Effects of targeting offshore tax centres should be investigated
Financial Times - 19th October 2000
It is becoming increasingly apparent that the Council of Ministers and the Committee on the Code of Conduct of Business Taxation are targeting offshore "tax havens" of EU member states as part of the policy of bringing an end to what they term unfair tax competition, arguing that they need to bring legal and economic sanctions against these prosperous, offshore communities that enjoy a large degree of autonomy.
As both a member of the European Parliament's Economic and Monetary Affairs Committee and one of the nominated MEPs for Gibraltar, I have an interest in these territories, many of which, such as the British Virgin Islands, Turks and Caicos and Cayman Islands, are UK dependencies. Although, like all MEPs, I condemn unequivocally both tax evasion and money laundering, (the latter has been a problem but appears in large part to have been resolved satisfactorily), I believe it is the right of EU citizens and corporations to optimise their tax arrangements. The Cayman Islands, for example, provide enormous expertise in the drafting and managing of aircraft leasing contracts, which has nothing to do with tax evasion or criminal activity. These centres, by providing a competitive, low taxation jurisdiction, apply downward pressure internationally on tax rates and provide an effective cap on EU governments' ability to overtax their citizens.
In the past, the UK government has encouraged its dependent territories to develop offshore financial services in order to become economically self-sufficient. If their livelihood is destroyed, not only will they become dependent once again on national aid budgets, but there will also be an exodus of unemployed Europeans returning home, with business being driven off to other non-EU and even non-OECD jurisdictions such as Hong Kong and Bahrain. I think it is appropriate that before such draconian measures are contemplated, an economic impact study be carried out to ensure the costs would not outweigh the tax-raising benefits.
Dr. Charles Tannock MEP (Con)