Dear Gordon,
Thanks very much for your letter. I must admit I was a bit surprised to get a letter from Number Ten. We’ve never had one before as far as I know. I thought you were writing about my gong, or perhaps looking for advice on how to run a successful economy.
I have to say that I’m most impressed with the way that, despite being in the middle of the worst economic crisis since the Second World War, you still have time to worry about little old Jersey.
Those people who say that you and some of your G7 colleagues are targeting tax havens as a diversion from the real problems are obviously being unfair. Incidentally, I use the term tax haven as shorthand for international offshore finance centre because obviously some of your advisers can’t tell the difference.
It was good of you in your letter to welcome the progress we have already made in meeting the new OECD targets on tax information exchange agreements. As you can probably appreciate, it’s quite difficult for a small jurisdiction to go out and negotiate with the world’s major economic players and come to an agreement that suits both parties.
I say both parties because obviously there’s a misconception that this is a one-way street. Some of your G7 colleagues obviously think that all they have to do is to lay down their conditions and Jersey and our fellow Crown Dependencies will simply roll over and be grateful that our interests are trampled upon.
Hopefully our negotiators take a more robust approach, but of course in the current climate created by the rhetoric coming from some world leaders, particularly your good self, we are constantly being put on the defensive. It would be nice to have just a little bit more acknowledgement of our willingness to meet new (and ever changing) international standards, and the risks we have been prepared to take with our principle industry and therefore the welfare of the people for which I am responsible.
But then I suppose we have to continue to play the role of the bad guys. Our highly successful finance industry attracts business from all over the world, particularly the UK. Our historically low taxes are important in this respect, which is why some people mistakenly describe us as a tax haven. But as you know, in a spirit of neighbourliness, we have gone to some considerable lengths to dissuade UK residents from using the Island to evade their dues to the nice Mr Darling. If they do and they break the law, we are on them like a ton of bricks.
So it was with interest that I read your reference to the focus on tax transparency, where we can’t be faulted, changing to an emphasis on tax avoidance, where no one knows what you’re talking about. No doubt as I write this some civil servant is beavering away in Whitehall trying to devise some new standards to make clear what is the difference between acceptable tax avoidance and unacceptable tax avoidance. I wish him luck.
Perhaps tax avoidance will be outlawed altogether, meaning it becomes tax evasion and forcing people to do everything they can to ensure they pay as much tax as possible. The taxman will be pleased but I don’t rate your chances of re-election.
Whatever your tax experts come up with is likely to prove a bonanza for the lawyers, unless of course the intention is to do away with the rule of law in this crusade against tax dodgers.
We will obviously meet whatever new standards are agreed, as we always have done, and someone might even ask our opinion. However, it seems to me that the best place to combat tax avoidance is where the taxpayer is actually domiciled. That’s why over the years we’ve consistently said that it’s entirely up to the UK government what they do to protect their own tax revenues. We won’t interfere. Similarly as we accept and, more importantly, actually adopt international standards, it is entirely up to us how we raise our own tax revenues.
So we wait with interest to see what new definition of tax avoidance you and your colleagues come up with. However, as you have written to me, it gives me a good opportunity to raise an issue that upsets some of my electorate: they simply hate being called a Crown Dependency.
It’s a bit of a nonsense, really, as there’s not much point being dependent on the Crown, and we’re certainly not dependent on the UK government. So why are we called a dependency?
The overseas territories are called simply UK overseas territories. Some of them may actually be dependent on the UK government, so perhaps there would be some justification in calling them overseas dependencies. But you don’t do that, because presumably you don’t want to upset them.
I know they say that the Crown is ultimately responsible for the good government of the Island, and the Crown in the UK context is now the government. But we’re not part of the UK, and frankly we have our own parliament to decide on the issue of good government (as well they might, although every parliament has its lunatic fringe).
This fiction about being responsible for the Island’s good government might have been useful when people needed the comfort of the UK casting a watchful eye on what Jersey was getting up to. Now it’s just an insult.
This is, of course, illustrated by the contents of your letter to me. You write as though you have a special relationship with the Crown Dependencies because of their constitutional position. But you apparently don’t know enough about what’s going on in the Crown Dependencies to understand them better or to stand up for them.
As they say, with friends like you …
Your Brother in Arms,
The Chief Minister
Peter Body is editor of Business Brief magazine
