Foot Review - Review Of British Offshore Financial Centres

[Albert Tatlock]

Progress Report Clicky

[Pragmatopian]

Pretty limited progress then.

[The Voice of Reason]

Think I could have written that in a couple of hours using freely available information nicked from the web re tax rates etc in the various jurisdictions. Jeez if I was given a project to do at work and could do no more than reiterate freely available facts, happy days!

 

Still to be fair, maybe being premature. the guy might actually do some real work. Let's wait and see

[Albert Tatlock]

Foot Rview - report now published (1.2Mb).

 

Govt Statement: CHIEF Minister Tony Brown MHK today welcomed the findings of Michael Foot’s Review of Crown Dependencies and Overseas Territories

[Utah 01]

C'mon Albert, any chance of an executive summary?

[Gladys]

I've printed it off and skimmed some. Generally, it distinguishes between the Crown Dependancies (us, Jersey & Guernsey) and the Overseas Territories, with the CDs coming out much stronger. The interesting thing will be how it will be received and acted upon by the UK. From an initial skim it would seem that the report considers there is much more vulnerability and so risk to the UK in the OTs than the CDs. Wonder if the UK got in quick on the VAT issue before its publication.

[oldmanxfella]

Wonder if the UK got in quick on the VAT issue before its publication.

 

I thought that too but the draft report must have been out for comments well before final publication.

[Gladys]

Exactly.

[Albert Tatlock]

I have just had my first glance through the report, and a couple of things jump out at me straight away:

 

1. The effective discrediting of the 'Tax Research Group' and the TUC pamphlet (the missing Billions). The Foot report basically says this £11billion supposedly 'lost' to the UK exchequer is really likely to be closer to £2billion (and probably much less than that from all the offshore jurisdictions), and heavily implies that bad studies are effectively being recycled by these groups in order to support the myth of a missing £11billion.

2. The UK have a decision to make. They either act as lender of last resort and support the offshores that can affect the UKs' reputation when financial systems go wrong as they have recently (which will be prohibitively costly and is therefore unlikely to happen IMO), or more likely, push that we stand on our own two feet. I think that it could also be read (not from this report itself, but from the reports' implications) that the recent VAT cut is aimed at ensuring the government here start thinking about its economic strategy far more deeper and e.g. go for a much leaner and far less costly administration, and make the diversification some of us on here have vigourously argued for become a reality. And of course push us into a position where a corporation tax could be more likely to have to become a reality as far as the UK is concerned. I think we need to avoid going this CT route though, or at least minimise it as much as we can, by tackling the enormous amount of waste in government.

3. According to the report, the reserve fund in the Isle of Man stood at £337 million at 31 March 2009. That's nowhere near the £1200million people (including myself) are requoting, as the rest is obviously made up of other monies (funds etc.) that do not really count in the general picture as they are effectively tied up. £337million is only 2 years of the cut in the VAT share that has been 'imposed' and would soon be gone if everything was left as 'business as usual'.

4. I noted how much 'they' are now more and more interchangeably using the phrases 'tax evasion' and 'tax avoidance'. This to me seems to be some sort of terminology attempt to make a currently perfectly legal 'avoidance' an effective crime. I don't see how they can do this though, as countries all over the world (UK and US included) all have differing tax systems and corporates will move to suit themsleves, their shareholders, and their employees too. I think this interchangeability of phrases is unrealistic socialist clap-trap, and those such as Tax Research and the TUC are missing the point that if we do not offer these services and allow the money to flow into the UK, other jurisdictions will always offer the services and money will flow elsewhere - and the UK and its offshores will both lose out substantially. Companies will never allow themselves to become 'charity givers' to be used to prop up certain governments like the UK, or indeed our own - they'll just relocate elsewhere.

 

Overall, so far, I have got the impression that the report sought to identify the potential to 'get back' as much tax 'back' into the UK exchequer as possible, but found the amounts actually involved to be nowhere near as has been suggested, and that it is in many markets the complexity and bureaucracy of the UK business systems themselves (not just tax, and not that much tax savings at that) that bring businesses here and other offshores. If they hit us harder, the income they will get back into the exchequer will be outweighed by the costs of business and cashflows going elsewhere, or the costs of making the UK less bureaucratic (won't happen IMO). The report concentrated on corporates, but identified and seemed satisfied that TIAs and other measures will automatically deal with identifying individuals seeking to evade tax.

 

I think (no news here) that Tynwald have become complacent, have wasted a lot of money, not diversified the economy sufficiently - and in the vast majority of cases (at least 3/4 MHKs) - have little understanding of what we have here and how it actually all works. I think we need some greater minds to be involved in analysing our route forward - because how we respond now, particularly to the VAT cut, and the need for a leaner administration, and the possibility of corporation taxes etc. will be critical.

 

And how we respond to the report itself will of course be extremely important. We defintely need a very UK-public charm offensive based on much of this report itself, with a clear message that we are good for the UK, and overall cost them nothing (actually making them money via significant financial flows). That it is time to stop picking on us as they are effectively cutting off their nose to spite their face, and for them to look closer to home for the causes as they blamestorm the financial crisis and try and work their way out of it.

[Slim]

1. The effective discrediting of the 'Tax Research Group' and the TUC pamphlet (the missing Billions). The Foot report basically says this £11billion supposedly 'lost' to the UK exchequer is really likely to be closer to £2billion (and probably much less than that from all the offshore jurisdictions), and heavily implies that bad studies are effectively being recycled by these groups in order to support the myth of a missing £11billion.

 

And most of that loss seems to be the Cayman and BVI, not the CI's.

[localyokel]

1. The effective discrediting of the 'Tax Research Group' and the TUC pamphlet (the missing Billions). The Foot report basically says this £11billion supposedly 'lost' to the UK exchequer is really likely to be closer to £2billion (and probably much less than that from all the offshore jurisdictions), and heavily implies that bad studies are effectively being recycled by these groups in order to support the myth of a missing £11billion.

 

And most of that loss seems to be the Cayman and BVI, not the CI's.

 

Yes. The clear message to me when I read it is that the Dependencies are the least of the UK's worries. As a group we are largely more solvent than all other groups and we present minimal tax loss when compared with places like Cayman. I also agree with what Albert has said in that the VAT cut seems to be a clear message from the UK to the IOM to diversify our economy properly not just get fat and lazy by milking revenue through UK agreements.

[Gladys]

Isn't the publication of a report of this type accompanied by a press release by the commissioning government? T'would be interesting to see what spin, if any, has been put on it by the UK.

[Gladys]

On doing a little Google, Cayman seem to be dismissive of the report and the Tax Justice Network considers it 'weak'. Well they would, wouldn't they?

[localyokel]

On doing a little Google, Cayman seem to be dismissive of the report and the Tax Justice Network considers it 'weak'. Well they would, wouldn't they?

 

Well who cares. Cayman is bankrupt anyway and I was amazed at just how much of its banking sector relies on a stupid US law that stops US Banks paying interest on overnight deposit - it would seem that one simple US regulation tweek could take about a trillion of banking transactions out of Cayman as it seems to survive only on a steady inflow and outflow of overnight US money.

 

I suppose its hardly a position of strength to get too angry but it will be interesting to see what the US do now that its main business model and the numbers involved have been so clearly exposed..

 

As for the TJN - I have a hat here that I would like to pass on to Richard Murphy to publicly eat!

[bluemonday]

I think (no news here) that Tynwald have become complacent, have wasted a lot of money, not diversified the economy sufficiently - and in the vast majority of cases (at least 3/4 MHKs) - have little understanding of what we have here and how it actually all works. I think we need some greater minds to be involved in analysing our route forward - because how we respond now, particularly to the VAT cut, and the need for a leaner administration, and the possibility of corporation taxes etc. will be critical.

 

Quite right.