Monday, October 17, 2011

Trouble in Paradise: Jersey on the Rocks

This blogger is just back from the beautiful island of Jersey, a British secrecy jurisdiction.

Amongst other events, I spent an evening at the political hustings hearing from one candidate after another how poorly governed the island is - the Council of Ministers has clearly failed - and, surprisingly, widespread discontent about the unfair tax regime (the General Sales Tax regime is seen as highly regressive, which it is), and several heretical comments were made about how the island is being abused by non-resident tax avoiders. The tax justice message is taking root at the heart of the beast!

We are planning a much longer blog about this trip to Jersey in the very near future, but meantime this cartoon from the Jersey Evening Post on 15th October gives a feel for the zeitgeist: note the reference to Action Aid's excellent report on the British FTSE100 companies being addicted to tax havens like Jersey.

Note also the reference to the expected 1,000 job losses arising from the closure of Jersey's 'fulfilment' industry. Fulfilment?!! Yes, indeed, what the heck is that? For many years, major UK based businesses have been exploiting a loophole in VAT law which allowed a relief on low value items consigned by post. This has grown into big business, with truckloads of DVDs, CDs, small tools, all sorts of whatnot, being shipped daily into Saint Helier and posted back to the UK the following day.

Jersey's fulfilment industry has been a complete and utter waste of resources, arising from a silly scam which the EU now plans to close down. This action was entirely predictable - the scam was abusive and created unfair market competition, which has destroyed many jobs elsewhere (follow the trail of comments below the article to see just how badly honest businesses have suffered as a result of this scam).

Sadly, though I remember warning the island's politicians in the mid 1990s against allowing this 'industry' to take root, these warnings were simply ignored and now the impact on the Jersey economy will be quite significant since up to 3 percent of the total workforce will find itself instantly unemployed. The question is; why didn't the island's government act earlier to attract other more legitimate forms of business?

John Christensen, TJN director


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