Thursday, June 28, 2012

Jersey to take ball, go home

If the UK won't play nice.  It seems that the island of Jersey is growing weary of political attacks coming from the UK that label Jersey as an unrepentant tax haven. Tax analysts reports [pdf]:
"Jersey Chief Minister Philip Bailhache, in a June 26 interview with the U.K. newspaper The Guardian, said relations between Jersey and the U.K. have been "strained" over the past several years as their interests have diverged, and that Jersey should be ready to escape the "thrall of Whitehall" if necessary."
I am not sure how independence will stop the UK from using Jersey and its fellow channel islands as a shield to deflect attention away from the notorious city of London, prime tax haven territory.  But in the meantime, the plan is to spend money on marketing to work on Jersey's image:
 "Jersey plans to open an office in London with the specific goal of improving the island's tax image among the British public. (Jersey has already opened a similar office, together with Guernsey, in Brussels.) Noting Jersey's many tax information exchange agreements with EU member states and other countries, Bailhache stressed that Jersey does not market itself as a tax haven or a tax avoidance facilitator."
Jersey's $5.1 billion GDP is built on financial services.  From the US CIA World Factbook

Jersey's economy is based on international financial services, agriculture, and tourism. In 2005 the finance sector accounted for about 50% of the island's output. ... Tourism accounts for one-quarter of GDP. ... Light taxes and death duties make the island a popular tax haven. Living standards come close to those of the UK.
That Jersey is a tax haven can't seriously be doubted, I don't think.   Of course the same is true for the UK.  Jersey's chief minister says if UK taxpayers do use Jersey to shelter their income, that it is a governance failure on the part of the UK:
"despite the island's efforts to downplay its use for tax avoidance, ... the real issue is why the U.K.'s and other jurisdictions' tax laws are written in such a way that they allow legal avoidance, which is then condemned."
That's true, but unfortunately for Jersey, it's convenient for them to serve as a focal point for anti-austerity and anti-tax dodger anger in the UK. It would be inconvenient to the UK to target the city of London similarly. 

Update: Tax Analysts sent me a link to an ungated pdf, link replaced above.

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