The stirrings of a fresh breeze of information is finally starting to dissipate the edges of the sto...
The stirrings of a fresh breeze of information is finally starting to dissipate the edges of the storm clouds of doubt that have been hanging over the heads of the UK-based offshore advisory industry. After seven months of waiting, Chancellor Gordon Brown"s ominous-seeming tax-collecting tax force is to reveal some of its secrets at a Jersey Taxation Society conference.
The extent to which the "Financial Institutions Task Force" clarifies the methods it will use to reclaim the estimated $2bn of unpaid tax, it is a welcome development.
However, there are serious issues of privacy at stake here. It is the responsibility of the financial institutions and trade bodies to make sure that in its enthusiasm for tax collection, the Inland Revenue does not overstep the mark and force banks into the dubious area of releasing information about the international accounts of their clients.
The offshore world held its breath after the Bank of Ireland succumbed to pressure and gave information to the Inland Revenue last year and there was concern that this could open the floodgates to banks everywhere following suit. Happily, this has not occurred, but it is on the back of this success that this task force has been created and so the troubles are looking set to continue.
To some extent, an opening of the books would be something of a PR victory for the offshore banks, who could not then be accused of protecting their clients from paying their rightful dues.
However, what Tony Dickinson, who is heading up the task force, must realise is that it is not as simple as catching tax avoiders. Low tax jurisdictions, especially those that have chosen to pursue the high quality international financial centre model, should not be seen as a threat to onshore government revenue streams, but instead as a valuable part of a thriving, competitive, global financial services industry.
It would be hypocrisy to support the continual battle the EU is fighting to tear down the walls of protectionism built up by many European countries on the grounds that open competition is bad for the investor and the consumer; and at the same time to try to prevent the personal and corporate taxation systems of governments competing toe to toe on the same grounds.
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