Britain’s Stance On Tax Havens

CO asked over on the ‘comment moderation is on’ open thread the following:

Any thoughts on Britain’s stance regarding “tax havens”?

“[Gordon] Brown Calls For World Drive Against Tax Havens”

Personally, I find it quite disconcerting that this seems to be the official line particularly when as is pointed out, a number of these jurisdictions are actually British territories… With friends like these…

As this topic is directly related to our social and economic well-being, and with the wealth of expertise that active bloggers and ‘lurkers’ may have in this area, I’ve decided that it desearves being a thread in its own right. That, and I’m swamped with assignments right now and being lazy…;)

Seriously though, whats everyones thoughts on this, and what is the best way for us as a people to handle the situation? Now, there are pros and cons to IB here, but with our limited resources its one of the few industries we can and should do sustainably. What I do not want to see in this thread though is a degeneration into partisanship. While there may be valid arguments about ‘UBP this’ and ‘PLP that’ it would be a much better exercise for us all to fully investigate the pros and cons of IB here, socially and economically, and the threats to IB that Bermuda is facing.

Thoughts?

And thanks to CO for her post.

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24 thoughts on “Britain’s Stance On Tax Havens

  1. jonny –

    Thanks. With the other thread at 300 plus posts, figured that one might get lost in the mix. My initial response is that this all just smacks of all that is wrong with colonialism and makes me question the reason for continuing with the current arrangement other than the benefit of hurricane relief. In the face of an economic storm it appears that Britain is prepared to sell her colonies down the river in the interest of going along with the flow.

    I think IB and Bermuda/Bermudians enjoy a symbiotic relationship although by no means perfect on either front, the reality is that we have entered willingly or unwillingly into a mutual partnership and we do enjoy the benefits that come along… as well as the inconveniences.

    That said, my qualm perhaps is with the manner in which Britian is approaching this and I believe that all of the British territories should be up in arms, or at least demanding further clarification on what this means exactly.

  2. The tax haven regulations look like they’re finally going to hit us this year. It’s a very, very big deal. I’m not sure how we’re going to wriggle out of this, however I have some faith that there are some very clever people trying to come up with plans to do that. But not a lot of faith.

    It would be so bad it’s almost too scary to fathom.

  3. The UK isn’t just going after crown colonies – it’s going after everyone.

    http://www.independent.co.uk/news/uk/politics/brown-leads-global-drive-to-close-down-tax-havens-1625959.html

    http://www.guardian.co.uk/business/2009/feb/19/gordon-brown-tax-avoidance-switzerland

    Among other things, the companies that left Bermuda to move to Switzerland aren’t necessarily better off. It really does depend on the nature of their operations and what they are doing where.

    And never forget that the US just elected a President whose campaign platform included a promise to shut down tax havens. Justified or not, in the eyes of most of the world, Bermuda is a tax haven. 😦

  4. I would like to think it’s posturing, but I doubt it. He’s looking for money, as is the US and to some extent, he’s saying what the bigger boys want to hear.

  5. Do you think that Britain has a duty to protect the interests of her Crown Colonies?>/i>

    Yes. But it’s not as simple as them saying “go after tax havens but leave our Crown Colonies alone”. If the UK and/or the US introdudes any sort of anti-tax haven policy (or simply jumps aboard something introduced by the G20) you can’t expect the policy to apply to only a select group of countries. And given their desperate need for funds I fully expect both countries to spearhead any actions.

  6. Blankman – Agreed that it’s not that simple however to be spearheading the campaign when in fact such a large number of these ‘tax havens’ are colonies/former colonies/jurisdictions/etc seems a) a bit hypocritical and pandering to the masses and b) a bit like a kick in the teeth to those colonies/former colonies/jurisdictions.

    We talk about the benefits of continuing our colonial ties but surely if this matter does not cause us to question them, then what will?

    Why shouldn’t the policies apply to only a select group of countries whose regulatory system encourages an environment of transparency? And furthermore, should the British Government and the dependent territories not be in some sort of consultation as to how our interests can be protected whilst our case as a reputable jurisdiction be put forward?

  7. i believe we would be better off as a full British state or better an American state. They have better social programs. Bermuda is a corrupt tax haven that fails to give the poor a good quality of life. Honest opinion.

  8. The article in the Independent seems to suggest it won’t be easy.

    “He will face a daunting task in persuading many smaller countries that depend on attracting multinational companies to fall in line and he admitted that success depended on the “rest of the world agreeing with us that this action needs to be taken”.

    I have to confess, I don’t really understand some of the more subtle nuances here – so what does this quote from GB mean?

    “That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need.”

  9. He needs to come here an see how the government steals from the poor. President Obama does too, this is the final chapter in my book. If income tax is 40% in Britain 40% of governments budgets should be for the poor. I sent a girl there to have a daughter the government gave her a house cheap. Bermuda is a corrupt taxen.

  10. Educated Pigs, sounds plural. Are you the spokesperson? I know many educated pigs and they are the best piece of porky in town. Spare ribs anyone?

  11. Why shouldn’t the policies apply to only a select group of countries whose regulatory system encourages an environment of transparency?

    The simple fact that a country’s regulatory system encourages transparency has no impact on the amount of tax they do or do not pay.

    Transparency, or the lack thereof, is not going to influence legal tax avoidance. Having said that it will have a direct impact on tax evasion [the press doesn’t generally differentiate between the two but much of the press coverage relates to people failing to declare income (i.e., fraud)].

    And furthermore, should the British Government and the dependent territories not be in some sort of consultation as to how our interests can be protected whilst our case as a reputable jurisdiction be put forward?

    I agree, but when the spectre of this sort of thing was raised before the US election the response was that “we’ll sit down with Obama and tell him how important IB is to Bermuda” and supposedly that will make everything alright.

    But back to the question – how does the fact that Bermuda is a reputable domicile impact the amount of tax that UK corporations do or do not pay to Inland Revenue?

  12. For those who missed it…Roger Crombies view:

    The worse news this week is British Prime Minister Gordon Brown’s plans to “shut down the tax havens”. What a very silly man he is. Fear not, Bermudians, for three good reasons.

    One: Mr. Brown is the very definition of incompetent. The chances of him knowing how to, or being able to, redesign the global financial system are zero.

    Two: The focus of whatever ham-fisted ideas Mr. Brown has come up with will to be on illegalities, and Bermuda should welcome that. We don’t want the cheats, the liars or the tax evaders. For one cynical thing, we don’t make much money off them, and for a more reasonable reason, we don’t want to be associated with “tax havens”.

    Look at Antigua. Everything we’re not. About to be clobbered by the sudden outbreak of puritanism that has spread around the edges of the recession, and probably deservedly so.

    Three: No matter what rules officialdom puts in place, other, smarter people will always defeat them. Thus, whatever Gordo and his suck-up pals might conclude, it won’t make any difference. Drug dealers are not going to say: “Oh well, better turn legitimate”. They’ll just find other ways of beating the system.

  13. One: Mr. Brown is the very definition of incompetent. The chances of him knowing how to, or being able to, redesign the global financial system are zero.

    Unless you’re willing to apply the same label to Obama, Mr. Brown is not our biggest problem.

    The focus of whatever ham-fisted ideas Mr. Brown has come up with will to be on illegalities, and Bermuda should welcome that. We don’t want the cheats, the liars or the tax evaders.

    To the extent that the focus is on illegalities, great. And it’s illegalities that have been making the headlines recently (and I stress recently). If anything, the recent happenings in Antigua and Switzerland (UBS) will only make us look good in that respect.

    But totally legal tax avoidance is also high on various radar screens. Companies that are actually based in the US or London but incorporated offshore [corporate inversions are high on everyone’s radar screen right now – fact is there have been relatively few US inversions to Bermuda (the latest wave is out of UK and there were numerous redomiciliations from Hong Kong a number of hears back)]. Obama is noted for his comment re the building in Cayman where 12,000 companies are incorporated “it’s either the biggest building in the world or …”. I don’t know how the US or UK is going to be able to tax the worldwide income of companies that aren’t incorporated in there but I’m sure they’re going to try. And while we’re on the topic, I don’t know how they’ll be able to differentiate between companies that inverted and those that were originally incorporated in Bermuda but now have substantial operations in the US and/or UK. While we think there’s a difference the US/UK public is unlikely to differentiate.

    For one cynical thing, we don’t make much money off them,

    No more and no less than we make from legal holding companies or captive insurers with no substantive Bermuda presence. As an aside, if you’re want to reject companies based on the number of actual staff on the ground you’re going to pick up captive insurers (most of them have no direct employees)

    and for a more reasonable reason, we don’t want to be associated with “tax havens”.

    Only one problem with that statement. In the eyes of the world Bermuda is a tax haven.

  14. The best way to deal with this is to makesure the Tories win the election dah? My party. Only countries with big armies need income tax.

  15. EU heads back financial clampdown
    http://news.bbc.co.uk/2/hi/europe/7904300.stm

    “Leaders also said they wanted to crack down on tax havens.

    Ms Merkel said: “As far as uncooperative players, tax havens or areas where non-transparent business is carried out are concerned, we need to develop sanction mechanisms. These must be made very concrete,” she said

    She added that a list would be drawn up “clearly showing which the unco-operative jurisdictions are.” ”

    Does Bermuda think it will be a co-operative jurisdiction? Bermuda IB is in for a serious downward trend 😦

  16. Rhetoric or not, they’re continuing to beat the drums.

    http://www.forbes.com/2009/02/23/tax-havens-europe-markets-equity-g20_19.html

    It is also somewhat surprising that Prime Minister Gordon Brown agreed to a cordinated response. The U.K. has a relatively lax tax policy and its links to tax havens like Jersey, Guernsey and the Isle of Man have been important to the flow of capital into London over the last decade.

    Interesting that people are actually picking up on this fact.

  17. any government from any nation that has used public funds to bail out any company….now has control of that company so the bail out money from the public purse can be repaid back to the people.

    this means that they (governments) can now order any company that has recieved bail out funding back to the home country.

    so how many companies in bermuda fall into that category?

  18. this means that they (governments) can now order any company that has recieved bail out funding back to the home country.

    so how many companies in bermuda fall into that category?

    Not many. AIG and I expect some banking operations.

    Problem with your comment is that those businesses are worth something only because they’re established and operate in various markets around the world. Shut down those branches/subs and the income from them goes away as well.

  19. Honestly if i had the money to cover the cost i would sue the government.
    1. For being a corrupt tax haven with an unfair tax structure
    2. For for failing to provide social programs based on this
    unfair tax structure
    3. Political corruption on privately benefiting from a corrupt tax
    structure calling it empowerment.
    I should write a tabloid expose. these people must pay.

  20. Not one poor person has ever sat in a cabinet seat or been the finance minister. The rich have created a tax structure to benefit themselves and thier families. No one who owns a home should recieve a pension cheque. This one of the reasons young people hate old people.
    I remember one day i knocked off from work and my fahter was in the kitchen sick from high blood pressure. He looked at me and said, ” Son you gonna take care of me when i get old.”
    All that take over the mortgage bullcrap, while he takes $100000 grand to travel off my future.
    He woke up one day i was gone. Bermua is an island of old people who feed off the blood of its young. This is wizardtry, witchcraft “pensions are for the needy not the greedy.”

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