BY DOMINIC WIGHTMAN
Not a week goes by without some Corbynite pointing out that one of the ways they will raise revenues when Jeremy Corbyn gets into Downing Street is by cleaning out the Offshore Centres of their billions, as if these havens contain billions comprised solely of unpaid tax.
Of course, presumably, what these Corbynites really mean is that any tax that was illegally evaded by Brits placing their funds offshore should be recouped, should Corbyn get to power (a big should), and from these taxes there would be more cash to pay for public services back home in the UK.
At least, in the wake of the revelations in the Panama Papers leak in 2015, the Shadow Chancellor John McDonnell said: “It’s time to clean out the tax havens with real government action. It should be a matter of shame to the British government that more than half the companies recently named in the Panama Papers were registered in UK-governed tax havens. Not only has this government impeded international efforts to crack down on tax avoidance and to tackle tax havens but senior figures are personally implicated in these immoral schemes.”
Let’s be clear on two key points:
First, from a UK perspective, there is currently no moral case for tax evasion, but tax avoidance is commonplace in all walks of life and always has been. (Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. In contrast, tax avoidance is the legal use of tax laws to reduce one’s tax burden.) Many of the best tax avoidance experts spent part of their careers at the VAT office or working for the Inland Revenue and know full well what the law states. It’s good business sense to pay as little out, and have as much as possible retained within the control of one’s business.
Second, Offshore banking of assets is ubiquitous. Many sizeable businesses, water companies, government department pension schemes, individuals and, embarrassingly, Labour councils tend to use offshore havens. Labour even rents its HQ from an offshore trust. These entities do this for a variety of reasons. It could be the gross roll-up of investment schemes offered, the performance of particular offshore-based funds, it could be anonymity of ownership to avoid publicity, or it could be for some other reason, such as hedging against political turmoil in a country. Money laundering, tax evasion and other crimes tend to be dealt with in a growing cooperation between the UK and offshore centres, especially since 9/11 amidst global recognition that following terrorist money trails illuminated terrorist locations and helped expose terror plots.
The irony of Labour’s position is that, while there is currently no moral case for tax evasion under this Tory Government, which maintains a reasonable rate of taxation (a fact Her Majesty’s Government underlies by legitimately pursuing evaded tax), there is surely a moral case for taking one’s assets offshore – and even for tax evasion – in the face of what a Corbyn government promises. There are historical precedents of socialist governments squeezing any wealth until the pips squeak. Take Venezuela, where real business is done offshore in US dollars, away from bolivar chaos and a bank-pilfering, immoral Government (its Corbynite-comrade ministers fond of using offshore shelters to hide their pilfered billions) so out of control it relies on narco-trafficking to pay off its Generals and to maintain power.
Why would you keep wealth in Britain which you or your family have worked your socks off to create – only for a covetous socialist Government to steal it? Where’s the freedom or justice in that? One could argue that Brits have a moral duty to keep their wealth away from a Corbyn government to ensure the wellbeing of Britain once his socialist experiment has failed.
Of course, the morality of going offshore is one thing. The mechanics of doing so is quite another. Just watch the first 15 seconds of this selection of clips to see what Labour intends to do with the Offshore sector should it get to power:
Andrew Neil’s question is, characteristically, spot on. Corbyn may wish to close down Monaco. He is utterly powerless to do so. Corbyn may wish to close down British-linked offshore havens, which include the British Virgin Islands, Jersey and the Isle of Man. Let’s presume he can. So, what is the consequence of doing so?
First, Britain’s overseas territories dependent on offshore financial services come to us for hand-outs, as Corbyn will have taken away their key sustenance.
Second, funds move. If I have assets held in the BVI or a British-linked offshore jurisdiction and know it will close, I immediately move those assets to Monaco. Or, if Macron and the EU find a way to close down Monaco, I swiftly move my assets to Labuan, located off the coast of the state of Sabah in East Malaysia. However many offshore zones are closed down, there are always plenty more that no government can ever get their hands on, save by physically invading them en masse, which would be absurd considering some of them are unprotected offshore-merchant-dependent like those tiny islands in Micronesia, like Vanuatu and Niue.
In other words, Britain, with Corbyn’s Offshore sector strategies, would simply drive away wealth overnight to offshore zones where wealth would be welcomed. Britain would be poorer, for as long as Corbyn’s nose-spite-face policies continued. And, if Corbyn should get carte blanche with his offshore crusade, offshore funds under management in the City of London would be untouchable for UK based traders – and this would result in many thousands of job losses.
Has Labour really thought this through?
My guess is that – as with student fees – Labour will promise the world to get into power. Once the democratic process is over, they will write off such blather as unrealistic, and backtrack. They only care about the revolution, after all.
Offshore can be moral. Let’s hope we in Britain never have to prove it.