Wednesday, 3 July 2013

Odds and Ends

Tax Matters
philipozouf tweets that "Launch of #ValueJsytoUK is in City at noon today, hence won't be in States Assembly today. DCM will answer Treasury Questions."

This is all about the publication of a new reports which shows the value of Jersey to the UK:

One of the paragraphs that I particularly like is the following:

"There is little hard evidence about the actual scale of offshore tax abuse and almost no assessment whatsoever of the role of Jersey or the other Crown Dependencies. This lack of evidence should be no surprise in itself. Those involved in tax avoidance and, especially, evasion will have little desire to publicise the activity, and every interest in hiding it. Meanwhile, those trying to demonstrate the 'cleanliness' of their jurisdictions find it almost impossible to prove that little or no such activity takes place there because you can't prove an absence of something simply by failing to find it."

What I like about this is not that they are saying there is no tax evasion or avoidance, although they do estimate this later as relatively small, despite high profile cases like Jimmy Carr, but that they acknowledge the methodological problems from the outset. How do you quantify something hidden?

It is something which doesn't seem to both Richard Murphy, who clearly has X-Ray eyes in that regard – maybe borrowed from The Man of Steel. He tweets "Jersey says "don't blame us – we're only little". Is that why there's £383 billion hidden there?"

But if it is hidden, how do we know that it is there? One might term this dilemma Schrodinger's Tax Evader. It is very difficult to quantify how much is "hidden" without opening the box, and if you did it would be known, and not hidden.

Meanwhile, Richard Murphy also blogs that:

"HMRC has also put disclosure facilities in place to allow investors with accounts in the Isle of Man, Guernsey or Jersey to settle their past tax affairs in advance of the information being automatically exchanged. These agreements are expected to raise over £1 billion over the next five years. "

"Now I do not know if £1 billion will be raised or not but have strong reasons for thinking it likely. And that blows a complete whole in what Jersey says, after which all its other claims have to be seen for what they are: an act of pure fanciful thinking."

The report coming on the value of Jersey to the UK takes a different stance, coming to a different estimate:

"Our own calculations, based on cautious assumptions and prior to the adoption of a new FATCA-type reporting regime, suggest that the maximum level of tax evasion plausibly facilitated through Jersey was £150 million per annum in 2011. The actual level was probably much lower"

Now if only the UK HMRC gives details on how much they raise, we will have a good experimental validation of either Richard's methods of calculations, or the Value to Jersey Report's calculations. We can then check if it was £1 billion or less. I am however of the opinion that should it turn out to be less, we can probably expect very little publicity from HMRC over that fact, and the best we could hope for would be a whistleblower giving the information to "Private Eye".

Something New
According to a tweet by Mark Forskitt "Sen Le Gresley: the new 1% is not social security and not tax. It is a new thing."

This is the extra 1% being added onto the ITIS to deal with long term care. It is ring-fenced, and will be split off from other tax revenues. But it is being collected via income tax, it is assessed on income, earned and unearned, and it increases the base ITIS rate from 20% to 21%.

If Bill Clinton was around, he would say that as far as the employee is concerned, it looks like a tax, it is collected like a tax. It waddles like a tax. It quacks like a tax. Despite the best PR in the world by Senator Le Gresley, it is a tax, and the base rate of income tax is 21%, however much the spin doctors pretend otherwise.

Nimble on His Feet
I didn't know Deputy Noel was particularly nimble with ad-libs, answers to oral questions, and thinking with his feet. But Lucy Stephenson tweeted that he was out of the Island today

"States today - slow start with Members voting about if they should excuse Dep Noel or not as he's in the UK attending a dance competition"

It turns out it is his daughter, and he is going along to support her in a dance competition. That's a relief, for a moment, I though States members wanted to emulate Vince Cable and Anne Widecombe. And the next thing you know, the Bailiff will be welcoming members into the States Chamber with a cry of "Nice to see you, to see you nice", although in French, which would sound far more refined and posh – "Il est agréable de vous voir. Pour vous voir, agreeable"

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