With the release of the “Final report of the Independent Review of British Offshore Financial Centres” commissioned in December 2008 by the UK Treasury and put together by former Bank of England official Michael Foot, the general public will now be acutely aware that this project was simply another diversionary tactic launched during the height of the financial crisis that seeks to advance a specific political agenda.
After stating that the economies of British territories operating as offshore financial centres are very reliant on the financial services sector, the report goes on to ‘recommend’ that these economies develop a more diversified tax base. It claims that there is a strong case for these jurisdictions to introduce taxes to increase the sustainability of their business models but without reference to financial havoc that is occurring in the G 20 jurisdictions that are imposing increasingly higher rates of tax. Mr. Foot even goes on to offer the UK’s technical assistance in collecting these taxes since the jurisdictions have no experience in this area. This will, he says, “bring them more into the mainstream of the international community.” As a statement that owes nothing to technical analysis and everything to political dogma.
Not surprisingly, the only real positive mentions for Cayman in the report come from the independent reviews of our transparency and compliance record published by the IMF and CFATF. These firm and unassailable facts regarding our adherence to international standards to fight financial crimes provide an inconvenient obstacle to those wishing to label Cayman as a tax haven or disparage the Cayman financial model. Typically the fact pattern is ignored or given insignificant coverage so that any audiences fail to understand the significance of Cayman’s standing or that Cayman ranks ahead of most G20 nations in this area.
There is a certain cultural arrogance contained in this report, along with a sense of denial regarding the financial position of the UK and the ‘international community’ whose example we are encouraged to model our behaviour upon. With many of the world’s largest economies heavily burdened by the weight of their debts and future obligations should they really be promoted as role models to smaller, more efficient economies with regard to the sustainability of their ‘business model’?
The authors of this report should have understood better that any comments on such issues as debt, prudent government spending, and business model sustainability would invite comparisons to the records of the UK and other G20 governments.
An analysis by consulting company Deloitte LLP, which is included in Foot’s report, even described the business models of offshore jurisdictions that depended on tax competition strategies as standing “outside the growing international consensus on tax policy norms“. That is an assumption, not a finding, and one that we would not have anticipated as being within the competence of an accounting firm. Thankfully the Cayman Islands government has chosen to resist the pressure to join the tax and spend march crippling many of the world’s largest economies, and will take steps to balance the budget without introducing direct taxation . The solution for Cayman is to trim expenditure so that our cloak is cut according to our cloth, yet maintaining Cayman’s tax neutrality. That may well prove to be Cayman’s most attractive asset .
With the release of the “Final report of the Independent Review of British Offshore Financial Centres” commissioned in December 2008 by the UK Treasury and put together by former Bank of England official Michael Foot, the general public will now be acutely aware that this project was simply another diversionary tactic launched during the height of the financial crisis that seeks to advance a specific political agenda.
After stating that the economies of British territories operating as offshore financial centres are very reliant on the financial services sector, the report goes on to ‘recommend’ that these economies develop a more diversified tax base. It claims that there is a strong case for these jurisdictions to introduce taxes to increase the sustainability of their business models but without reference to financial havoc that is occurring in the G 20 jurisdictions that are imposing increasingly higher rates of tax. Mr. Foot even goes on to offer the UK’s technical assistance in collecting these taxes since the jurisdictions have no experience in this area. This will, he says, “bring them more into the mainstream of the international community.” As a statement that owes nothing to technical analysis and everything to political dogma.
Not surprisingly, the only real positive mentions for Cayman in the report come from the independent reviews of our transparency and compliance record published by the IMF and CFATF. These firm and unassailable facts regarding our adherence to international standards to fight financial crimes provide an inconvenient obstacle to those wishing to label Cayman as a tax haven or disparage the Cayman financial model. Typically the fact pattern is ignored or given insignificant coverage so that any audiences fail to understand the significance of Cayman’s standing or that Cayman ranks ahead of most G20 nations in this area.
There is a certain cultural arrogance contained in this report, along with a sense of denial regarding the financial position of the UK and the ‘international community’ whose example we are encouraged to model our behaviour upon. With many of the world’s largest economies heavily burdened by the weight of their debts and future obligations should they really be promoted as role models to smaller, more efficient economies with regard to the sustainability of their ‘business model’?
The authors of this report should have understood better that any comments on such issues as debt, prudent government spending, and business model sustainability would invite comparisons to the records of the UK and other G20 governments.
An analysis by consulting company Deloitte LLP, which is included in Foot’s report, even described the business models of offshore jurisdictions that depended on tax competition strategies as standing “outside the growing international consensus on tax policy norms“. That is an assumption, not a finding, and one that we would not have anticipated as being within the competence of an accounting firm. Thankfully the Cayman Islands government has chosen to resist the pressure to join the tax and spend march crippling many of the world’s largest economies, and will take steps to balance the budget without introducing direct taxation . The solution for Cayman is to trim expenditure so that our cloak is cut according to our cloth, yet maintaining Cayman’s tax neutrality. That may well prove to be Cayman’s most attractive asset .