Monday, March 17, 2008

Tax Havens: a challenge to Christian values?

We have remarked on several occasions about how the media in many tax havens is "captured" by the political forces of the financial services industry, and how its practitioners rarely, if ever, speak out. But in any society there are always brave voices who don't like what they see and ask difficult questions. One such voice has just spoken out on the Cayman Islands. The author, Andre Iton, was writing about recent news about the tax avoidance tricks by the British retailer Tesco:

To suggest, as many self-interested parties repeatedly do, that the “tax efficiency” machinations of the wealthy and the mega-corporations is, at worst, benign to the social wellbeing of the average citizens (of the offended country) in the face of such opportunity losses as identified in this single occurrence is indeed a stretch. As the facilitating jurisdiction, it is essential that we use such incidents, which inevitably attract the opprobrium of large segments of the global community, as moments for serious introspection and honest self assessment.

Spot on, Iton. And he goes further - to make a fundamentally important point.

There is nothing short of unanimity amongst the people of these islands that these are communities rooted in Christian values. As we reflect we would do well to remember Jesus’ response to those who sought to query him on the matter of obligation to the state. He advised them very clearly that what was due to Caesar should be rendered unto Caesar.

Do we truly believe that it is consistent with our value system to provide succour to the greedy, the gluttonous and, on occasion, the malfeasant who would not render unto his/her Caesar what is rightfully due to him? At the level of our domestic society our Government consistently ensures that those of us who reside here, render unto our Caesar, all that is due to him. Every fee, every licence that is required of each of us is rigorously pursued, collected and enforced.

This is what tax havens do: they tax their own citizens, but allow the citizens of other countries to escape their taxes. And, correctly, he pits Cayman's meagre rewards against the welfare losses elsewhere:

Based on the current costs of establishing offshore entities in this jurisdiction, it is unlikely that the direct revenue earned by our public purse for the pleasure of hosting these transactions that brought us mainly negative international press, would be sufficient to cover the costs of our next official delegation to London, whilst it saved the perpetrators a cool $2 billion! Can our moral compass be maintained in the face of such fundamental contradictions for so little returns? Is this where and how we wish to position the economy for the next generation?

John Christensen, director of the Tax Justice Network and a former economic adviser to the state of Jersey, read today's Cayman story and highlighted the corruption of the media in one of Britain's foremost tax havens:

In all these years I have never seen a single article in the Jersey media which properly raises any of the issues he raises here. When faced with criticism, they take the ostritch approach - and deny that the outside world has any right to intervene.

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