Tax haven Jersey, hiding over 99% of assets held there
The government of tax haven Jersey is trumpeting:
Jersey’s Acting Comptroller of Taxes, David Le Cuirot, has sent to EU Member States a total of £4.6 million in retention tax for the year 2011.Now let's put that into context. First, under the EU Savings Tax Directive, jurisdictions withhold taxes on certain kinds of income, then retain 25% of that for themselves and remit the rest to the home countries of the relevant taxpayers, assuming they are resident in one of the 42 jurisdictions effectively covered by the Savings Tax Directive. That means Jersey withheld £6.1 million in total.
The tax rate applied under this scheme was 20% for the first half of 2011, rising to 35% in the second half, for an average of 27.5%. Assuming a rate of return of 3% per annum, that means that the STD "captured" an asset base of roughly £740 million.
But Jersey Finance noted that by December 2011 Jersey had £158.1bn of banking deposits and £189.4bn of funds under administration, for a total of about £350 billion.
Of the banking deposits, about 35% are from EU residents, suggesting that a total of very roughly £125 billion of potential assets.
So that £740 million only about 0.6 percent of all the assets that the Directive could cover. Over 99% of the Jersey assets escape the Directive.
[An email we received via Richard Murphy said: "Don't you mean 35% of banking deposits £158 bn = £55 bn unless funds also count for STD?" TJN: it's a good point, and here we get into a more complex area. Currently, these funds generally escape the EU Savings Tax Directive, which is full of loopholes. However, Amendments to the Directive are in the wings, which would close its main loopholes. Depending on what proportion of those funds are covered by, say, Jersey trustees, we think Jersey would in most cases be the jurisdiction that should withhold the taxes of Jersey-administered funds under an amended STD, so we think it's appropriate to add these two figures together - although we do admit that not all of these funds would be captured even under an amended STD.
But even so, here's a different way of looking at these numbers. Let's just be extremely conservative and use the data only for banking deposits: £158 billion in total, worldwide. (You can be sure that pretty much all the non-European parts of that are escaping tax on that stuff.) Jersey is paying out less than 0.003% of the value of these assets. That isn't even a rounding error. It's a joke.]
We would find the Jersey spin on these numbers amusing, if this weren't so serious.
"The Acting Comptroller of Taxes is happy that the process of exchanging information and the payment of retention tax is continuing to work extremely well.Is it, now?
David Le Cuirot said “I am extremely grateful once again for all the cooperation and help received from the paying agents, in particular the banks, who bear the greatest burden.”Our emphasis added. That is such a terrible burden for those banks, who are facilitating a 99 percent escape rate. Let us pause, a moment, to express our sympathy.
And now, finally,
The Treasury and Resources Minister, Senator Philip Ozouf, said “As part of our good neighbour policy we are pleased to continue voluntarily to lend support to the Member States in the implementation of their Tax on Savings Income Directive.”Well they sure are big-hearted people over in Tax Haven Jersey. If that is really true, then how about now doling out a few dollars to charities that dare to question Jersey's tax haven policies? Or would they prefer to continue to blackmail them?
All of which makes more odious the ongoing efforts (hat tip Richard Murphy) of those in Jersey, and those in the City of London and British establishment who support them, to urge an increase in the amount of media spin Jersey should conduct to try and shake off its richly deserved tax haven label, and the time the British government spends giving them time, while the calls of ordinary British people fall on deaf ears.
Hat tip: here