Promised zero-10 reform ‘unity’ has yet to emerge
Thursday 31st December 2009, 2:29PM GMT.
MORE cracks have emerged over the Crown Dependencies’ ‘united’ moves to replace zero-10.
Following pressure from Europe, the States voted in October to press ahead on a presumption of introducing a general corporate tax rate of 10%. Members overwhelmingly supported a Policy Council report that said the island would work closely with Jersey and the Isle of Man on the issue.
But since then neither Jersey nor the Isle of Man have fully committed publicly to change, instead making statements which some believe are aimed at gaining a competitive advantage.
The latest of these was from Isle of Man Treasury minister Allan Bell (pictured) and reported in the International Adviser, a monthly news magazine aimed at the finance industry that also publishes online.
He stressed that the Isle of Man zero-10 regime was deemed to be code compliant by the European Union in 2003 and he gave no sign the island was actively pursuing replacing the regime.
‘Obviously we recognise that times have changed and we will be following the current debate in Europe with some interest – and if there is a need to review the situation at any time, then clearly the Isle of Man will,’ he said.
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This is odd to say the least. The Isle of Man believes that zero-10 is compliant and appears to be sticking with it. While the Channel Islands’ governments believe their versions of zero-10 are not compliant.
The Isle of Man could probably hardly believe their luck when our Chief Minister persuaded the States to nominate an approximate company tax rate of 10%. The Isle of Man’s strategy has been for 7 years or so to have the Channel Islands taxing their finance industry while the IoM has zero-10 to lure companies to their shores.
We will have a clearer idea when the IoM budget is presented in February.
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It seemed to me at the time that the States jumped in far too fast without actually having all the facts at their fingertips. The messages coming out of Europe that we were now non compliant, appeared wooley at least. No one seemed to be able to tell the States exactly where this was coming from and i was surprised that the debate actually broadcast our propable intentions of raising Corporation to 10% on so little concrete information.
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Since when was ‘presumption’ and ‘assumption’ intelligent tactics?
Our leaders have jumped in, without having all the facts to hand (or even being sure that they have to change anything) and told the world (and our competitors, namely the IOM and Jersey, who have no reason to show any allegiance to us) what they think our new ‘strategy’ is going to be, thus potentially giving them the opportunity to gain advantage over us.
The level of ignorance here is astonishing, even by our local Government’s standards.
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I guess too many deputies wanted to appear to be making a decision. But when you are about to make the wrong decision, dithering is quite a rational strategy.
Gary is right – this was, and is, a time for taking soundings, in this instance talking to EU mandarins, and those countries alleging our zero-10 is non-compliant.
No good talking to the UK, even if they got it right it would be second hand. I suspect on this kind of issue you need to listen carefully to, and even watch the body language of, those who know something
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There was the suggestion that Zero 10 was compliant so far as the letter of the law was concerned but not compliant in spirit.
This seems seems strange to say the least and if policy is being determined on this basis then we are in for a rough ride.
Bit like being in the home for the terminally confused.
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The Chief Ministers of Jersey and the Isle of Man gave precisely the same assurances and commitment about getting rid of zero-10 to Stephen Timns, UK Treasury Secretary, as we did. The sole difference was that their systems of executive government enabled them to do so verbally, whereas our machinery of government obliged Deputy Trott to call an emergency States Meeting.
If anybody things that we will get anywhere at all, whether in the long run or the short term, by sticking two fingers up to the EU then they are deluded. However, there is likely to be a UK General Election in March (and there must be one by May) and so there is nothing to be gained by committing to anything when there is a very good chance that the more sympathetic Tories will be back in power in just over 2 months time.
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Happy New Year to all posters on this forum.
I should like to correct the misleading information contained in David’s post submitted at 5.45am on January 4th.
Contrary to David’s post, the differences in the three islands’ systems of government is an irrelevance in their handling of the reform of zero-10.
In all three jurisdictions, the authority to determine tax rates and fiscal policy rests with their respective parliaments. The Chief Minister of Guernsey does not have the authority personally to commit this island to changes in its company tax regime; but nor does the Chief Minister of Jersey.
Guernsey has pursued a more public route to company tax reform than Jersey and the Isle of Man, but the existence of cabinet or committee government has nothing to do with it.
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Matt
Is there any real difference between you and David Cranch?
David states that the States and not the CM make decisions.
I took his comment that executive government allowed the CM’s of Jersey and IOM to make a verbal commitment, subject to approval of the respective parliament.
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Stephen John
You are correct and I’m afraid Matt is wrong.
I am very reliably informed that Chief Minister Le Sueur in Jersey and his counterpart in the Isle of Man have the necessary authority to give the undertakings to the UK Treasury Secretary which Chief Minister Trott did not have. That is precisely why we had no option but to convene an emergency States Meeting to enable the undertaking to be given when when the assemblies in Jersey and the Isle of Man had no need to do so.
Whether or not our Treasury Minister said any more than was strictly necessary is a moot point, but was possibly unavoidable in the circumstances.
But it surely isn’t the case that Jersey and the Isle of Man have any intention to stick two fingers up to the UK or the EU. Tempting though that may well be, it isn’t a path which we or they should be contemplating. Far better to bide our time and hope that the Tories avoid a hung parliament.
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Stephen,
Sorry, but I do not understand your question about David Cranch and I? I was referring to the poster calling himself “David”, not “David Cranch”.
Our Chief Minister does not make policy decisions. The Policy Council can and does, where its mandate permits. More material matters are referred to the States of Deliberation. The extent of delegated authority could be adjusted at any time, but the principle remains the same: in the Assembly and at committee level, the States ensures that there is not too much authority vested in the hands of any one person.
The final paragraph of your 4.19 post does not make sense, in my view. How can one ‘commit’ to anything if it must still be referred to a higher authority for approval?
In respect of this matter, it seems to me that all Chief Ministers are broadly in the same position – they cannot commit their islands to specific tax reforms without the approval of their parliaments.
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Stephen,
I may be a David, but I am not David. !
Happy New year to you and all.
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David,
Sorry, but your informant is anything but reliable. What he/she appears to have told you contradicts the constitution and operation of the States of Guernsey and the States of Jersey.
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Perhaps David gets his information from our much loved and esteemed leader.
Who in their right mind would want to give him more power and authority.
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Matt
What you say about our Policy Council is quite correct. But I think you will find that Chief Minister Le Sueur and his Isle of Man counterpart have the actual or implied authority to give the level of verbal undertaking to HM Treasury that our Chief Minister Trott knew that he could not give on Guernsey’s behalf. And it wasn’t a verbal commitment to introduce a specific tax strategy, which of course would require full debate in each Crown Dependency. I understand that it was a verbal commitment to scrap zero-10, with no timeframes given. That’s what Jersey and the Isle of Man are rightly exploiting, and where we appear to have been making unnecessarily-premature public statements which have resulted in the lack of unity between the three islands.
Perhaps you can inform us as to why the States of Jersey have not deemed it necessary to meet to discuss the subject ? Is it that they have dealt with it at Council of Ministers level without it needing to be debated by the States of Deliberation, and thus not publicly reported ?
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No, I’m David!
And zero ten worked!
The only logical conclusion to this meandering exchange is for Mr Trott to tell Mr Timms in his best loud voice that Guernsey will levy a -10 zero tax, and then tell the Guernsey people that we will have growth forecasts of 2 billion percent within three months. And free beer.
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David,
I am gratified that you feel able to confirm that my understanding of the mandate of the Policy Council is correct.
The remainder of your post highlights one of the problems with ‘ministerial’ government without political parties.
Where there are parties – in the UK, for example – the PM can give commitments on behalf of the cabinet in the knowledge that the loyalty of his party’s MPs will almost always prevent parliament challenging the authority of the cabinet.
Where there are no parties – here and in Jersey, for example – any commitments given on behalf of the Policy Council or Council of Ministers which extend beyond the limited authority delegated to those bodies is vacuous and risks becoming illegitimate because they are effectively acting as minority governments with a good chance of being defeated in their respective parliaments.
You are trying to draw distinctions where none exist. In Guernsey and Jersey, fiscal policies are determined by the States, not a small group of ministers acting as a minority government.
Both CMs – Deputy Trott and Senator Le Sueur – know full well that any undertaking, verbal or otherwise, made without the consent of their respective parliaments runs the considerable risk of being overturned.
In Jersey, as in Guernsey, zero-10 is established in legislation. Are you suggesting that Senator Le Sueur has committed Jersey to tearing up such legislation without obtaining the consent of that island’s legislature?
Last month, Senator Ozouf, Jersey’s Treasury Minister, said: “We have not agreed to move to a flat corporate tax rate of 10%.” Presumably, the “we” meant neither Jersey’s Assembly nor their Council of Ministers.
Whereas, in October, our States resolved: “That the current, planned review of taxation shall proceed on the presumption of a 10% general rate of corporate tax.”
Deputy Maindonald moved an amendment which proposed an alternative form of words along the lines of the review proceeding “…on the presumption of a general rate of corporate tax exceeding 0%…” I voted for the amendment, but very few others did.
These – the policy differences between the islands – are worth consideration. The different systems of government are a diversion; a total irrelevance to this debate.
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Matt
Did I really have to spell out David Cranch again for you to understand my second paragraph was in relation to David Cranch’s comment. surely the context was clear.
You then say that my comment “I took his comment that executive government allowed the CM’s of Jersey and IOM to make a verbal commitment, subject to approval of the respective parliament” doesn’t make sense to you.
It was a speculative comment. Would personal agreement / acceptance, subject to approval of the States be more pleasing to you?
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Matt
In a nutshell – Chief Minister Le Sueur felt able to give a verbal undertaking to get rid of zero-10 while Chief Minister Trott knew that he could not do so. You seem to be suggesting that either (a) Le Sueur was acting ultra vires without realing it, or (b) knew that he was acting ultra vires and simply didn’t care.
Your comment re Deputy Ozouf is a red herring. He was refusing to commit to a minimum rate of 10%, which is very clearly not the same thing as committing to give up a zero-10 ringfencing system.
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Matt Fallaize
I’m surprised you even got that from David. Normally he tells people, that know what they’re talking about, are living in ‘a fantasy land’.
It’s like they own the place.
Doh!
Next he’ll be saying that no-one doing business in Guernsey is dodging taxes!
We’ll soon find out…
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Stephen,
Sorry, I still don’t understand the context re the comments of David Cranch and I. Wires crossed; probably my fault. Please accept my apologies.
The part of your post that made no sense to me was the implication that CMs elsewhere came with more authority to make personal commitments on tax rates because of the existence of ministerial government.
Of course, Senator Le Sueur could tell the UK Treasury that personally he agreed with fiscal policy X, and that Jersey would do Y, subject to the approval of their States. The point is that Deputy Trott could have done exactly the same.
The Council of Ministers in Jersey and the Policy Council in Guernsey represent less than one-quarter of the total number of their respective parliaments. And without party whips to control the votes of the other three-quarters, in respect of major items of policy neither CM can give cast-iron assurances without the consent of the States.
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David,
Sorry, but you are putting words in my mouth.
With the greatest respect, what I am actually suggesting is that you are making assumptions that far exceed your understanding of the similarities and differences between the Crown Dependencies’ systems of government.
How do you know that Le Sueur gave a verbal undertaking? How do you know that Trott didn’t? How do you know to what extent company tax reform has been discussed within Jersey’s Council of Ministers? And where on earth have you obtained your (mis) information about the level of authority delegated to Jersey’s Council of Ministers and our Policy Council?
I’m afraid that your musings on the islands’ systems of government are laced with inaccuracy and misinformation.
Ironically, on the question of whether Guernsey was too quick to make public presumptions about company tax reform, I think you and I broadly agree. As I say, I voted for the Maindonald amendment; but from memory I think only about a dozen others did.
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Zero 10 and what it sought to do has always been mostly china to a blood orange. Now that we have been thrown into disarray do we really see or anticipate a flow of business from one centre to another whatever we do or propose to do? Rather like competition in the retail business where popularity ebbs and flows from one to another. There are far greater issues that will affect our always tenuous business on which our economy relies so heavily. No matter how much we feel otherwise, we cannot ignore what might well emerge from the new Brussels that will make all our plans as though forged in jelly moulds. The permanent positions of the Presidentia of the European Council came into being on 1st December and thereafter. Britain took foreign affairs but missed out on the all important fiscal leadership that boasts a passionate Frenchman who dreams tax where we might dream of Katherine Jenkins. The City of London now runs the risk of losing its key position not only in Europe but the world. Of this alone we should be seriously circumspect. Along with all that goes his long held, equally passionate, detestation of offshore centres and I have no doubt that there is much paper piling up on the subject in those newly painted halls ready to put in train all sorts of measures that might affect us and over which we can do very little. We must not underestimate their powers.
So while we juggle with inconsequentialities will someone dare tell me I am wrong!
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Matt
I’m not trying to put words into your mouth at all. I’m simply stating that Le Seuer and his Manx counterpart felt able to give an undertaking on the spot to HM Treasury which our own CM wasn’t able to give until after convening a States Meeting. Neither Jersey nor the Isle of Man had to call an assembly meeting before giving that undertaking. Fact.
Not “misinformation” at all. But I’m not revealing my source.
Arnald
Strangely enough, I reserve that treatment for people who actually don’t know what they are talking about, who recklessly shoot from the hip with mindless ramblings with the intention of destroying Guernsey’s finance industry, and whose ramblings are driven by so many chips on both shoulders that they can’t see where they are going. I can’t see any way that Matt fits that description at all, but you might recognise it.
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Arnald
I for one won’t shed any tears if there are any remaining imbeciles who have not been taking heed of the multiple warnings about undeclared offshore bank accounts over the years. They can’t say that they haven’t been warned, but like car drivers who repeatedly ignore speed traps and reports of prosecutions yet carry on speeding nevertheless, there are inevitably going to be some who have considered themselves beyond the tax laws. However they will have been suffering the retention tax on their interest and it is hoped that their banks here have duly carried out their obligation to consider whether such customers have a valid reason for opting to suffer the withholding tax instead of having their interest information exchanged.
Its not a sector from which Guernsey gains any significant benefit, at least relative to the economic and reputational risk exposure (ie Landsbanki) and the days are surely long gone where Guernsey has wanted to be seen to be competing for offshore undeclared savings. Why fly directly in the face of the EU Savings Tax Directive, the objectives of which are crystal clear ?
The bottom line is that Guernsey does not seek to attract undeclared offshore savings and the sooner that it it is completely eradicated from our shores, the better. There is more than enough decent, fully legitimate business around for us all to focus on. The efforts of HMRC over the past few years to attack undeclared offshore savings should be applauded and the last few remaining dregs of that sector should hopefully now be gone or just about gone. Good riddance to it as its nothing less than unacceptable tax evasion which has no place here.
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Tom
I don’t think you are wrong at all. And there are still people who don’t think we can justify representation in Brussels ? Hopefully the Tories will make an attempt to wrestle back the City of London from Brussels’ control before its too late. Meanwhile, New York, Shanghai, Singapore and Hong Kong rub their hands with glee. Incredible.
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David
From the hip, maybe, but never blindly. That’s your problem, blinkers. Just because I’m not facing you doesn’t mean that my argument is incorrect. You support the deterioration of society through wealth management that deprives other jurisdictions of tax receipts. It is your meaning in life.
Where is the promised land of efficient capital usage? What have been the global trends of the last sixty years, the last thirty years or the last the last decade?
Zero ten was a perfect example of this ignorant arrogance you exude with every post. You really think you are superior. I could argue you under the table face to face, and face your pomposity with grace.
You really have no idea about the real world and it is pitiable that you are an epitomy of Guernsey’s outlook.
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Whilst it is commendable (if a bit risky) that our elected representatives are happy to spare the time to give and clarify their views on subjects in these pages, is there anyone else out there concerned that we have these arguments played out between publicly known deputies ( Fallaize, Jones etc) and anonymous contributors (Arnald, David etc)
Or maybe you all know each other ??
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Arnald
I’m not remotely interested in wasting time engaging with you in arguing the morals of offshore finance. You have your views and I have mine and we will agree to disagree. I’m interested in the facts of what actually exists rather than in your views of what you think should exist. You seem to suffer from the exact opposite of wilful blindness. You always appear able to see what isn’t actually there, convincing yourself that there’s no evidence that you are wrong so you must be right. Well that’s fine, you carry on if you like.
Now, I’ve already wasted far more time responding to you in 2010 than I had resolved to, so my further comments to you will be greatly reduced. Time is too valuable (capitalist objectives to pursue, in fact) to be wasting any more time on futile arguments with somebody who seems to have unlimited time to argue for the sake of it and to lecture me on things that I have no interest in being lectured about. Even the Jehovah’s Witnesses who knock on my door seem to understand that message.
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Bob, From this goldfish bowl looking out we can easily be deluded into thinking that we are much much bigger than we are. We are big only because we hold assets in some form or other for entities beyond our shores and that I fear is also our weakness. I do think we are dreaming to think that anyone of clout in Brussels or anywhere else will give one tiny ear to our pleas
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No, David, not capitalism. Your business mocks the very concept of capitalism. It reduces efficient distribution of capital, it concentrates risk for the public and it piles rewards on those least worthy.
Try again.
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Arnald
Whatever, yawn yawn…not interested in being preached at today any more than I was yesterday. Try wasting your taxpayer-funded time on somebody else.
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Arnald
Nice to see that you’re as full of it this year as you were last, and still on your mission to discredit our reputable industry that finances the island.
I wish David luck with his resolution, you’re really not worth bothering with, it’s impossible to have a discussion with somebody so obviously bitter and deluded.
Happy New Year, let’s hope it’s a profitable one for the likes of me and David, and we can continue to pay your salary.
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Phil
You’re a veritable hero!
Completely unsung!
Your crass vulgarity is why we’re in this financial mess in the first place. Until you start to know what you are talking about, it will always be impossible to have a proper conversation with any of you. It’s a shocking state of affairs when the poor level of education within the finance industry has so much control over the lives of the public.
So I am to be insulted for staying at home, unpaid, to look after my children?
Now when you’re done with the self-important back slapping get back to your self-important life and look ever inwards, marvelling at your self-importance.
Someone will clean up after you, don’t worry.
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Arnald
Can you please point out where I insulted you for “staying at home, unpaid, to look after your children”?
Are you still living in Arnaldland, where “reality” is what you dream it to be?
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Has Arnald been put down ?
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