Here is your starter for ten: what part of the British Isles has escaped the recession unscathed? Answer; the Isle of Man.
Thanks to its role as an off-shore banking haven, which provides a quarter of local jobs, the Isle of Man has enjoyed unbroken economic growth for a quarter of a century. Average weekly earnings on the island are now a bumper £661, compared with £444 on the mainland.
Little wonder then that the good folk of the Isle of Man are some of the few people on the planet taking any notice of next week’s G8 summit, which is being held just across the water in Northern Ireland. Chaired by David Cameron, the leaders of Canada, France, Germany, Italy, Japan, Russia and the US are gathering for their annual chinwag. Top of the agenda, according to the Prime Minister, is the issue of global tax compliance.
I hold no brief for tax jurisdictions that offer secrecy and a blind official eye in order to attract tax evaders – which the Isle of Man definitely does not. I do find G8 politicians, especially British ones, a mite hypocritical.
Last year, after Francois Hollande won the presidential election, Cameron blithely invited French millionaires to move to the UK to avoid the new wealth tax. I
n his March Budget, Chancellor George Osborne announced that he expects to squeeze an extra £1 billion in tax revenues following the signing of new tax disclosure agreements with the authorities in the Isle of Man and the Channel Islands.
This is smoke and mirrors: the UK already has virtual tax transparency with the dependancies.
True, there remains an issue concerning financial trusts located in the islands, where the ultimate beneficial ownership is often obscure. But full disclosure is dependent on international agreement with the countries that currently keep trust ownership confidential – not with the Manx, Guernsey and Jersey authorities.
And guess what? The worst offenders are in the G8, including Russia, Canada and America.
Delaware, with a population of only 900,000, has more than a million registered companies, most of which are just brass plates. Maybe the US tax authorities should start there?
Back in 2006, the Isle of Man found itself the subject of a major US Senate inquiry. This alleged that billions of dollars had been hidden in Manx trusts by rich Americans trying to evade tax. Democratic Senator Carl Levin thundered: “I hope the report will blow the lid off schemes that use shell corporations, sham trusts and fake transactions to avoid paying taxes”. But after a lot of hot air, none of the allegations led to action.
Expect lots of high-sounding commitments from the G8 regarding tax transparency – followed by a deafening political silence.