Protesters are turning up the heat on tax havens

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For the most part, it seems pretty remote from everyday life here, and there will no doubt be many people wondering why the protesters should pick on Jersey instead of Guernsey, or the Isle of Man, or the Caribbean.

For most residents, living in Jersey has little to do with taxes. We’re here because of historic roots, family ties, employment, or as an accident of circumstance. Yet time and time again, in conversation with people from the ‘mainland’, I’ve been accused of stashing my millions offshore to avoid paying the UK Revenue, or at the very least knowing plenty of people who do.

Last summer the focus changed temporarily to the subject of alleged widespread child abuse, and this week’s High Court action by a Jersey politician is bound to raise plenty more questions. But it doesn’t take long for the same old tax haven jibes to reassert themselves.

Last Friday’s protest by members of various lobby groups, some of them global charities, some from the French mainland, and one former senior employee of the States, will no doubt have attracted the attention of millions who are already under the misapprehension that Jersey is nothing more than a hive of tax evaders.

If the protesters intended to intimidate ordinary people doing ordinary jobs in the finance industry, they may have succeeded. The receptionists at one firm I went to see that morning had been put on ‘red alert’ in case the placard-bearers came calling at the door. One chap who works on the Esplanade said that he had been accosted at the entrance to his office, with more than a few insults intended to sting.

No doubt the protesters have strong convictions. But is the public humiliation of folk at their place of work justified action in the cause of human rights, or is it more of a convenient bandwagon?

Granted, around 13,000 Islanders now work in the financial services industry. The political will which has allowed this dependency goes back into the mists of the 1960s. But we all need jobs, and this is the employment that happens to be on offer here. And so far, with tourism declining as we speak and agriculture no longer able to compete with the bigger boys, financial services is about as good as it’s gonna get.

Apart from the fact that the concept of tax havens translates effectively into many languages, what is it exactly that the protesters are complaining about?

Essentially it has little to do with those who are at the bottom of the food chain. They are targeting people who mainly live outside the Island and companies (and banks) which may well be tempted to try to use firms based here to help them to pay as little tax as possible.

The protesters claim that the tax lost to various countries by those who use offshore services to pay less is damaging the world economic balance and leaving third world countries in poverty.

The supporters of the finance companies say that everything they are doing is totally within the law. This includes the law as set down by UK Chancellor Alistair Darling, who earlier this year introduced a new charge of £30,000 allowing UK resident non-doms to earn as much as they like outside of the UK without ever having to report it to the UK tax authorities, just as long as they pay their 30 grand up front.

Yet Mr Darling has been the first, of late, to declare a crackdown on the very places which service the wealthy that he is allowing to escape tax. Is that hypocrisy, or is it political pressure from new US president Barack Obama?

The fact is that the UK gains considerable tax take already from the spending and investment power of these super-wealthy non-doms and cannot really afford to send them packing — especially in a recession, when huge sums of government money have been spent on shoring up banks allowed to run amok by the watchdogs who were supposed to be a line of defence.

Most of the tax ‘mitigation’ advice which is parcelled out to the world’s largest companies is provided by the world’s largest accountancy and legal firms, who know the rules inside out and spend hours studying the small print of Mr Darling’s every word to see where there might be some new opportunities for their clients to save money.

The offshore finance industry is now under global pressure as never before, and not simply from the UK government.

The wealthy whom it services are not as wealthy as they were. Only last week the exclusive Forbes billionaires listing suggested that even people like Sir Richard Branson will have had their wealth reduced by many millions.

If people who can afford the best financial advice on offer are losing bucks hand over fist, what hope is there for the rest? There has to come a point at which the cost of that expertise will come under as much scrutiny as everything else. This is the marketplace in which Jersey has set out its stall.

The fact is that if the finance firms based in Jersey decided that all this high-profile reputational damage was a little too close for comfort and upped and went, there could be a queue of 13,000 people outside our new careers office. That’s not including those whose livelihoods depend on the finance industry to support them.

Meanwhile, no doubt, the protesters will have long returned to the lands where, if they are made unemployed, there is dole money aplenty on demand.

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