Crown Dependencies mislead public with spin over new U.S. tax haven legislation
"Probably the biggest change in the bill from the last Congress is that it would no longer require Treasury to develop a list of offshore secrecy jurisdictions and then impose tougher requirements on U.S. taxpayers who use those jurisdictions."A different approach is being taken instead, whereby the focus is not so much on jurisdictions, as on financial institutions. Specifically, it is those institutions that shun the U.S.' Foreign Account Tax Compliance Act (FATCA,) a crucial tool for fighting abusive offshore behaviour, that are being targeted by Levin's new bill.
Now it is is rather interesting to see some of the spin that is emerging from the Crown Dependencies.
For example, an article in WealthBriefing entitled: Guernsey Removed From US Offshore Blacklist.
The piece states:
Senator Carl Levin has removed Guernsey, a UK Crown Dependency, from his "blacklist" of "offshore secrecy jurisdictions", following a visit by the island's chief minister to Washington.
But, there is no blacklist any more. So how can Guernsey be removed from a list that no longer exists? The story is not only misleading, but factually wrong.
The article goes on to talk about Guernsey's reformed character -- the truth of which will become more apparent once we release the results of the updated Financial Secrecy Index in a few weeks' time.
The article continues:
This move signals a strengthening of ties between the governments of Guernsey and the US, and comes after several meetings between Guernsey's chief minister Lyndon Trott and Bob Roach, Senator Levin's chief investigator and counsel, in which Guernsey's financial sector was discussed.
The US senator, a Democrat, has been one of the most vocal critics of offshore financial centres in recent years, pushing for legislation to crackdown on suspected tax evaders.
Sen. Levin and his team have very much been in the forefront of the crackdown on tax haven abuse, we agree. But Guernsey's chief minister Lyndon Trott is then cited:
I was delighted to be advised this week that Guernsey would no longer be unfairly blacklisted in the Senator’s legislation.
Unfairly? Again, check out the Financial Secrecy Index for some clarity.
Two Jersey politicians have welcomed a new bill in the USA that removes a list of "secrecy jurisdictions" from the Stop Tax Haven Abuse Act.
It was the second time US Senator Carl Levin had tried to introduce a bill of this kind.
The first was a failed attempt in 2009 where all Crown dependencies were listed as secrecy jurisdictions.
This new bill proposed this week removes that list from the act.
Actually, the bill did not "fail" - it is being reintroduced, with strengthened provisions. More factual inaccuracy. The article then states:
[Jersey] Treasury Minister Senator Philip Ozouf said: "We are delighted therefore to see that we have been listened to, along with other jurisdictions that were also on the list who have made similar representations to Washington, and that there is now greater understanding of our position as an open and transparent regime.
Open and transparent? Pull the other one. You need look no further than our last blog but one, to see how hollow these claims are. Phase 2 of Jersey’s Peer Review on Exchange of Information by the Global Forum on Transparency and Exchange of Information for Tax Purposes shows otherwise. As Richard Murphy points out:
The OECD have delivered on this. They’ve revealed, in unambiguous terms, how little information exchange Jersey has actually done And they’ve also not avoided the fact that a perceived failure has occurred and they have levelled criticism at Jersey for the fact that this has happened and have demanded reform.
This shatters Jersey’s reputation. Firstly it is not transparent when tiny amounts of data are made available. Second it is shown to be non-cooperative (as the UK has already officially labeled it).
And, the UK's The Telegraph proclaims in a headline: Crown dependencies removed from US tax haven 'blacklist'
Misleading, inaccurate headline, though the article itself is more accurate:
Mr Levin said that the new bill, instead of recommending that the US treasury automatically impose stiffer requirements on those who used offshore jurisdictions, would "build on the Foreign Account Tax Compliance Act (FATCA) of 2010, by creating tougher disclosure, evidentiary, and enforcement consequences for US persons who do business with foreign financial institutions that reject FATCA’s call for disclosing accounts used by US persons".
"By focusing on non-FATCA financial institutions instead of offshore secrecy jurisdictions, the bill relieves the treasury of a difficult task, while providing additional incentives for foreign banks to adopt FATCA’s disclosure requirements," he explained.
And then reports:
Authorities on the three islands, who have worked hard to convince Washington of the transparency of their financial services over the past few years, announced themselves “delighted” with the news.
The inference in these articles appears to be that the U.S. Stop Tax Haven Abuse Act "blacklist" has been removed because certain listed jurisdictions have pointed out to Sen. Levin and team that they have been "unfairly" represented.
We disagree. Instead, these U.S. lawmakers are demonstrating a wider recognition of the fact that tax havenry is a global spiderweb, perpetrated by an intertwining of elite interests, where financial intermediaries are key players that need to be targeted specifically. Read Treasure Islands to see how.