Gordon Brown Writes To The Isle Of Man . . .

[manshimajin]

Which numbskull in the local media decided that this was a threatening letter (assuming our letter is the same or better than the Jersey letter)?

 

Did MR rely on a press release or put their own interpretation on it? If the former, heads should roll in the office which issued the release, if the latter, heads should roll in MR.

Dangerous territory Gladys.

 

In the first place as a population we are kept in the dark on these lofty matters that effect our future. We rely on the likes of MR and other media to draw our attention to them. In the second place if MR get their interpretation wrong someone from Government should come on air and tell us what the correct interpretation should be. That is surely one of the reasons we employ them - to keep us well informed on matters of consequence to the Island? If the UK public service are so thin skinned as to be upset by a local radio station on a small island in the Irish Sea misinterpreting their phraseology they should learn to write in plain and clear English.

 

Would we be having this forum discussion if weren't for the media?

[Albert Tatlock]

The Foot review is about UK residents and taxation - not anything to do with the rest of the world - and how UK citizens pay tax and whether UK residents are using this place to evade paying tax in any way.

Is it? I understood it to be a review of banking regulation in the Crown Dependencies and Overseas Territories following the collapse of Landsbanki in Guernsey and Kaupthing here. The outcome I am expecting is the proposal of a unified depositors' protection scheme, operated by the UK and funded by hefty payments from the Isle of Man, Jersey, Guernsey, et al - either taken directly from our respective governments or via a levy on interest earned here. Both would, very dangerously, establish the principle of the Crown Dependencies and Overseas Territories, or the people who use them to do business, being in effect compelled to pay a UK tax. The latter would additionally reduce the competitiveness of our financial services offerings.

 

If I am correct, this truly demonstrates the sinister nature of the deliberately engineered Kaupthing collapse - lest we forget, the UK bank was found to have a surplus of some £1,100 million after the administrators had done their work, indicating it was solvent all along. In other words, Brown and Darling organised a calamity for the Isle of Man, and may shortly be demanding regular payments just in case it happens again. That is the dictionary definition of a protection racket, and alone gives good reason for us to reduce our close ties with the UK, forge new relationships with the broader world, and upstream our banks' money to financial centres other than the City of London.

I was just trying to make the point that the Foot Review is separate from and unrelated to G20 - it is about our tax relationship with the UK.

 

However, to see the potential consequences of this review clearly written and interpreted like that for the first time is quite worrying, and you have enlightened me, and no doubt a few others. This also shows to me that maybe far more people here, including politicians in a position to supposedly know better, are being a little too complacent at the moment, simply by expecting more of the same that has come out of previous UK reviews - and selling that misguided and complacent view to us that the earthquake is over - whilst buildings such as HSBC still collapse near them.

 

I don't disagree with anything you have said. Stealth taxation indeed, and possibly a general future direction even the OECD could try to go in with other jurisdictions too no doubt (even eventually those that are independent) e.g. maybe through some kind of international OMF 'Offshore Monetry Fund' - contribute, otherwise 'fail to make our next OECD white list'??? Is this a model Broon is about to try and test out on us and the other associated 'British' offshores and then push through the OECD 'to create a level playing field'?

 

Whilst the UK could maybe impose or push for such 'taxation' to protect its own citizens banking here, could they do that for everyone banking here? Is the answer to simply pull away from UK, European, US (TIEA) markets and try and build markets elsewhere, always trying to keep 5 years ahead? Is a TIEA really the obvious admission that we can't do business with a particular country anymore or can only do restricted business with that country in future, and more importantly whilst any TIEA is in development an obvious sign for immediate and concerted R&D and a IOM PLC team effort to push into another market to replace it?

 

Would IOM independence work if the OECD eventually followed a similar route - and eventually might they? Such an approach seems to effectively imply universal world taxation, and 'world government' through the guise of the economic control of smaller countries by the G20/OECD. I can't see Brown and his socialism getting too far on this though with the OECD, the yanks certainly don't want it it a free market, and it already sticks in their crop generally that they have had to bail out banks and other businesses sold to them on the basis it was necessary to avoid a depression.

[Rog]

Since Kaupthing (Isle of Man) Limited is / was based on the Isle of Man the UK tax payer should absolutely NOT be required to bail that bank out.

 

That should be absolutely down to the Isle of Man taxpayers. The implications may well be that the IOM government must issue bonds in order to get the requisite cash but if so then so be it.

 

As for the Isle of Man not being a ‘Tax Haven’, that really is simply a matter of semantics. As a low tax British Isle and also a Crown dependency the Isle of Man absolutely IS a tax dodgers haven.

 

The so called ‘transparency’ issue is in reality simply bullshit. What is going to be demanded (and obtained) is far more than ‘transparency’, it is absolute closure of the low tax status of the Isle of Man even more so than the Channel Isles.

 

If the adoption of full UK taxation rules and levies are NOT imposed by the Islands government then at best (best?) the Isle of Man will be ‘cut loose’ absolutely from the UK. And make no mistake, the EU won’t have anything to do with the Island if it intends not to toe the EU and UK party line regarding taxation.

 

This is far more than simply a matter of transparency. The so called ‘white list’ is the first step down the road of homologation of taxation within the EU and those countries with EU association.

 

The US already has its programs running to clamp down on tax dodgers and I have absolutely no doubt that the US and the EU will cooperate to the fullest extent in ending the situation. Sleight of hand and sharp practice is defrauding citizens of countries from tax revenue that a few very wealthy corporations and individuals have been avoiding and evading paying for far too long. The issue is now well and truly in the public eye, it has become a political ‘must do’ for all parties, it will happen.

 

The intent to close down opportunities for EU (and US) citizens to exploit what is semi-legal embeselement --- which is precisely how it is being seen in both Brussels and London according to a couple of MEP’s that I was in conversation with at a dinner that I attended last night right at the top of the list of things to be done as a part of the attempts to institute some form of latter day Bretton Woods agreement.

 

Guys, you can wriggle and squirm all you want, the bottom line is that the financial sector on the Isle of Man (and other tax havens, because that is precisely what it is) is not only drinking in the Last Chance Saloon but the G20 White List was the call for last orders.

 

Now the towels are over the pumps, and the staff are about to start the ‘come on, aint you got no ‘ome to go to?’ --- and there’ll be no ‘lock in’ this time.

[Albert Tatlock]

As for the Isle of Man not being a ‘Tax Haven’, that really is simply a matter of semantics. As a low tax British Isle and also a Crown dependency the Isle of Man absolutely IS a tax dodgers haven.

It is also a great deal about relativity. What do you think UK tax levels would be at if Broon hadn't, and didn't continue to, waste £billions of taxpayers money (most estimates suggest at least 10% of GDP annually). People in the UK are fed up to the back teeth of paying through the nose and getting little or no benefit for it.

 

The bottom line is that Broon is trying to drag us all down to be as inefficient as he is, and the only means he understands how to do that is through financial penalties. In the meantime Broon seeks to blame others for what are clearly his own incompetencies, instead of analysing what NuShite (and the tories) have collectively done to the UK (to its people, culture and businesses) over the last 30 years.

 

The UK is finished and will take generations to recover if ever at all. The credit crunch was the final stake through the heart.

[Tugger]

We're going to have some tough times, and we're going to have to be nimble on our feet alright, but unfortunately for Rog I think the island is going to do OK (not great, but OK) as long as those in charge of making decisions make the right ones. Rog is incandescent that this little island has done so well because he bear us so much ill-will. I think he would actually climax if we were brought to our knees and our populations made to suffer.

 

I think we might see a bit of an exodus of HNW individuals from the UK shortly - the tax burden is going to be devastating in the UK over the next few years, all thanks to Gordon. He'll be thrown out next time, of course.

[Politician]

However, to see the potential consequences of this review clearly written and interpreted like that for the first time is quite worrying, and you have enlightened me, and no doubt a few others.

Well, don't take what I have said as gospel. Whilst it is clearly documented that the Foot Review was set up to consider offshore banking regulation in the wake of the two bank collapses, the likely outcome is speculation on my part. However, it is interesting that that was my first reaction on reading of the review, and a couple of days later a Financial Times leader speculated in the same direction. This led Richard Murphy to criticise the paper roundly for poor standards of journalism - knowing him, he could easily have reacted thus because he believed they were correct and had let the cat out of the bag.

 

Whilst the UK could maybe impose or push for such 'taxation' to protect its own citizens banking here, could they do that for everyone banking here?

I imagine that would be the objective, which will be justified by arguing that should further bank collapses occur, the UK taxpayer might need to meet all the losses. At the time, Darling claimed this might become necessary because the Isle of Man had suggested the UK should cover the cost of Kaupthing losses. That is, of course, a gross distortion of the truth - we merely argued that the £550 million illegally sequestered from KSF (IOM) should be returned to it, so that it could continue trading.

 

Is a TIEA really the obvious admission that we can't do business with a particular country anymore or can only do restricted business with that country in future, and more importantly whilst any TIEA is in development an obvious sign for immediate and concerted R&D and a IOM PLC team effort to push into another market to replace it?

Not as such, no. In my view, the old-style tax havens where money could be salted away to evade tax, or aggressive and complicated avoidance deals could be set up, will shortly be a thing of the past. What will remain will be a small number of very highly regulated specialist offshore jurisdictions, plus a changing roster of unregulated Pacific islands, conducting illegal money-laundering on a short-term basis until they are shut down by the rest of the world. However, since the real objective of the anti-tax haven campaigners is the elimination of tax competition, not the elimination of opacity, we would be much more likely to maintain our financial services industry by severing ties with the UK.

 

I can't see Brown and his socialism getting too far on this though with the OECD.

Me neither. Put simply, the threat is Brown and the UK government, not the traditionally objective OECD. We need to take steps to neutralise that threat now.

 

[Note: edited for a typo]

[Rog]

Rog is incandescent that this little island has done so well because he bear us so much ill-will. I think he would actually climax if we were brought to our knees and our populations made to suffer.

 

What an amazingly stupid – and absolutely incorrect assumption to reach. I would be more than delighted to see the Island survive and benefit from what’s coming down the pipe.

 

Any ill will that I feel is personal and towards a handful of individuals who closed career opportunities to me at the time because of my background and religion, as well as those types whose attitude and actions were what made so many people have to leave their home in order to make a living beyond ‘horse trams in the summer, dole in the winter’.

 

I do agree that the right decisions could see the Island emerge from the collapse of the Finance sector.

 

I only hope that the right decisions are taken, but my concern is that so many people are in denial about just how serious the situation is, and that those in a position to make the decisions (or affect decisions) may let their own isolated ‘I’m all right’ attitude get in the way of real progress and so screw up opportunities for the hoi polli.

[Tugger]

I would be more than delighted to see the Island survive and benefit from what’s coming down the pipe.

 

LOL

 

The finance sector isn't going to collapse Rog, sorry to burst your pipe dream. It's certainly likely to get a little leaner, but there won't be mass starving on the island, and wishing will not make it so

[pongo]

@ Politician I have the strong impression that you are exaggerating any threat because you see the UK from an ideological, rather than an objective, perspective. You seem to almost see progress towards better regulation as if it were some conspiracy.

 

The greatest threat to the financial services industry on the IOM is decline and consolidation of the financial services industry internationally and in general. The greatest threat to any economic region is over dependence on any single industry.

 

The IOM has no future as a rebel state. Nobody would do business with a pirate kingdom.

[manshimajin]

What is going to be demanded (and obtained) is far more than ‘transparency’, it is absolute closure of the low tax status of the Isle of Man even more so than the Channel Isles. If the adoption of full UK taxation rules and levies are NOT imposed by the Islands government then at best (best?) the Isle of Man will be ‘cut loose’ absolutely from the UK.

Rog, how does your contact with MEPs reconcile this UK concern about low personal or corporate tax rates with low/different tax rates within other EU legislatures eg Luxembourg, The Netherlands, Ireland - and flat rate tax rates in some (Slovakia 19%, Lithuania 24%, Estonia 20% targeting 18%, Czech Republic targeting 15% etc...)? My understanding was that the UK (and Gordon Brown in particular) with the support of Ireland were absolutely opposed to a level taxation playing field in Europe. For them to ask for other countries to standardise their tax rates based on the UK rates sounds hypocritical and contrary to their public policy statements. Surely each country has the right to set its tax rates based on its own expenditure and budgetary position. Various legslatures have quite different positions in relation to defense, social, education, health and other spending goals.

 

The UK Government has high expenditure due to, amongst other reasons, rapidly increasing unemployment levels, its expensive and somewhat inefficient welfare system, extravagant fiscal stimulation (in part due to lax regulatory control of the banking system) and involvement in foreign wars. It seems both illogical and undemocratic to expect other legislatures to adjust their tax regimes based on the specific tax raising needs of the UK government. This would be a very dangerous precedent. One that is directly opposed to forcing the UK to improve its public sector efficiency and review its policy issues. It sounds to be driven by 'protectionism' which Gordon Brown has spent much time opposing in the EU and G20. Maybe I misunderstand what you mean by "the adoption of full UK taxation rules and levies"? If I don't I can only say how retrograde such an idea is - in particular for the UK!

 

Are Gordon Brown and Alistair Darling promoting this idea because they foresee massive increases in taxation in the UK in the years to come to pay for current UKG policy - and are concerned about an exodus of businesses and individuals from the very high taxing country they are creating?

This is far more than simply a matter of transparency. The so called ‘white list’ is the first step down the road of homologation of taxation within the EU and those countries with EU association.

see comments above - this is contrary to stated UKG policy. There have been a lot of 'over my dead body' comments from UK politicians opposing German attempts to level the taxation playing field. Is the UK losing out to Germany on this argument?

The US already has its programs running to clamp down on tax dodgers and I have absolutely no doubt that the US and the EU will cooperate to the fullest extent in ending the situation. Sleight of hand and sharp practice is defrauding citizens of countries from tax revenue that a few very wealthy corporations and individuals have been avoiding and evading paying for far too long. The issue is now well and truly in the public eye, it has become a political ‘must do’ for all parties, it will happen. The intent to close down opportunities for EU (and US) citizens to exploit what is semi-legal embeselement --- which is precisely how it is being seen in both Brussels and London according to a couple of MEP’s that I was in conversation with at a dinner that I attended last night right at the top of the list of things to be done as a part of the attempts to institute some form of latter day Bretton Woods agreement.

I would refer you to the Economist article further up this thread. Sadly the USA, the UK and the EU do not seem to be wanting to close off their own enormous gaping supports of tax avoidance and corporate opacity. It was astounding that the Australian academic found that it was not necessary to produce basic ID to set up companies in the USA and UK that were required in so-called 'tax havens'. One can only hope that in your contact with MEPs you are advising them to put their house in order first and to influence the USA to do the same with some of its State legislatures. It was ironic that HK and Macau's compliance situation was simply written out of discussion because the Chinese Government would not allow it to be included. if these matters are not dealt with one would be dealing with a situation of extreme hypocrisy ( so what is new in politics and accounting?) - "do as we say not as we do" - that would strain your credibility (if you are involved in this area) and theirs. It also raises the issue of, to take a simple example, U2 moving their tax base from Ireland to The Netherlands because the Netherlands allows them to pay significantly less tax. One wonders to what extent the EU will crack down on such 'tax dodgers' who transfer from one EU tax domicile to another to reduce their tax, or whether the USA will 'crack down' on company secrecy in Delaware et al?

[Politician]

@ Politician I have the strong impression that you are exaggerating any threat because you see the UK from an ideological, rather than an objective, perspective.

Yes, I do have severe ideological issues with the present UK government, which seems to me to embody the worst aspects of Old Labour (disdain for small business, an underlying belief that public funds are limitless and can always be topped up by increasing the tax burden), early nineties Conservatism (a slack-jawed admiration for the wealth of multinational corporations, irrespective of how that wealth was gained) and various defunct East European totalitarian states (an obsession with surveillance, constant paranoia about state security). In return, I have a suspicion that Gordon Brown and Alistair Darling have an ideological problem with a low-tax nation like the Isle of Man, whereas the OECD, G20 and EU are concerned solely with mitigating the abuses formerly prevalent in some tax havens. Furthermore, the UK government's actions over Kaupthing, Brown's new-found enthusiasm for the anti-tax haven lobby and the possible direction of the Foot Commission (whose interim report should be with us within the week) do present legitimate cause for caution.

 

You seem to almost see progress towards better regulation as if it were some conspiracy.

Not at all - as I have previously stated, I believe the old-style tax havens have no place in tomorrow's world - we evolve or die.

 

The IOM has no future as a rebel state. Nobody would do business with a pirate kingdom.

Agreed absolutely. I said before that I believe there will be a small number of highly regulated offshore jurisdictions with specialist financial services expertise in the future. I want us to be one of them.

[hboy]

Since Kaupthing (Isle of Man) Limited is / was based on the Isle of Man the UK tax payer should absolutely NOT be required to bail that bank out.

 

All the IoM ever asked for was the £500 odd million that was taken off KSFIOM back you certinous old tosspot. That is not a bail out its getting back the money that was taken off you by Alisttair Darlings complete f**k up dealing with KSFUK. Other people have used the word 'stolen' but lets remember KSFIOM was solvent and would still be solvent today had that £500m not been lost in thew ether of the UK banking system.

 

Nobody is asking to be bailed out.

[manshimajin]

Out of interest:

Of those questioned in the YouGov poll for Scottish Widows, 69% said they want to escape the British weather.

Meanwhile, 35% said finances would motivate them to move abroad. Almost half, 47%, said they believed the United Kingdom was too expensive for the kind of life which they wanted to lead. And 28% said they did not feel they could afford to stay in the UK when they retire.

 

The Scottish Widows study found 63% of respondents thought the lifestyle abroad was better, while 24% said they felt safer overseas."

 

Difficult if you govern a country from which so many people would want to move if they could. This situation is likely to get worse not better if the projections are correct about the huge increase in UK income tax needed to pay for 'fiscal stimulation' and bank recapitalisation. One also gets the feeling that people in the UK are beginning to resent living in the country with the most CCTV surveillance per capita in the world. The upcoming European elections will be an interesting indicator of the way public opinion is leaning.

 

The logical thing is for the UKG to improve its performance but it is no doubt easier to create diversions from its own failings.

[pongo]

Fair enough Politician. I made a couple of somewhat snarky points and you answered them well. Kudos :-)

[manshimajin]

I think that this has been posted on another thread but may be relevant to some of the discussion here.

 

Current advice from the UK Foreign & Commonwealth Office to UK citizens thinking of living abroad:

FIND OUT ABOUT THE BENEFITS OF OFFSHORE BANKING

Once you are no longer resident in the UK, different taxation rules apply depending on your country of residence. You may want to seek independent tax advice and consider the benefits of offshore banking before you retire abroad. An offshore bank account can play an important role in helping to minimise your tax liabilities. Additional benefits may include asset protection, estate planning, confidentiality, security, and the ability to deal with English-speaking professionals who understand culture sensitivities and the unique needs of expatriates.

Interesting - minimisation of tax liabilities, estate planning (IHT minimisation?), confidentiality.

 

FCO Document