Fresh Attack On Offshores

[localyokel]

Lichtenstein is coming under real flack at the moment. I still don't see why IoM will be able to continue as is or why should not expect real pressure to be brought to change this within next 5 years - if not a great deal sooner. As far as I can see IoM is skating on thin ice over this, and cracks are starting to appear.

 

Without wishing to be rude its probably because your not walking the streets or in the offices here every day. The IOM has nothing to be frightened of - much of what is being said outside the Island is piss and wind as there are bigger fish to fry than us (Lichtenstein as a prime example of an offshore centre that does not comply with anything). The IOM took one of the most aggressive positions with the OECD when the whole ringfencing thing took off - it was proved right with the approach it took and we followed through on what we promised - to do away with ring-fencing. That was 1998 and what is starting now is only the second round of pressure.

 

We always have the right amount of vision to handle the problem. I actually feel quite comfortable right now because the whole of the western financial system is turning to shit and there are going to be no political goals to score over the next 5 years. All this focus on offshore centres is going to disappear as politicians in mainstream centres focus on their own financial systems not going under.

 

In a crisis you man the pumps. You don't worry about leaks in the pumps and whether you need to re engineer to stop them!

[Skeddan]

Thanks localyokel. Not rude at all - I don't have any insight into what the real situation is - and wondered if the stuff Tax Research is piss and wind (like the £270m they claim IoM gets from the UK). Given what Prof Willem Buiter were saying I didn't think their criticisms of IoM could be simply discounted, and didn't know enough to know what to make of it. When you say 'second round of pressure' this makes a lot of sense of what is going on and puts it into perspective.

[localyokel]

Given what Prof Willem Buiter were saying I didn't think their criticisms of IoM could be simply discounted, and didn't know enough to know what to make of it.

 

You can't discount it, BUT we've been here before. There are bigger fish to fry and the IOM has been tough but fair. Its addressed the problems and had the balls to run with it before other centres. I doubt we are in the firing line given how far behind some places are lagging.

[La_Dolce_Vita]

But I don't see how this is right as it would seem to be a system that lets the wealthy get away with not paying their share of tax and placing the burden and responsibility of taxation onto the poor. It comes across as one rule for one group of people and another for a different group.

 

My recent understanding may be coloured since having read these excerpts in the papers and having read a little on the Tax Justice Network, but are the articles on ethics, poverty, and corporate responsibility untrue?

 

The world is a pretty unfair place and guess what the rich pay people to make sure they don't pay too much tax. If you could afford to you'd do it too. Nobody wants to pay more tax than they need to. Its hardly shock news - your also making the common mistake of confusing tax avoidance (legal) with tax evasion (illegal).

 

If politicians actually invested tax money into better public services and infrastructure I'd go with your 'social responsibility' argument - but they don't. The EU is a safe haven for drunk, incompetent politicians, who have never undergone public scrutiny or a public audit in their lives. Why should taxpayers fund that? Billions disappear each year and their auditors have failed to sign off the accounts for what I think is 11 years now. Some of them according to recent reports are claiming up to 9 x their salary as expenses.

 

Also consider the Isle of Man's history - main wealth generated by the running trade two centuries ago moving into offshore banking in more recent times. In between what happened? Poverty, broken up briefly by a tourism boom. Finance has been good to us.

 

I do agree with what you say about how tax is spent. I have quite anarchistic views so am not much in favour of any sort of tax system or government for that matter, and am certainly not a fan of the EU. But what I may not understand is your view about the social responsibility issue and how you mitigate it by what the government does with the money. For me the problem is that citizens and generally people with less wealth are paying a larger proportion of tax in these systems than the corporations. There are two separate systems, so yes the world is unfair but that is due to there being an offshore centre. Maybe I misunderstanding this but aren't these companies (or rather the people running them) avoiding the tax they NEED to pay, shouldn't companies pay corporation tax? They avoid their own tax systems and end up paying less or no tax, but although this is not illegal this does not seem to be 'right', especially when it seems to only benefit the rich.

 

I fully appreciate that the Island's economy has had very severe times, and I can imagine what would happen if the Island's status as an offshore centre collapsed. But if the Island's economy serves to make rich people richer and allows to exist an escape whereby some people (the better off) can avoid paying their fair share unlike the vast majority then an end to offshoring would be better for the world, wouldn't it?

[triskelion]

They avoid their own tax systems and end up paying less or no tax, but although this is not illegal this does not seem to be 'right', especially when it seems to only benefit the rich.

 

I fully appreciate that the Island's economy has had very severe times, and I can imagine what would happen if the Island's status as an offshore centre collapsed. But if the Island's economy serves to make rich people richer and allows to exist an escape whereby some people (the better off) can avoid paying their fair share unlike the vast majority then an end to offshoring would be better for the world, wouldn't it?

Only if you accept that corporations paying more tax is morally superior to them reinvesting the money they save by using offshore centres back into the business, which creates more jobs and investment. Even the bonuses awarded to executives will either be spent or reinvested, rich people don't just accumulate wealth; they spend/invest it. Even the money you have in the bank is used in this way, you just increase the scale the richer you are.

 

It isn't immoral to have a competitive corporate taxation system, and doing so has brought many benefits to the people of the Island, whilst it is difficult to say with any real certainty that it has impacted negatively elsewhere. For example, an American company that uses offshore systems is still going to invest their savings in America, they just bypass the Treasury.

 

I may have explained this really badly/be wrong.

[La_Dolce_Vita]

Only if you accept that corporations paying more tax is morally superior to them reinvesting the money they save by using offshore centres back into the business, which creates more jobs and investment. Even the bonuses awarded to executives will either be spent or reinvested, rich people don't just accumulate wealth; they spend/invest it. Even the money you have in the bank is used in this way, you just increase the scale the richer you are.

 

It isn't immoral to have a competitive corporate taxation system, and doing so has brought many benefits to the people of the Island, whilst it is difficult to say with any real certainty that it has impacted negatively elsewhere. For example, an American company that uses offshore systems is still going to invest their savings in America, they just bypass the Treasury.

 

I may have explained this really badly/be wrong.

 

No, I understand what you are saying. I would say that corporations that pay the tax they would be supposed to were there not competitive tax systems would seem to be more ethical than a world where corporations can choose how best to avoid the tax they are supposed to pay. When I meant the rich getting richer I meant the productivity and profits resting firmly in the control of the business who will only use their profits to further own business, although I understand what you mean about the byproducts being a requirement for labour. Although companies and executives invest and spend it is for their own desires and is not being spent as per the 'general needs of society' as it would if it were government spending.

 

With the immorality issue, the company that avoids the Treasury is not paying its tax to the country which it is told it should.

It may be legal but it isn't right. The provision of jobs on the Island is the obvious benefit, for the Island. But in other countries it means that less money is available for public spending and that affects the tax burden that the citizen has to bear.

[localyokel]

But what I may not understand is your view about the social responsibility issue and how you mitigate it by what the government does with the money. For me the problem is that citizens and generally people with less wealth are paying a larger proportion of tax in these systems than the corporations. There are two separate systems, so yes the world is unfair but that is due to there being an offshore centre.

 

I don't agree with you but I see where you are going. All an offshore centre is, is a release value in the financial system. We are not responsible for the ills in the world, and we are not responsible for looking after the revenue of bloated states like the EU who will waste billions annually whether we exist or not. What we are taking about is not illegal, and is not morally wrong.

 

Maybe I misunderstanding this but aren't these companies (or rather the people running them) avoiding the tax they NEED to pay, shouldn't companies pay corporation tax? They avoid their own tax systems and end up paying less or no tax, but although this is not illegal this does not seem to be 'right', especially when it seems to only benefit the rich.

 

As I said previously I'm talking about tax avoidance - a legal process by which a business reduces its tax bill - and not tax evasion which is illegal and which states such as the EU can stop easily through the court system or through fiscal penalties. If companies are using offshore centres its because legally they can. Tax laws are not concerned with morality, or fair play, a tax system exists to raise revenue for a government - see my final point below.

 

You also refer to companies paying their fair share, but where? Where does a multi national company pay tax - in fact whose economy or social security system benefits from a company operating across 20 countries? Your viewpoint is pretty narrow in that you still seem to believe in such a thing as a 'British' company or an 'American' company when geography is largely irrelevant these days. Therefore, its tax paid by the people a company employs that keeps domestic economies afloat not what corporation tax the company pays - which is exactly what the new Manx system acknowledges. You could have a 'British' bank that employs 20,000 in Britain but which is headquartered in Holland and pays corporation tax in Holland and virtually nothing in the UK at all. Its corporation tax is doing nothing for the UK economy, but the VAT it pays and the tax paid by its employees is substantial for the UK.

 

I fully appreciate that the Island's economy has had very severe times, and I can imagine what would happen if the Island's status as an offshore centre collapsed. But if the Island's economy serves to make rich people richer and allows to exist an escape whereby some people (the better off) can avoid paying their fair share unlike the vast majority then an end to offshoring would be better for the world, wouldn't it?

 

I can't accept that as being true and if you are a borderline anarchist as you suggest you should be arguing against the existence of tax per see. It cannot be morally right, for instance, to take your tax money paid by you to fund an illegal war in Iraq. But millions of UK taxpayers have directly funded murder, death and mass destruction just through paying taxes to their government. That is where your tax money goes - more is spent on defence than anything else - and as an anarchist you can't possibly believe that to be right or morally justifiable?

[Skeddan]

All an offshore centre is, is a release value in the financial system. We are not responsible for the ills in the world, and we are not responsible for looking after the revenue of bloated states

....

As I said previously I'm talking about tax avoidance - a legal process by which a business reduces its tax bill - and not tax evasion which is illegal and which states such as the EU can stop easily through the court system or through fiscal penalties. If companies are using offshore centres its because legally they can.

Localyokel, this strikes me as a really important point. If the UK is losing tax revenue by tax avoidance and to offshore centres, it should take measures to make this tax evasion. (And if it cannot, how could this be considered to be tax revenue which might otherwise have gone to the UK?)

 

I may be wrong, but it also sometimes strikes me that the blame is being put on offshore centres - which are beyond the control - almost as if to shift responsibility and avoid doing what actually should be done to stop the abuses or unethical practices being complained about. It slightly smacks of being a PR exercise to assure the public of 'get tough' while at the same time allowing the big corps and super-rich fat cat cronies to keep these loopholes. (That may even be a political or economic necessity or expedient given these can only be closed by concerted action, otherwise they will be an exodus). If insiders know its all piss and wind scapegoating, but no real threat as IoM is cooperating in its obligations, then I guess let the public think what they like and maybe the AAA rating speaks for itself.

 

I also agree with what I think you are saying - the issue is not about morality etc. It is simply one of complying with international obligations etc. It is similar to a company - it should be run to maximise shareholder value within the law - being 'ethical' or 'unethical' is not its business, and provided it has proper compliance, it cannot be accused of being unethical - rather it is a defect in the law.

[bluemonday]

The Lib Dem reply to the budget across ( on Tv yesterday ) seemed to indicate a desire to jump on tax havens as part of the LD policy - fat chance of them actually getting the chance to implement it though...........

[La_Dolce_Vita]

I don't agree with you but I see where you are going. All an offshore centre is, is a release value in the financial system. We are not responsible for the ills in the world, and we are not responsible for looking after the revenue of bloated states like the EU who will waste billions annually whether we exist or not. What we are taking about is not illegal, and is not morally wrong.

 

Maybe I misunderstanding this but aren't these companies (or rather the people running them) avoiding the tax they NEED to pay, shouldn't companies pay corporation tax? They avoid their own tax systems and end up paying less or no tax, but although this is not illegal this does not seem to be 'right', especially when it seems to only benefit the rich.

 

As I said previously I'm talking about tax avoidance - a legal process by which a business reduces its tax bill - and not tax evasion which is illegal and which states such as the EU can stop easily through the court system or through fiscal penalties. If companies are using offshore centres its because legally they can. Tax laws are not concerned with morality, or fair play, a tax system exists to raise revenue for a government - see my final point below.

 

You also refer to companies paying their fair share, but where? Where does a multi national company pay tax - in fact whose economy or social security system benefits from a company operating across 20 countries? Your viewpoint is pretty narrow in that you still seem to believe in such a thing as a 'British' company or an 'American' company when geography is largely irrelevant these days. Therefore, its tax paid by the people a company employs that keeps domestic economies afloat not what corporation tax the company pays - which is exactly what the new Manx system acknowledges. You could have a 'British' bank that employs 20,000 in Britain but which is headquartered in Holland and pays corporation tax in Holland and virtually nothing in the UK at all. Its corporation tax is doing nothing for the UK economy, but the VAT it pays and the tax paid by its employees is substantial for the UK.

 

 

What do you mean by a release value for the financial system?

 

From your reply I am left curious as to why corporations or companies are taxed at all. I was under the impression that they are taxed because companies are 'players' in society or rather they are part of society. So they pay a proportion of their profits to society to fund schooling, for example.

 

I understand what you mean about avoidance and evasion, but isn't the difference only that one is legal and the other is not, both are ways of trying to pay less tax. I am only puzzled because I am getting the impression from what you are saying that it is pointless for countries to impose corporation tax because corporations can legally avoid such tax or find ways to pay much less than they would otherwise.

 

...if you are a borderline anarchist as you suggest you should be arguing against the existence of tax per see. It cannot be morally right, for instance, to take your tax money paid by you to fund an illegal war in Iraq. But millions of UK taxpayers have directly funded murder, death and mass destruction just through paying taxes to their government. That is where your tax money goes - more is spent on defence than anything else - and as an anarchist you can't possibly believe that to be right or morally justifiable?

 

And I do hold those views regarding tax. But in the context of this thread I am trying to understand why some in society can avoid tax whereas others cannot, and the justification behind this. I do hold anarchist views but if it possible in the current global economic/political system for the richer segments of society (on the assumption that they are players in society, which I am trying to ascertain) to avoid tax whilst the poorer cannot then such a system would be something I would find immoral.

It would help to find out why there is corporation tax.

[The old goat]

The long term future of the Isle of Man as a tax haven is very unlikely and even the medium term future is very uncertain indeed.

 

The Isle of Man is highly dependent on the United Kingdom.

 

It is said that when America sneezes the United Kingdom gets a cold. Just contemplate what the effects will be as America finds that sneeze now turns out to be the start of pneumonia.

 

Given that the United Kingdom government will have to do everything that can be done to protect tax revenue and the steps that they WILL take may surprise and even shock people on the Isle of Man.

[hboy]

Given that the United Kingdom government will have to do everything that can be done to protect tax revenue and the steps that they WILL take may surprise and even shock people on the Isle of Man.

 

The downfall of the west. Just what you f**king loonies have been waiting for. Blah, blah, blah. I take it you'll still be drawing your manx salary though - you tit.

[The old goat]

Given that the United Kingdom government will have to do everything that can be done to protect tax revenue and the steps that they WILL take may surprise and even shock people on the Isle of Man.

 

The downfall of the west. Just what you f**king loonies have been waiting for. Blah, blah, blah. I take it you'll still be drawing your manx salary though - you tit.

 

The people of the west have brought themselves to where they now stand. As for my salary, not that it is any business of yours, my salary is not paid by any business on the Isle of Man or for that matter any business that is Europe based.

[Albert Tatlock]

Given that the United Kingdom government will have to do everything that can be done to protect tax revenue and the steps that they WILL take may surprise and even shock people on the Isle of Man.

 

The downfall of the west. Just what you f**king loonies have been waiting for. Blah, blah, blah. I take it you'll still be drawing your manx salary though - you tit.

 

The people of the west have brought themselves to where they now stand. As for my salary, not that it is any business of yours, my salary is not paid by any business on the Isle of Man or for that matter any business that is Europe based.

If you are carrying out work on the island, I cannot believe that the work is not being paid for from the island - maybe not directly to you, but most certainly I would suspect indirectly - so what's the real difference?

 

If you don't like the west - then why not just f**k off back to Stoneageistan? - not forgetting to leave behind any modern medication, and all that 'decadent' money you have been collecting working for the 'infidels' etc. etc. of course. Some of you guys don't seem to want to build bridges, you just seem to want to blow them all up.

[Slim]

The long term future of the Isle of Man as a tax haven is very unlikely and even the medium term future is very uncertain indeed.

 

Why?

 

It is said that when America sneezes the United Kingdom gets a cold. Just contemplate what the effects will be as America finds that sneeze now turns out to be the start of pneumonia.

 

Places like the isle of man tend to do better when large economies are suffering problems.

 

Given that the United Kingdom government will have to do everything that can be done to protect tax revenue and the steps that they WILL take may surprise and even shock people on the Isle of Man.

 

What do you base that on?