Jersey Finance and the Hired Gun
Militant? Well we know they have hired public relations businesses in London to approach journalists and opinion formers to attempt to discredit Tax Justice Network in general and our senior personnel in particular.
Now they're at it again. They have just released a report criticising Christian Aid's recent work on the impact of transfer mis-pricing on developing countries. Their motives for doing this are clear: public opinion has moved firmly against the tax cheating that is the stock in trade of the offshore financial centre in Jersey, and as the senior business correspondent of Jersey's Evening Post recently commented: “It’s not only banking secrecy that’s dead. Tax avoidance – the industry that helped
Needless to say, the prospect of an end to tax avoidance is bad news for Jersey Finance and its clients. So the name of the game is 'shoot the messenger.'
Sadly for them, however, their hired gun, Mr Richard Teather (pictured above) has missed the target.
Firstly, Mr Teather has ignored recent research that supports the Christian Aid position, including the report published by Washington-based Global Financial Integrity in February 2010. This work, and the recent work of Penn State University's Simon Pak, arrives at findings that are consistent with Christian Aid's estimate that the tax losses to poorer countries from trade mis-pricing are as high as US$160 billion annually. Raymond Baker (GFI), Christian Aid's Alex Cobham, and Richard Murphy of Tax Research UK have written a riposte to earlier criticisms of the Christian Aid estimates, which you can read in full here.
Second, Mr Teather is not an independent researcher. He has been retained for several years to advise the Jersey government on their tax haven strategies. His advice has clearly not been useful; for example, we find no evidence that he warned the government that their 'Zero/Ten' corporate tax policy did not meet the standards required by the EU Code of Conduct Group on Business Taxation. For the record, TJN did advise the States of Jersey that their tax proposals would fail, so it came as no surprise to us when they did.
Furthermore, we also find no record of his having advised the Jersey government to cooperate with the EU on automatic information exchange.
This track record is telling: Mr Teather, who teaches at Bournemouth University, is a strong supporter of the weird and whacky notion of tax competition (a political construct that has done immense damage to poor people, especially in the world's poorer countries). The following extract from his book speaks volumes about his extreme position:
While I am not seeking to condone dishonesty or criminal activity, from an economic perspective this is merely another example of tax competition: indeed, it is often necessary behaviour in order to take advantage of tax havens. Without the willingness of some to engage in this sort of activity, tax competition would be much less effective and therefore reduce the benefits that flow from it for the rest of us.
Let's unbundle what Teather is saying here. He is stating, without ambiguity, that dishonest and criminal activity - we think its fair to say he's alluding to tax evasion - is often necessary to take advantage of tax havens. We agree with the logic so far. But he proceeds by arguing in favour of this behaviour on the grounds that it is necessary to render tax competition more effective. This is an extraordinary argument, which reveals Teather for what he is: a militant ideologist of the Libertarian far-right.
Having prospered for many decades from the tax avoiding industry (not our words but those of a senior columnist of Jersey's Evening Post), Jersey's leaders seem hell-bent on discrediting those who campaign for measures to combat abusive tax practices. Shame on them, and shame on their hired guns.