Page last updated at 19:55 GMT, Monday, 9 March 2009

Island fear at tax 'haven' threat

By Paul Greer
BBC Radio 5 live in Guernsey

There is growing evidence the UK government intends taking a hard look at the status of Britain's "off shore" tax havens. But how would that affect places like Guernsey?

A high street in Guernsey
The high street in St Peter Port could look quite different without banks

In his speech in Washington last week, Prime Minister Gordon Brown said: "How much safer would everyone's savings be if the whole world came together to outlaw shadow banking systems and off-shore tax havens?"

President Obama has put his signature to a bill designed to make it harder for depositors to hide funds off shore, and here in the UK a review is already under way into banking practices in the Channel Islands and the Isle of Man.

But with the economies of places like Jersey and Guernsey so dependent on banking and insurance, there is concern any tightening of regulatory rules could see both jobs and income vanish elsewhere.

Some experts say up to two thirds of Guernsey's economy is now dependent (either directly or indirectly) on banking and insurance.

In recent months, Guernsey's chief minister Lyndon Trott has been both in Washington and London trying to convince politicians Guernsey is not a tax haven but, as he puts it, "a place of low tax jurisdiction".

FROM BBC RADIO 5 LIVE

He said: "We haven't got anything to hide. We are well regulated and determined to maintain our position as one of the most competent jurisdictions in the financial economy.

"I very much hope we will remain that way."

The TUC claims accounts in Guernsey alone cost the Treasury 48m in lost taxes over the last three years.

But Paul Medea, of the Guernsey Business Association, says losing Guernsey's special status would also cost the UK dearly and would "devastate" the island.

Paul Medea says business on the island would be devastated
Paul Medea says business on the island would be devastated

He said: "We would become a drain on the UK, people would have to emigrate and it would be a shadow of its former self.

"I fear that tourism wouldn't plug the gap."

However John Christensen, a development economist and former adviser to the UK and Guernsey governments, said reform of these areas is becoming a matter of urgency.

"Not only because of the huge tax evasion that happens through these places but also because they have been major centres of the shadow banking system that has caused so much of the current financial crisis.

"They create regulatory gaps that are exploited by banks and any attempt to re-regulate the global financial markets must take account of these weak links."



Print Sponsor


SEE ALSO
Brown urges tax haven regulation
06 Mar 09 |  Scotland

RELATED BBC LINKS


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC iD

Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific