Amendment was quite as black and white as you present it.
Yes, it was a dreadful error to introduce zero-10 in 2008. Doing so in 2009, as per Jersey, would have had minimal impact on business and generated several tens of millions more in revenue.
But the error was committed well before the Matthews Amendment, which was proposed just a few weeks before the new regime was about to kick-off. Delaying then might well have given rise to a perception of uncertainty and instability, and may well have harmed the industry as a result.
Quite why the start date of 2008 was not challenged during the zero-10 debate of June 2006 is a mystery. That was the error.
On the question of morals, you are right that zero-10 was always inherently unfair. But you are equally right to say that the States of the time introduced the zero tax product because it helped to sustain the island’s prosperity.
Chris,
The constitutional debate takes place on Thursday evening.
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CM
We made the right decision at the time and I am perfectly happy with the way I voted on the day, The States as a whole did make the decision on sound information and advice and we did as I say together with 3 other jurisdictions end up complying with the Code of Conduct directive. It was the right decision at that critical point and as a result we maintained our core business securing thousands of local jobs in the process. It is not us who have not played the game, it is the EU or at least some of the EU member states who have moved the goal posts and if we want to continue to trade with the EU through their financial markets then we will have to adjust our position again that is the way of things, even then we have no real knowledge of where the next attack will come from or what any future demands may be, if know CD perhaps you can enlighten us.
I also don’t believe we did go too early nor did the majority of the states or indeed the industry itself. Your opinion is that it could never be right and that as they say is a point of view. As for the burden on ordinary people they would be a lot less pleased if they had watched their vital services collapse because we no longer had the income to support them if we had taken the reckless move and did nothing while our finance business fled to other jurisdictions that were prepared to offer zero rates.
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The attacks on Dave Jones are totally unfair he is hard working Deputy that has a vast knowledge on Europe and his comments absolutely spot on when it comes to Europe he is very much in the Churchill camp and not Chamberlain in his defence of Guernsey and he is not an appeaser like many others that have let down these Islands over the years of New Labour.
The 0-10 was never going to be acceptable and as mentioned before Murphy told Jersey and the Isle of Man it would not work and his connections in Europe told him it had not been agreed or accepted in any way.
Make no mistake Murphy has got to be taken seriously as his connections in America and Europe are far more important than the Channel Island connections why is this with all the money at the disposal of the States.
I hate all Murphy stands for and people in his camp should realise he would love to see all the Banks to leave and the Channel Islands become a backwater.
Please make sure the next strategy is acceptable and please take Murphy more seriously as he will trawl over every clause and cry to his left wing friends if he thinks there is a flaw in the plan
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Please do not be selective on what you put on this blog.
The attacks on Dave Jones are totally unfair he is hard working Deputy that has a vast knowledge on Europe and his comments absolutely spot on when it comes to Europe he is very much in the Churchill camp and not Chamberlain in his defence of Guernsey and he is not an appeaser like many others that have let down these Islands over the years of New Labour.
The 0-10 was never going to be acceptable and as mentioned before Murphy told Jersey and the Isle of Man it would not work and his connections in Europe told him it had not been agreed or accepted in any way.
Make no mistake Murphy has got to be taken seriously as his connections in America and Europe are far more important than the Channel Island connections why is this with all the money at the disposal of the States.
I hate all Murphy stands for and people in his camp should realise he would love to see all the Banks to leave and the Channel Islands become a backwater.
Please make sure the next strategy is acceptable and please take Murphy more seriously as he will trawl over every clause and cry to his left wing friends if he thinks there is a flaw in the plan
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We do not need to comply with the letter of these non-applicable “laws”.
We attempted compliance to prevent ourselves becoming unpopular in Europe/ OECD, and to ultimately avoid sanctions of some form. That we complied (according to Dave) with the letter means little or nothing in European circles. They’d rather we were gentlemanly and played in the spirit of their rules. Many of us predicted this reaction. I remain unconvinced (as do others) that we do actually fully comply with the code.
In any event, we (most of us) wanted the benefits of compliance, without the pain. If the boot were on the other foot, Dave would nuke ‘em, just for not being English.
Yes, we moved our goalposts. They seem to be just about to score though, just the same don’t they? Their “laws” will continually evolve, in order to bring about the desired result. We are a flea on the EU dog. We must expect him to scratch.
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Dave, I am not criticising your voting for zero; most of us would have had to have done the same. Eire faced pretty much the same decision years earlier, and opted to abolish their “offshore company” regime. They went for a proper (if low) rate corporation tax, and ignored the other players – IOM, Jersey and Guernsey – while hoovering up EC grants. IOM had VAT to protect them so they could afford the Zero gamble. We all know that. Jersey, sensibly went a year later than us, but with GST in place. This drama will have not cost them anywhere near as much.
But why is it that only our States were gullible enough to be led (rushed, even) into this a full year earlier than necessary, and without much in the way of a proper revenue raising plan? That’s the bit you lot got so wrong. Just hoping some growth would turn up.
How much business has Jersey lost by being the last to zero, if any; and would that business have been worth the extra costs of going earlier? I expect the answers are “very little” and “no”.
Anyone that foresaw the EU not liking our zero tax package should have known that it would need to be changed. Logically, then our contingency reserves should have been kept intact for that eventuality. This likely European reaction was on the horizon, was causing uncertainty and wasn’t conducive to finance sector growth. Thus the shortest possible lifespan of the “zero” was going to be the best option, not the oneupmanship of apparently getting there before Jersey, or the phoney kudos of “compliance” a year earlier than necessary.
Local companies are largely now or likely to be paying in the future the same total amount of tax as they had under twenty percent. That will not change under a ten percent rather than zero rate. So changing to a ten or twelve rate will not suddenly lead to any change in our long term deficit. We may now gain some short term cash, but I expect we’ll waste it. What will change is the reluctance of offshore clients to pay the currently enhanced fees and costs AND a ten/twelve percent rate, which now seems likely. This could lead to a loss of many clients.
We have become a very expensive place to do business. The costs of changing legislation impacts far beyond the states coffers. I dread to think what the accumulated costs of recent (say last five years) legislative changes have been to my clients.
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Matt Fallaize
The 0% is not the problem. It was the mechanism whereby local shareholders of resident companies became the taxable object for corporations.
This is discriminatory. 0% everywhere would have been compliant, but shifting the original discrimination against the corps, it becomes the person.
Whoever ‘asked the question’ of whoever will have deliberately omitted that part. It could never have been compliant as it is now.
So much for Trott’s new States transparency. He knew full well what was happening about this.
He is dangerous to the Guernsey public.
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Richard Murphy
| October 14, 2009 at 4:28 pm
“I advised Jersey that this would happen in 2005 when engaged by a Shadow Scrutiny Committee.”
…
“Now we have been proven right as we knew would be the case”
…
“You were warned”
cool story bro
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Arnald,
Is your 1:09 post based on the assumption that in the long-term it is not possible to defend a distinction between tax on profits paid by companies and tax on distributions from companies paid by shareholders?
If so, I am inclined to disagree, although it may be that some players in the EU would also wish to erase this distinction in due course.
I also do not think it is accurate to claim that the zero product is not a problem. It is quite obviously provocative and cannot be maintained, certainly not in its present form – although it may well be that the objections of some EU member states extend beyond that feature of our company tax regime.
Bob,
I like your fresh perspective on zero-10 – that, knowing its potential to provoke antagonism, policymakers might have been sensible to prepare it for as short a life as possible.
We say that with hindsight, though. Watching from the public gallery in June 2006, I very much got the impression that the States thought it was designing a tax system to last.
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Richard Murphy has made some very good points in summing up what ever made the Islands ever think that 0-10 was acceptable in his blog titled What does Jersey know.
It is paramount that what ever decisions are made that nobody rushes into rash rulings that are vulnerable to attack.
Once an agreement is made we should demand to be left alone for at least ten years as from 1997 we have been under the cosh and the most important thing in banking is stability
It is most disappointing that people like Arnold or whatever his name is seems to relish the downfall of the Islands that pay his wages and give him a good quality of life
http://www.taxresearch.org.uk.blog2009/10/19/what-does-jersey-know/
What does Jersey know?
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No Dominic
I want a government with integrity.
If that means losing people with no integrity then that is the price to pay.
These issues with the finance industry are directly negatively affecting people who have no say, no knowledge and no interest in the machinations we employ. They trust the government. £200M? Come on, what’s to defend? Trott’s gone pulling that face he does when under pressure at some bankers’ knees up and self worship and Guernsey is derided for it’s clumsy ‘competing with public money’ game of dare.
That’s fine with your own company, mate, but not with innocent lives.
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It’s not wanting destruction, Dominic, the opposite. I want a sustainable and just future, with decisions made with integrity, scrutiny and accountability.
I want a government I can trust.
Not ones that use the population of an island as a means of leveraging advantage against other populations, in an industry that has a negative social impact by it’s very nature.
That’s called war.
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Squak! A Tax Attack!
Onwards Brave Trott, Champion Of All His Realm.
Don’t worry folks, if it wasn’t for him we’d all be speaking German by now.
And eating snails.
That insidious culture, worming its way in past Jones Castle and making us all onion wearing zombies. With garlics for eyes.
I tell you what, let’s make it worse by publically insulting them!
Me first
Bunch of bullies.
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We in the Crown Dependencies can speculate ad infinitum about the actors responsible for the change of perspective emanating from Brussels. Their names and motives probably fascinate us but are ultimately of limited relevance.
Similarly, claims of foresight re. the degree to which zero-10 might, or might not, have complied with the EU Code are ultimately fruitless.
Attitudes in European chanceries, and hence in Brussels, have changed in the light of economic circumstances. We must face up to, and deal with, the consequences. Prudence and pragmatism must overrule hollow posturing.
Our current levels of service delivery depend upon a tax-base which is, to a significant degree, furnished by the success of our financial services sector. Unpalatable as it may be, it seems that we must learn the regulatory tune which Brussels is composing and we must draft a set of tax governance laws which enables our financial services sector to win financial prizes for dancing to it more successfully than their counterparts in competitor jurisdictions.
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Sean McManus
I thought that’s why we needed 6 years of consultation for zero ten? Are you saying that secretly it was arranged that this £200M theft from the public purse was only ever going to be a smash and grab?
Unpalatable as it may be, the Deputies were either conned, or malicious, because the warnings were there – the actions of Jersey prove it – and the intent to withold information was critical for it to pass under the radar.
Those in the last assembly are directly responsible for this theft of trust, services and opportunities. Being philosophical about it now, whilst grinning at the audacity of it all is frankly not good enough.
This is a banana dictatorship. Turks & Caicos.
£200M Sean McManus, and rising.
Trott is touting for riskier and riskier business, endangering stability and seeding doubt on our political direction. We are mocked in the nationals, berated in the financials and patronised in the politicals.
Only the bankers are pleased. Are you proud of that achievement?
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Sean McManus says “Similarly, claims of foresight re. the degree to which zero-10 might, or might not, have complied with the EU Code are ultimately fruitless”.
Fruitless? Costly most likely to the tune of well over £200 million.
It really didn’t take much searching and thinking to se that the proposals were “iffy” to say the least.
So, a little credit for those of us who had done our homework.
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Sean McManus says “Similarly, claims of foresight re. the degree to which zero-10 might, or might not, have complied with the EU Code are ultimately fruitless”.
Fruitless? Costly most likely to the tune of well over £200 million.
It really didn’t take much searching and thinking to see that the proposals were “iffy” to say the least.
So, a little credit for those of us who had done our homework.
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Stephen : yes, credit to all those of you who did the homework.
Arnald : I am unaware of any secret arrangements prior to the introduction of zero-10. My ignorance may be no defence and may well fail to deflect your anger at the cost of what has befallen us butI see little current benefit in blaming my predecessors in the States. Those who write the history of these events can pore over the details but I must turn my attention to what happens next.
If I find a scorpion in my shoe I can speculate at length about how it got there but, more importantly, I can seek to rectify the situation. Key to any progress is our ability to make a more informed decsion this time around. For my part, I will gladly utilise any data furnished by yourself, by Stephen or by any other commentator in order to secure a better information platform ahead of decision time.
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Trouble is, Sean McManus, that no one is going to believe you. The politicians put the scorpion in your shoe. Some of us saw them do it.
Why was a scorpion allowed to be there?
The information was available at the time. Polite warnings and offers of assistance were forthcoming.
Richard Murphy has been personally abused by politicians and businessmen on this, and other, fora. Always saying the same thing “you want us all dead and poor”.
How does this equate with highlighting an operational cckup, leading to possible embargoes and ostracisation from the community?
To say the risks weren’t there, obvious, stark and looming and that you’ll listen to advice now, after £200M – with some glib platitudes on the inefficiencies of investigation – just says to me you’ll (as generic policy decider, not individual) vote for whatever those bankers say again.
Do you not understand the concept of using tax, a public tool for development, as a competition tool can only end in disaster. We’ve probably been saved, mid term, from far worse distortions and what do we get all over the media?
That we’ve been bullied by unelected bureaucrats and they are like a fascist regime ready to take our culture etc etc
Come on. It’ll just happen again. If you don’t feel you well enough informed last time, what will make a difference this time?
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Arnald, Richard Murphy is disliked (although I’d question whether he’s abused) because he hates the idea of tax avoidance (as you do). He can’t face the fact that tax avoidance is legal. You can argue until you are blue in the face about the multi zillions you claim are owed to the UK etc, but it doesn’t change the fact that tax avoidance is legal and legitimate.
His ideas are also very left-wing, which also finds little favour on this forum.
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[Matt Fallaize: We say that with hindsight, though. Watching from the public gallery in June 2006, I very much got the impression that the States thought it was designing a tax system to last.]
Matt,
I disagree completely! It was well known during the debate in 2006 that the zero-ten proposals were very likely to be rejected by the EU at some point. Charles Parkinson said as much in his opening remarks, which are archived at the BBC:
http://www.bbc.co.uk/guernsey/content/articles/2006/06/28/tax_debate_2806_feature.shtml
The relevant line is at 7:23, this is a direct quote: “Nevertheless, I believe a flat 10% is what we might end up with, when the EU comes back and says a zero rate was not exactly what they had in mind”
CP was not alone in thinking this, it was blindingly obvious that the approach of switching from corporation tax to personal taxation (but for local residents only so as to move it out of scope of the EU Code of Conduct) would be seen by the EU and OECD as a continuation of the same harmful tax practice in all but name.
It was only ever a question of how long we had before that happened, the global financial crisis may have caused a speeding up of the process but the eventual outcome was always inevitable.
The zero-ten debate as such was really about what to do in the interval before that happened. The outcome, largely at the behest of the Chamber of Commerce and GIBA, was to reject options chargable to companies such as a payroll tax, and instead deplete the reserves in the short term and aim for tax rises and spending cuts in the future.
Curiously, the later attempt to defer the start date by one year was also rejected, on the basis that changing the tax strategy at such short notice would damage Guernsey’s reputation and leave the States open to ridicule internationally. Given the recent news, that particular justification does seem just a little bit ironic.
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Greg
He’s disliked because he asks questions that are very close to home, and advertises his knowledge. He runs a successful operation attracting important clients.
It’s only a certain, tiny and over indulged group of a niche industry that find the idea of fairness a target for personal vitriol.
The more his investigations prove valid, the more all those years of mockery will look like deliberate misinformation to cover up the realities.
Do you just forget about the constant scandals and failures of regulations?
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Aidan Matthews
An informed assessment. So why did Trott and Guernsey Finance use “fully EU compliant” as marketing material?
If we were attracting no EU investors to have a foot in the EU markets, or somesuch, is it not tantamount to mis-selling?
Selling a ringer?
The whole thing is highly suspect.
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Many people a few years ago all agreed the best way to go was Guernsey and Jersey companies adopted a rate of between 10-20% and then all the trust companies or company formations could offer to their clients companies outside the Islands with zero rated tax the administration could still be administered in the Islands but legitimately would not be responsible for the company’s tax in other areas that have zero tax .This was not acceptable because they did not like to lose the yearly fees on Jersey and Guernsey companies.
Many people were mystified taking a route which disrupted the economies of the Islands and hit hard on the man in the street.
To Murphy and the likes of Arnald solution will not be acceptable unless they see the Banks move out and Guernsey is bust .Make no mistake we hear these weasel words about concern for the poorer people in society but how on earth does he think they will survive without our main activity. Murphy, Christensen and their ilk and especially Christensen have harboured grudges for many years against the Channel Islands and the Politicians going back many years have fueled the situation by not being frank with the electorate and ridiculing their knowledge and always were in denial what the real standing of each new threat to the Islands was. Both Murphy and Christensen are very switched on and have seen right through the nonsense spoon fed to the public since 1997.
The attacks on the Islands which started in 1997 were highlighted by many individuals in Guernsey and Jersey and every time the senior Politicians said people like David Baxter, Roger Perret,Paul Le Claire, Christopher Booker, Karen Stevens, Lindsay Jenkins, Graham Mather were scaremongering all of these people and many others have all been vindicated and serves a good lesson to the current Politicians is do not take people that are very well informed as mugs and remember all these people were defenders and supporters
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[Arnald: So why did Trott and Guernsey Finance use “fully EU compliant” as marketing material?]
That was controversial at the time, there were complaints that the marketing had been overly political.
There was even a bizarre incident where Laurie Morgan emailed a letter to various States members describing the advice given regarding the potential for the zero-ten policy to be recommended as compliant. On closer inspection (clicking “Show Changes in Microsoft Word) it was revealed that the commentary had been exaggerated to make it seem like a stronger recommendation.
Of course they obviously didn’t want to publicly declare, in any official capacity, that they had doubts because that could be detrimental to the policy passing any approval process.
Having said that, it was counterproductive to attack alternatives as being potentially non-compliant, particularly on spurious grounds such as that elective taxes might be judged non-complaint in the future. The OECD report did not mention elective taxes (it does talk about “negotiable” taxes, which are different) and countries such as the US have “check the box” tax regulations where companies can elect to be taxed under different schedules depending on their preference. These are not normally considered harmful in their own right as their main real effect is to save the cosec and admin work around winding up / formation of new entities.
The best that could be said is that the compliance of zero-ten was well known to be a grey area, and that without the support and backing from the UK, would be likely seen as technically non-compliant by the EU.
Now that the UK has withdrawn its support, the advice from the various business lobby groups to go ahead early, and make deeper cuts than needed, looks short sighted.
That’s all in the past now, but for the present it’s worth noting that the business lobby advice does tend to focus on the short term gains, and not so much on the long term interests of the island.
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