- Tax expert says he correctly predicted Jersey’s budget shortfall eight years ago
- Richard Murphy is regarded as one of the most influential people in global tax affairs
- He says Ministers only have themselves to blame
- Watch videos below of Richard Murphy’s 2011 Plan B for Jersey
ONE of Jersey’s fiercest tax critics has claimed he correctly predicted the Island’s huge budget shortfall eight years ago – and has warned ministers they have only themselves to blame for bringing the States finances ‘to its knees’.
Richard Murphy, regarded as one of the most influential people in global tax affairs, today said that the Island’s controversial zero-ten tax regime – where foreign non-finance firms pay nothing and finance firms pay a reduced rate – has left a gaping financial hole which will have a significant effect on the lives of ordinary Islanders.
And he said that the black hole could have been avoided if ministers had listened to his warnings – from as far back as 2007 – that the introduction of zero-ten in 2009 would have a devastating impact on the Island’s economy.
It comes after ministers this week announced that £60 million of public sector staff cuts and savings were needed to help avoid a predicted budget shortfall of £125 million by the end of 2019.
In a blog entitled I Hate To Say It To Jersey, but I was Right All Along: You’re Going Bust, Mr Murphy wrote: ‘One of my recurring themes from 2007 onwards was that Jersey would one day, as a result of its introduction of a zero per cent corporation tax, face an insurmountable financial black hole that would bring its States finances to its knees.
‘I got the timing wrong: I admit that. In 2007 I forecast that a deficit of £134 million might arise by 2012. This was averted by privatisations, raising reserves and cuts. But such measures cannot hold off the inevitable forever.
‘I repeated the warning many times since then.
‘All were ignored by Jersey’s ministers who said I was completely wrong. The evidence now makes clear who read the runes correctly.’
Mr Murphy, who runs tax campaigning organisation Tax Research UK, said that ordinary Islanders were now going to pay – through new charges, redundancies and benefits cuts – for Jersey to maintain its status as a ‘tax haven’.
He added: ‘It was ever thus: the needs of the tax abuse industry always come first in Jersey.’
The tax campaigner said that his sympathy lies with the ‘ordinary people of Jersey’ and urged Islanders to ‘vote the politicians who have sold their Island to the finance industry out of office’.
Mr Murphy, who was ranked the seventh most influential person in global tax in 2013 by the International Tax Review online journal, went on to describe what he believed had caused the budget shortfall.
‘Jersey has a crisis for three reasons, and they have not changed from 2007.
‘The first is that you cannot run an economy on the basis of not properly taxing your biggest economic activity, which in Jersey’s case is finance.
‘When so many companies using Jersey pay no tax at all and those in the finance sector that do pay tax pay at half the normal rate, of course there is going to be a financial crisis in the Island. It did not take genius on my part to predict that.
‘Second, Jersey has remained wedded to a tax-haven model for its economy when tax haven activity has come under scrutiny and many of the reasons for using Jersey provided opportunities for abuse and have been taken away as a result of the efforts of tax justice campaigners.
‘And third, Jersey refused to change.
IN 2006, Jersey’s then Chief Minister, Frank Walker, was due to go head to head against Richard Murphy at a public debate.
However, the then Senator Walker backed out on the grounds it could damage the Island’s best interests.
In a written answer to a question tabled by Deputy Geoff Southern in the States, Senator Walker said he had been advised against having the debate with Richard Murphy of the Tax Justice Network.
Challenged, he then said that when he was challenged on a BBC radio programme to a debate, his immediate reaction was to agree as he wanted to expose Mr Murphy’s position on Jersey as ‘the vindictive crusade it is’. However, he said he had since been advised that previous experience suggested any such debate would be misrepresented by Mr Murphy and would damage the best interests of the Island.
At the time, Mr Walker argued that Mr Murphy and his colleagues were an ‘unelected, unrepresentative group, responsible only to themselves’.
‘A public debate would give them credibility they neither deserve nor justify,’ he said.
The following Letters to the Editor were published in the JEP in 2006, following the news that Frank Walker had pulled out of the debate:
From John Christensen, director, Tax Justice Network.
IN the past six months the work of the Tax Justice Network has been cited and profiled in international media including the Financial Times, the Wall Street Journal, the International Herald Tribune, Sudendeutsche Zeitung, Canadian Broadcasting Corporation, the BBC World Service, BBC Radio 4, BBC Panorama, Het Financieele Dagblad, Africa Report, Public Agenda and more.
Our research was cited on the first page of the recent report on tax havens — ‘The Enablers, The Tools, The Secrecy’ — published by the US Senate Permanent Sub Committee on Investigations, which strangely you failed to report on in the JEP despite its obvious relevance to the Island.
My press adviser tells me that our research has been cited in the press of more than 50 countries during the past 12 months.
Over the same period TJN teams have met senior officials of the European Commission, the International Monetary Fund, the World Bank, the United Nations Economic and Social Council, the OECD and the South Centre.
We have met treasury officials from many major countries including the USA, France, Germany, Norway and the UK.
So who does Senator Walker think he’s kidding when he says that a debate between him and Richard Murphy would give TJN ‘credibility they neither deserve nor justify’? (JEP, 8 December). Hasn’t he let local politics go just a little to his head?
Richard Murphy is internationally renowned for his research and advocacy on tax and related financial issues. I would not pretend that this would have been a debate between equals, but having agreed to a discussion with Richard, the excuse given for not proceeding was feeble in the extreme.
The truth, as everyone knows, is that Senator Walker, to use a Margaret Thatcher term, was ‘frit’. And so he should be.
By supporting the tax avoidance industry in the way that he and his colleagues have for many decades, he has contributed to the enrichment of a few and the impoverishment of millions.
Tax havens are an international disgrace, and the use of Jersey for this has been shameful and despicable
From Rosemary Pestana.
SURPRISE surprise! What sort of Chief Minister do we have who accepts a challenge to go head to head with Richard Murphy and then retracts? Why would he do that?
Senator Walker says Mr Murphy would misrepresent the debate. He claims that the debate would damage Jersey.
Senator Walker says publicly that our finance industry is highly respected globally, so how could a debate between Senator Walker and Richard Murphy possibly affect that in any way?
Thirdly, the Chief Minister excuses himself by saying that Mr Murphy is not an elected member of the States.
When on ‘Talk Back’ Senator Walker accepted the challenge for a public debate, he knew perfectly well that Mr Murphy was not an elected politician. So what has changed?
Besides, what difference does it make whether a person is elected or not?
He also argues that the Tax Justice Network is dedicated to shutting down the finance industry and thereby causing unemployment. How can our so-called highly respected finance industry possibly come to any harm because of a debate on local radio? Or is this just an excuse?
At the last election we were promised accountability, so can we please have it?
There is too much spin in Jersey politics. Or could it be that the people who are running us are the Chief Minister’s consultants and advisers?All at the Jersey taxpayer’s expense, of course.
So what is the real reason for Senator Walker backing down from the challenge of debating head to head in public? Could it be because Mr Murphy is an utterly truthful man as well as a far more able one than our Chief Minister?
I suspect that’s the real reason.
What utter cowardice, Senator Walker!
Who is Richard Murphy, and what are his qualifications? He is a Bachelor of Science in economics and accounting, a Fellow of the Institute of Chartered Accountants, a member of the Research Commit tee of the Association of Chartered Certified Accountants, a visiting Fellow of the University of Sussex Centre for Global Political Economy and a visiting Fellow of the University of Portsmouth Business School.
He also holds a research post at Nottingham University. He has addressed the United Nations, the World Bank, International Monetary Fund, European Union, numerous governments, non-governmental organisations and civil society organisations, and he works as a forensic accountant for the BBC on TV and radio programmes.
What qualifications does Senator Walker have, other than being an elected member of our government?
From Pat Lucas, president, Attac and Tax Justice.
CONGRATULATIONS to Senator Walker for avoiding a head-to-head with Richard Murphy.
I would have done exactly the same if I relied on spin and waffle and was not able to browbeat my opponent by using my office as Chief Minister.
Senator Walker has superb judgment in bodyswerving superior beings, especially when this particular being has superior connections within the UK and Europe and facts as opposed to fiction would be revealed.
