Minister Wary Of Obama

[Snaipyr]

The recent investor and media scrutiny has related to real issues - rather than some PR failure.

I didn't say it didn't - however, effective PR (getting across the real issues/side of the story) is how you address things like this at a time of crisis. Allowing this investor/media scrutiny to get away with blatent falsehoods, paints us as something we are not and will have a future impact.

 

Albert - 1) Am I right in thinking that a PR person was appointed to the IOM Govt payroll just a few years back?

2) Was he interviewed on Manx Radio and actually said that he didn't like speaking live to the media?!

[Skeddan]

Albert - 1) Am I right in thinking that a PR person was appointed to the IOM Govt payroll just a few years back?

2) Was he interviewed on Manx Radio and actually said that he didn't like speaking live to the media?!

[Skeddan]

Time is running out:

 

President-elect Barack Obama plans to crack down on international tax havens, including Jersey, Guernsey and the Isle of Man, within weeks of taking power in January…

http://www.guardian.co.uk/business/2008/no...avens-crackdown

 

The article also very usefully identifies two of the key people in this initiative:

 

Joe Guttentag, deputy assistant secretary for international tax in the Clinton administration and a key figure in the Obama campaign, is likely to drive the policy through, along with Professor Reuven Avi-Yonah, who helped frame the act.

If these are the ‘players’, then IMO it would make sense for IoM to engage with them. If Prof. Avi-Yonah is the main architect, and Guttentag is an implementer, then Prof. Avi-Yonah may well be the best person to target (and possibly the easiest to approach and engage with). To begin with I’d think the sensible thing would be to understand their thinking rather than react to second and third-hand press reports of ‘crack down’ etc.

 

Prof. Avi-Yonah’s testimony at the US Senate Finance Committee hearing on Offshore Tax Evasion (May 2007) is well worth taking note of. Clicky

 

Of particular note is his discussion of the Sam Wyly case which involved financial structuring in IoM to ‘circumvent’ US taxes through use of trusts etc.. This brings to the fore reasons why IoM may come under fire, and why the Obama Administration would consider IoM as a tax haven jurisdiction.

 

Equally instructive is his discussion of ‘Recommendations to Address Offshore Tax Abuses’, particularly b) Bilateral Information Exchange, c) [uS] Cooperation with OECD, and d) Incentives to Tax Havens.

 

The discussion of ‘Sanctions on Non-cooperating tax havens’ is also worth taking account of. As he notes, there are incentives for tax havens which do not cooperate with OECD efforts. The strategy is that offshores who ‘play ball’ should not be disadvantaged.

 

Taken together, and in the context of IoM’s progress as a responsible finance centre, the ‘Stop Tax Haven Abuse Act’ could well be turned very much to IoM’s advantage.

 

From what I gather IoM could be 95% of the way to being ‘clean’ (with TIEAs, OECD cooperation etc.). I would think it likely that suitable measures could be found to address any issues of tax circumvention (e.g. changes to TIEAs). I would also suppose (and hope) that suitable measures might be found which would not adversely effect IoM’s finance sector to any significant degree. IMO it would make sense for such ‘last mile’ measures to be discussed and explored with Prof Avi-Yonah – from which may come propositions which could be taken forward with Guttentag.

 

Having IoM cooperate in this would be a win-win; IoM would establish a model and exemplar, and by taking such a lead would position itself as a reputable responsible finance centre – and the poster child for that. Given the ‘carrot and stick’ approach, it would also be likely that US would want to demonstrate the advantages of cooperation with aid, assistance, or other positive tokens of goodwill.

 

I would think that such an approach by IoM to seek a model for compliance and cooperation on this would be welcomed. If coordinated with the Obama Administration so as to ‘manage for effect’, this would offer Obama a ‘win on the board’ in a key initiative within weeks of taking office, give impetus to this strategy against tax haven abuse, and very likely win praise and much positive publicity for IoM. Moreover I would think helping Obama achieve this political ‘win’ would mean IoM would be looked on very favourably by the new President of the United States.

[oldmanxfella]

Oldmanxfella - you're ungrateful calling them 'thick'. Don't you remember the good ol' US of A saved mankind from the aliens in 'Independence Day'? Where's your gratitude?

 

I said the average Republican was thick, not the average American ... hmm, let me think about that again. Maybe you were right and I was wrong.

[manshimajin]

If these are the ‘players’, then IMO it would make sense for IoM to engage with them. If Prof. Avi-Yonah is the main architect, and Guttentag is an implementer, then Prof. Avi-Yonah may well be the best person to target (and possibly the easiest to approach and engage with). To begin with I’d think the sensible thing would be to understand their thinking rather than react to second and third-hand press reports of ‘crack down’ etc.

May also be worth reading the 'Stop Tax Haven Act'

STH Act

The act

Provides initial list of 34 Offshore Secrecy Jurisdictions, while giving Treasury Secretary discretion to add or subtract from the list using certain criteria. Initial list of jurisdictions was taken from IRS court filings identifying them as probable locations for U.S. tax evasion:

 

Anguilla, Antigua and Barbuda,Aruba, Bahamas, Barbados Belize Bermuda British Virgin Islands Cayman Islands Cook Islands Costa Rica Cyprus Dominica Gibraltar Grenada Guernsey/Sark/ Alderney Hong Kong Isle of Man Jersey Latvia Lichtenstein Luxembourg Malta Nauru Netherlands Antilles Panama Samoa St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Singapore Switzerland Turks and Caicos Vanuatu

 

Directs Treasury Secretary to list jurisdictions with secrecy laws or practices that unreasonably restrict U.S. tax authorities from obtaining needed information, unless the jurisdiction has information exchange practices that effectively overcome those secrecy barriers.

IOM is definitely slap bang centre in the gunsights when you read the speeches.

 

I agree with your comments about talking to the relevant people - does this have to be done in conjunction with the UK (Foreign Office) or can we go it alone and steal a march on the EU by sorting something out with the USA? There might be a few people in the OECD who would be willing to help.

 

Has anyone heard what is happening in the Channel Islands about this issue as they are also a target for the legislation.

[jimbms]

I said the average Republican was thick, not the average American ... hmm, let me think about that again. Maybe you were right and I was wrong.

No the average Amarican is fat not thick

[oldmanxfella]

Has anyone heard what is happening in the Channel Islands about this issue as they are also a target for the legislation.

 

The Channel Islands don't seem to be affected too much by the publicity. You rather wonder whether their policy of not engaging or courting the USA is paying off for them.

[Declan]

I expect they haven't noticed what's going on. From what I've seen of them I think the Jersey Government exists solely to make ours look good.

[Albert Tatlock]

Has anyone heard what is happening in the Channel Islands about this issue as they are also a target for the legislation.

 

The Channel Islands don't seem to be affected too much by the publicity. You rather wonder whether their policy of not engaging or courting the USA is paying off for them.

I too backed a policy of 'keeping your head down' at first, but this has now gone too far and we are now getting negative publicity which we do have to face up to and counter IMO - and in far better ways than we are doing at present.

[Skeddan]

The Channel Islands don't seem to be affected too much by the publicity. You rather wonder whether their policy of not engaging or courting the USA is paying off for them.

 

I too backed a policy of 'keeping your head down' at first, but this has now gone too far and we are now getting negative publicity which we do have to face up to and counter IMO - and in far better ways than we are doing at present.

I can't really see the issue is really to do with 'publicity'. Even with great publicity, IoM and Jersey would still be listed as offshore secrecy jurisdictions (along with Hong Kong and Singapore, which don't seem to have had a lot of negative publicity as abusive tax havens).

 

Publicity and PR won't get IoM taken off the list either. That requires dealing with the issues and working with US Treasury to update the 2002 US-IoM Information Exchange Agreement.

[Albert Tatlock]

I too backed a policy of 'keeping your head down' at first, but this has now gone too far and we are now getting negative publicity which we do have to face up to and counter IMO - and in far better ways than we are doing at present.

I can't really see the issue is really to do with 'publicity'. Even with great publicity, IoM and Jersey would still be listed as offshore secrecy jurisdictions (along with Hong Kong and Singapore, which don't seem to have had a lot of negative publicity as abusive tax havens).

 

Publicity and PR won't get IoM taken off the list either. That requires dealing with the issues and working with US Treasury to update the 2002 US-IoM Information Exchange Agreement.

I don't disagree. I meant 'publicity' - in the sense of getting 'the facts' and a greater 'understanding' out there that we shouldn't be on the list in the first place.

 

Publicity

1.

a. Information that concerns a person, group, event, or product and that is disseminated through various media to attract public notice.

b. Public interest, notice, or notoriety achieved by the spreading of such information.

c. The act, process, or occupation of disseminating information to gain public interest.

2. The condition of being public.

 

Politicians represent people - and politicians and people more often gain a view/perception through publicity. Positive or negative, it is those views that are often used as a remit these days as to how politicians handle things. The media (publicity) is the driver for much.

 

Dealing with this is a two pronged approach surely? a. dealing with the negative 'publicity' i.e. countering the views of others publically stated through the media and impacting our image - by standing up to them in the media and disseminating our own position, thus undermining the negative/incorrect and, b. ensuring that the behind the scenes inter-governmental approach i.e. with the U.S. treasury etc. is also pursued.

 

I think you are missing the point that both are actually required simultaneously, as they are inextricably linked. Do not underestimate the approach being taken by those 'against us', they are actively persuing both routes.

[Skeddan]

May also be worth reading the 'Stop Tax Haven Act'

STH Act

...

I agree with your comments about talking to the relevant people - does this have to be done in conjunction with the UK (Foreign Office) or can we go it alone and steal a march on the EU by sorting something out with the USA? There might be a few people in the OECD who would be willing to help.

I wouldn't think it would require being done in conjunction with the UK. Many 'abusive tax havens' are British territories, so probably more could be done by IoM taking the initiative (and is fully able to).

 

I did read the, Offshore Tax Bill, which is the proposed 'Stop Tax Haven Abuse Act'.

 

IOM is listed as an 'offshore secrecy jurisdiction' - i.e. listed as not having 'effective information exchange practices' - the jurisdiction "has corporate, business, bank or tax secrecy rules and practices" (both formal and informal) which unreasonably restrict the ability of the US to obtain information relevant to enforcement of its taxes.

 

It appears that jurisdictions will be examined on an annual basis, and a jurisdiction will be deemed to be an offshore secrecy jurisdiction unless:

 

1. There is treaty or information exchange agreement with the US that provides for a the prompt, obligatory and automatic exchange of relevant information.

 

2. In the previous 12 months the exchange of information was in practice adequate to prevent tax evasion or avoidance or US income tax by US persons and to allow US to effectively enforce its taxes.

 

3. In the previous 12 months the jurisdiction has not been identified as uncooperative with international tax enforcement or information exchange by an intergovernmental group or organisation of which the US is a member. (and US concurs with this).

 

The trouble is once listed, even if pass all three tests, there appears to be no requirement for the Secretary to delist the jurisdiction. Quite possibly once on the list, one is then on close 'watch' every year thereafter.

 

The main requirement seems to be beefing up IoM's 2002 information exchange agreement with US (perhaps as per OECD model agreement per Art.26), and showing that not listed as uncooperative by OECD etc.

 

US-IoM IEA Oct 2002

 

I wouldn't have thought this beyond reach. What's the point of efforts combating 'negative publicity' from RTE or whoever - the real effort should be about getting of the list of 'offshore secrecy jurisdictions'. That done, and with OECD clean bill of health, that should then be relatively easy. While IoM is listed, then it is a fools errand.

 

IMO the priority should be working with US to identify how the 2002 IEA could now be further improved upon. IoM does not seem hostile to this - so better to cooperate together in this, and US should not assume IoM would be at all unwilling or uncooperative.

 

This from the US Treasury Secretary after the US-IoM IEA was signed in 2002:

 

"The United States and the Isle of Man already have a close and cooperative relationship on law enforcement matters. Today, cooperation between governments is more important than ever before. We greatly value the cooperation of the Isle of Man, particularly now as we work to ensure that no safe haven exists anywhere in the world for the funds associated with illicit activities, including terrorism, money laundering, and tax evasion."

 

If there are loopholes which have since been found and which need to be plugged, one might have expected the US to have approached IoM to work together to resolve this. I'd hope that the US should have no reason to anticipate anything other than a close a cooperative relationship with IoM in such matters. If no such approach has been made by US, being listed as an 'abusive tax haven' would be a bit of a slap in the face. There's nothing to be gained by such prejudicial action against jurisdictions which have shown themselves to be cooperative and responsible.

[manshimajin]

Skeddan - I agree that someone from the Government and the Treasury who has been involved in the various bilateral negotiations should be writing to the relevant people in the USA now and making arrangements to see them as soon as possible. They should be asking them now what particular matters need to be upgraded from the October 2002 agreement you reference. No time for pootling around.

 

As for RTE et al - they are only an indication of the way we are being pictured to the general public in other countries. Obviously we need to deal first and foremost with legislatures but we having fixed that we do need to improve/rectify the public image too.

[Skeddan]

Skeddan - I agree that someone from the Government and the Treasury who has been involved in the various bilateral negotiations should be writing to the relevant people in the USA now and making arrangements to see them as soon as possible. They should be asking them now what particular matters need to be upgraded from the October 2002 agreement you reference. No time for pootling around.

Now look back at Allan Bell's comments in the Manx Radio item linked to at the start of this thread:

"[Obama] classes them all as tax-havens (and) doesn't seem to be able to differentiate between well run, well regulated cooperative states, and those rogue states he sees are draining tax dollars out of the United States.

 

"He has called for action and may well, especially if he has a full Democratically controlled Congress, try to drive through legislation against us at an early stage, so we need to be very conscious of that."

 

IMO this raises a number of questions, including: what communications have IoM Treasury received from the US on changes sought to the IoM-US IEA? What actions has IoM Treasury taken with regard to upgrading the IoM-US IEA? and What do they propose doing to ensure action is not taken against IoM by the US for practices which impede US enforcement of its taxes?

 

It is all very well to be 'very conscious' of something, but appropriate actions are needed to address this. AFAIK such basic questions on the matter have not been raised in Tynwald or in the media; their apparent lassitude on this seems no less astonishing that the malaise that IoM Treasury seem to be suffering from in this.

[manshimajin]

"[Obama] classes them all as tax-havens (and) doesn't seem to be able to differentiate between well run, well regulated cooperative states, and those rogue states he sees are draining tax dollars out of the United States.

 

"He has called for action and may well, especially if he has a full Democratically controlled Congress, try to drive through legislation against us at an early stage, so we need to be very conscious of that."

Yes it sounds very naiive and too passive given that Obama was one of the main sponsors of the Stop Tax Haven Abuse Act and his co-sponsor Senator Carl Levin used his floor speech to identify the Isle of Man specifically as one of the offenders:

Our Subcommittee’s most recent investigation into offshore abuses highlighted the extent to which offshore secrecy rules make it possible for taxpayers to participate in illicit activity with little fear of getting caught. Through a series of case studies, the Subcommittee showed how U.S. taxpayers, with the help of offshore service providers, financial institutions, and sometimes highly credentialed tax professionals, set up entities in such secrecy jurisdictions as the Isle of Man, the Cayman Islands, and the island of Nevis, claimed these offshore entities were independent but, in fact, controlled them through compliant offshore trustees, officers, directors, and corporate administrators. Because of the offshore secrecy laws and practices, these offshore service providers could and did go to extraordinary lengths to protect their U.S. clients’ identities and financial information from U.S. tax and regulatory authorities

Not a time to behave like a rabbit in a spotlight.