Cretins ahoy!

Letter to the DT from the usual suspects:

A recent Organisation for Economic Cooperation and Development report on implementation of its anti-bribery convention was critical of the British Government, which has ultimate and final responsibility for crown dependencies and overseas territories, including a number of tax havens.

Havens can facilitate tax evasion, money laundering and other financial crimes. We estimate that each year they allow some companies to dodge $160 billion in taxes in the developing world – far more than such countries receive in aid.

It doesn\’t matter. Because:\"\"

Note that these are flows, not stocks.

There\’s what, a couple of trillion of FDI in those poor countries? More? The existence of that capital there is vastly more important than any tax dodging that people might be doing with the profits being made from it.

Plus, of course, taxing those returns more is going to reduce the inflows, isn\’t it? As the absolutely standard economics of taxation tell us of course.


7 thoughts on “Cretins ahoy!”

  1. the British Government, which has ultimate and final responsibility for crown dependencies and overseas territories

    You see, they’re not real countries. Actually, the only differences between them and the Isle of Wight are distance and, for some, sunshine. If you actually read the report, there is a lot of HMG saying “we just do this, because of colonial history, but it is really bad manners in the 21st Century.”

    I wonder how many of the lefties whining about this would not notice the cognitive dissonance if there were significant independence movements in the territories and refused them a referendum?

  2. wow it’s almost like you’ve complete forgotten all those empirical papers about the relationship between taxation and FDI inflows I cited on a previous thread.

  3. All two of them, eh, Luis? I remember reading them and, surprise surprise, they didn’t say what you claimed they did. You just knew most people wouldn’t bother to check, and wanted to give the impression that you had something backing you up.

  4. Offshore Observer

    Surreptitious Evil: I think care needs to be taken about the use of the words “countries”. Certainly the Crown Dependencies and Overseas Territories are not soverign states. They lack international legal personality and the UK is ultimately responsible for their international affairs. But as far as I know there is no legal definition of “country”. It is quite clear that the CDs and OTs have complete autonomy over internal matters such as setting their own tax rates. This is far more legislative independence than say Wales or Scotland both of whom are recognised as countries despite being ruled from Westminster.

    There also needs to be a clear distinction between the Overseas Territories (Bermuda, Cayman, BVI, Pitcairn etc) and the Crown Dependencies. Overseas Territories were once rules directly from the UK, through the FCO and were subject to legislation passed by the Imperial Parliament. They were also considered “terra nullius” or empty land and therefore when the British settled on them they simply took all of England’s common law and planted it in the new territories. So English common law simply applied by virtue of occupation. They were then ruled from Westminster. Over time the UK parliament gave them legislative autonomy and effectively devolved power from Westminster to the colonial parliaments. That means that they can impose direct rule relatively easily by simply suspending the constitution of each territory as those constitutions are simply Acts of the Imperial Parliament (which still exists it is simply Westminster).

    The constitutional history of the Crown Dependencies is different. The three Islands have never been subject to the direct rule of Westminster. They have always governed their own internal affairs and they are not subject to the Common Law of England. The Channel Islands actually follow Norman French customary law as their underlying legal system. The common law has never applied directly but has influenced the evolution of channel islands law over the centuries. There was a report in the 1960s prepared for the UK government which said that in the opinion of its author the UK must have some reserve powers to legislate directly for the Crown Dependencies in circumstances where the peace order and good government of the Islands has broken down. That has never been tested and I suspect that if they did attempt to do so there would be a constitutional crisis and then a move towards independence.
    On the issue discussed in the report the UK accepted that it had capacity to legislate directly for the Overseas Territories. There is no mention of that CDs in that context. The OECD report while interesting is legally wrong in a few areas. Then again why would anyone expect the OECD to be alive to the details of the constitutional relationship of the UK to the CDs.
    None of this suits “the usual suspects” messaging so they are happy to propagate the errors of the OECD

  5. Another aspect of the usual suspect’s letter details transparency of corporate registers. In a World Bank initiative StAR identified that one of the Crown dependencies had a better corporate register (for identifying ownership) than the USA and the UK.

    As for bribery and corruption etc, it is well known that it is much easier to launder money in the USA and the UK than most offshore centres. The USA for example do not want to tackle this. Take a look at the Levin Grassely bill for further info. In the case of the USA it is usually do as I say but not as I do.

  6. I think care needs to be taken about the use of the words “countries”.

    I used the word deliberately and specifically. For all the reasons that you go in to. Except the 1960s report, which I was unaware of.

  7. Offshore Observer

    SE: its colloquially called the Kilbrandon report. Unfortunately it is not avaliable on line but here is the wikipedia link:

    I appreciate that you chose the word specifically but it the Channel Islands and the Isle of Man are not “countries” then neither are Wales and Scotland. On one view they are no more countries that Quebec, Delaware, or Bavaria (which is my view).

    But you try telling that the Scottish or the Welsh. That might ruin the 6 nations but at least if it were a 4 nations competition then team GB would probably clean up most years.

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