'I Love Tax' - Anonymous Offshore Banker
Jeremy Hetherington-Gore Unleashed
20 July, 2008
After the insane public spending spree conducted by Gordon Brown at the UK's Treasury during which he wiped out the hard-won gains of 18 years of Thatcherite orthodoxy, his unfortunate successor Alistair Darling had to announce last week that public borrowing for the first three months of the fiscal year 2008/9 rose to GBP24.4bn, the highest since records began in 1946. Not to worry, the government is only taking just over 40% of national income to waste on behalf of the populace, so no-one will notice another percent or two to put things right. German Finance Minister Peer Steinbrueck showed the way last week, saying he would increase rates of income tax for the wealthy in order to recoup revenue that will be lost as a result of a recent ruling by the Constitutional Court allowing German taxpayers to offset health contributions against tax. Strange, I thought they had a right-wing Chancellor.
Sir Win Bischoff, a leading City figure, said last week that he expected at least two years more of credit crunch problems, with falling house prices in the US and the UK. Perhaps that 40% will have to go to 43%, as the one thing you can be sure the government won't do is to cut back on spending. Oh, no John, no John, No! Sir Win has been put in charge of the Financial Services Global Competitiveness Group, which has the unenviable task of working out how to stop all the rich people leaving Britain now that the government has turned on the 'non-dom' hedge fund managers who were supporting it with their spending.
The Brits' rubber-stamp Parliament continues meanwhile to whinge about 'offshore', just like the US Congress. Both bodies have Committees taking another of their regular sour-faced inspections of offshore - that's where all the rich people go when they're driven out - and will come up with some more spendid wheezes for making it more difficult to transfer money to low-tax jurisdictions.
Not that 'offshore' will care. The more governments try to throttle it, the better it seems to do. One fund administrator in Guernsey last week threw a party to celebrate 400% growth in its assets in a mere two years from EUR12bn to EUR50bn. And that's just one firm; altogether Guernsey's financial assets top half a trillion dollars, up 100% in the last five years. This story could be repeated dozens of times around the world in other offshore jurisdictions: Bermuda is booming; Luxembourg (the richest country in the world by GDP per head) now has 48,000 stock exchange listings, up 11% in the last year; Hong Kong (reserves up to just under USD500bn) is another place that never seems to go backwards; in the Gulf, Dubai, Qatar and Bahrain are swimming in money.
Explain it, I can't. If it's more and more illlegal every year to hide money offshore, and if offshore is more and more transparent every year, how does the money get there? Perhaps there's an undiscovered physical principle equivalent to gravity: a sort of osmosis whereby national boundaries become financially porous in proportion to the comparative levels of taxation on either side. Let's call it Gore's Law and maybe I'll be famous after all.
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