We're dining at the tax avoidance restaurant

I’ve enjoyed a nice bottle of wine, three courses of good food and generally made the most of the facilities. The bill arrives and it’s for £50. However, I choose not to pay it and instead take the waiter to one side. I offer him £30 cash if he can delete my meal from the system and let me leave out of the side door.

Now, in such a situation, would you say that I had avoided paying my bill or evaded paying it?

And does defining the difference really matter? At the end of the day, the restaurant is still out of pocket and still missing the £50 it should have been paid.

Whether people avoid or evade paying tax (and there is, as far as the law is concerned, apparently a huge difference) is an argument that seems to blur the issue when it comes to financial offshore centres.

This week Deputy Montfort Tadier and Treasury Minister Philip Ozouf have been at loggerheads, arguing over remarks made by the Deputy to a French newspaper which suggested that Jersey was costing the country millions in tax. Ignoring Senator Ozouf’s curious attempt to imply that Deputy Tadier was wrong to air an opinion of his own that did not tally with the official party line, I couldn’t help but notice that he also missed the entire point. It’s not just about whether our finance industry is legal – it’s whether it’s moral.

Senator Ozouf was again banging the drum by insisting how well-regulated, above board and generally squeaky clean these huge faceless companies are. I don’t doubt him. I have a few friends who have worked in finance both in the UK and Jersey and they say the differences are sometimes huge and that Jersey really is a well-run ship. But is that enough?

For those of us in Jersey who don’t work in the finance industry, I think it’s always been a bit of an uneasy relationship. We are almost like a rich mobster’s wife – we enjoy the lavish lifestyle and the perks that come from swimming in cash, but we don’t really know where the money came from and probably don’t want to know. It might not necessarily be outside of the law, but if it’s a practice that ultimately divests someone or some organisation of their fair share, I’m not sure it’s something to celebrate.

Look at the outrage generated when Jimmy Carr was ‘caught’ depriving the UK government of a healthy wodge of his huge earnings by having squirrelled away his nuts in Jersey. Most people couldn’t care less whether or not he had acted illegally – it was more that the traditionally left-wing comic had acted immorally by turning his back on the country that looked after him, that provided him with health care, education and new roads to drive his sports cars on, by choosing not to pay his way.

Consider the alternative approach taken by multi-millionaire author JK Rowling. In a powerful statement issued a few years ago, the Harry Potter writer explained how she had been offered several ways of paying less tax by financial advisers but that she had made a conscious decision to fork out the full amount to the UK Treasury – mainly because she had relied on the system when she was a struggling single mother and she felt it would be unfair of her not to pay her way now that she was so successful. It was a noble gesture and welcomed as such, but it seems a bit strange that we are at a situation where a person is lauded for paying their fair share.

A key question for Jersey, as Deputy Tadier asked during his heated radio debate with Senator Ozouf, is whether the Island’s finance industry will exist as it is now in 200 years. No one knows.

It could be argued that the vultures are circling. Senator Barack Obama is among many leaders who have warned that they are not going to tolerate the current situation (which includes several other offshore centres as well as Jersey) for much longer – especially while they battle on amid a recession.

And perhaps the reason for Senator Ozouf’s increasingly passionate defence of our current situation is that we don’t have a Plan B. He has no choice but to insist that the current system is sound, hardy and bulletproof because the alternative just doesn’t bear thinking about. If the EU somehow found a way of stopping Jersey from offering some of the financial services it does, the effect would be disastrous for the Island, leaving us devastated both economically and socially. We couldn’t rely on tourism or agriculture, our previous thriving industries, to bail us out, because we are driving at 90 mph down a one-way street with our eyes closed.

We are all enjoying the gravy train (and, honestly, I can’t thank you bankers enough) but it might be prudent for us just to be aware that there might come a time when money doesn’t grow on trees in Jersey any more.

It is the same reason I was always a bit wary of the fulfilment industry in Jersey – another example of how the Island was able to manipulate the system for gain. That entire business was founded on a loophole and was always destined to collapse once the people that were losing income found a way to stop it. Why on earth did we feel that we had a right to undercut everyone else? Imagine if Guernsey found a way of offering tax deals that blew Jersey out of the water – could we honestly complain if we lost all of our business?

Whether it’s tax avoidance or tax evasion is an issue of semantics and one for the lawyers to argue over. But for the Islanders who rely on Jersey’s finance industry for their way of life, both indirectly and directly, we need to have a long, hard think about how our current economy was formed and where it’s going.

We’ve all enjoyed dining at this restaurant for the last 50 years. But who’s going to pay the bill?