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Tax everyone the same
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From Paul Blampied.
I’M not surprised the EU is complaining. Zero-Ten sounds just as bad as Exempt Companies.
There’s still an element of discrimination between local and offshore, so little changed on our side. But in the last year a lot has happened in the financial world at large.
Maybe it’s time we stopped looking for loopholes to allow one group to continue paying nothing. And instead started looking for ways to change from being a zero tax jurisdiction to a genuine low tax jurisdiction. If the tax rate was low enough it shouldn’t necessarily chase many of the offshore companies away.
I suspect most companies and their shareholders have some sort of conscience and resent being branded as tax avoiders. No one likes paying tax, but paying 0% tax? It’s not paying tax!
Why not look into reducing the Island’s 20% tax rate, which at present targets just locals and instead charge everyone including the offshore companies a far lower rate?
The number and size of finance and the offshore companies registered here dwarf the size of the local economy, so it would be a small tax spread over a bigger area to bring in what we need.
The local population would welcome a reduced tax bill. Tax bills so low that ITIS would no longer be necessary? Obviously a percentage of offshore companies would move to try and keep paying a zero rate but as long as the tax rate was very small, I suspect a large proportion would remain.
When an offshore company is getting investigated by another country’s tax authority how does the discussion with the tax inspector go?
‘Q) You’re avoiding paying tax.
A) No I’m not; I’m registered in Jersey, so pay my taxes in Jersey!
Q) Oh really, and how much do you pay?
A) Well I pay £0 because it’s a 0% rate tax!’
Doesn’t sound right does it? It annoys the foreign tax inspector and encourages further investigation.
How low on tax could we go? Could we go as low as 1% or 2%? Then a sliding scale discount so no one company or person gets clobbered with a bill big enough to drive them off. For the very big boys, the offshore companies that deal in the multi-millions, even a 1% tax would be a huge bill and no doubt sufficient to drive them off?
So for the big payers once a tax bill exceeds a pre-determined amount, anything further is discounted on a sliding scale – the more you earn the lower the tax rate you pay.
Compared to most alternative tax jurisdictions, the Jersey tax would be very cheap. We would no longer be a tax haven, but a low tax jurisdiction because we charge tax and tax everyone, local or foreign, the same.
Offshore companies would then have a moral high ground, and be able to say with hand on heart, that they were not tax avoiders and do pay tax. Maybe not a lot, but they would pay tax.
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