Cracking on (to the bottom)
Tax havens take money from public services, John O’Farrell warns, and lower corporation tax will have the same effect.
The best book I’ve read so far this year is Treasure Islands, by Nicholas Shaxson1, available at most good bookshops and libraries, such as the Ormeau Road branch, whose copy I borrowed. The book is about the development and impact of tax havens, defined by Shaxson as: “a place that seeks to attract business by offering politically stable facilities to help people or entities get around the rules, laws and regulations of jurisdictions elsewhere.”
This is as good a definition of what tax havens like Jersey do. On the surface, a beacon of respectability and good manners. In fact, a parasite leeching off the tax systems of neighbouring states. Tax havens surrender their sovereignty, becoming captured by their own economic ‘miracles’.
John Christensen, a former economic adviser to the States of Jersey, tells of how easy cash and dirty money changed the character of a pleasant island into one of avarice, cronyism and paranoia: “Politicians responsible for financial regulation sat on the boards of the banks that they were appointed to regulate, and senior civil servants interpreted laws and regulations so as to further the personal interests of senior politicians and their cronies.” 2
Much of the billions which slush through Jersey and the Isle of Man annually are directed away from the legitimate claims of national governments. In other words, the huge (if uneven) wealth of these tiny UK dependencies absolutely depends upon the theft of taxes owed to the rest of us on these islands.
Tax legally avoided in the UK with the connivance of the ancient and unreformed rulers of these tinpot islands means less to spend on welfare, defence, the rule of law and libraries. They are parasites and deserve to be called so the next time the legislators of the Council of the Isles meet. Would it be possible for just one MLA, TD or MP to face down the bailiwicks of the Channel Islands or the Tynwald of the Isle of Man and demand our money back?
It would be nice to think so, but our moral authority to do so is being undermined by the conviction of our betters that, in tax terms, the only race worth wining is the race to the bottom.
In the recent Assembly election, few candidates questioned the worth of cutting corporation tax to the 12.5 per cent enjoyed by corporations in the Republic, to the continued fury of the Europeans who have bailed them out. Perhaps we want to be hated too. The SNP Government in Scotland has signalled it would like the right to cut its corporation tax, just as is proposed by the Treasury in the current consultation of ‘Rebalancing the Economy’. The race to the bottom is truly on, but we haven’t got there just yet.
There is some opposition, even among successful businessmen such as John Taylor. Lord Kilclooney told the House of Lords last month that cutting CT would “will hurt the 95 per cent of Northern Ireland people who are not company directors” and there was “a major public relations campaign”, led by Owen Paterson, “to con the wider population.” The Secretary of State’s real aim, alleged the peer, was reducing the block grant. “In one stroke, he revealed himself as a little Englander rather than one seeking the best interests of most people in Northern Ireland.”
Regardless of his true motivation, the Secretary of State never misses the opportunity to tell us that “cutting corporation tax is crucial to shaping the economy.” Literally any opportunity. Less than a day after the murder of police officer Ronan Kerr, he linked the case for cutting tax to the safety of citizens. The Belfast Telegraph reported his remarks thus:
The radicalisation of teenagers could not be countered just by policing and had also to be tackled economically, added Mr Paterson.
Citing moves to cut corporation tax in the province, he said it was a crucial part of the Government’s strategy to boost the province’s economy to the extent that even its most deprived areas benefited.
“With this political stability, we have a wonderful opportunity to really crack on and galvanise the economy.
“My hope then is the rising tide of prosperity is completely colour-blind, it will wash into every one of those estates where there are sadly disaffected unemployed young people and they will all be lifted by it.
Secretaries of State used to tell us about their “passion for peace”. Now, our passions are spent upon a race to the bottom.
1, Treasure Islands: http://treasureislands.org/the-arguments
2, Hooray Hen-Wees, John Christensen: www.lrb.co.uk/v27/n19/john-christensen/hooray-hen-wees
