OPPOSERS HAVE BEEN VINDICATED ON ZERO-TEN POLICY

Letter to  Jersey Evening Post  19th September

YOUR EDITORIAL  'Vindication for zero-ten tax policy' (14 September) is remarkable for the extraordinary amount of misinformation contained in it.

You simply failed to explain that the zero-ten policy just approved by the European Union is not the zero-ten policy which they declared was against their Code of Conduct.

It was the original zero-ten plan that I and others claimed over the years would not be accepted by Europe. And we were right.

Back in 2002, Europe told Jersey, Guernsey and the Isle of Man that the zero-ten proposal presented to them did comply with their Corporate Taxation Code of Conduct.

When Europe later declared that it was not happy with the original zero-ten proposals, Jersey authorities made the excuse that 'Europe changed its mind, having first approved it and then disapproved it'. That line was also peddled by the then Bailiff of Jersey, Sir Philip Bailhache, in one of his many forays into the political arena.

Senator Le Sueur later let the cat out of the bag when he admitted that only the bare bones of the proposal was put forward to Europe, it did not include the 'deemed dividend section' and it was only an 'in-principle agreement awaiting further detail'.

When Europe saw the 'deemed dividend section' it considered this and declared that it breached their Code of Conduct and was unfair and discriminatory.

Which is what 1 and others had been saying for several years and been condemned for doing so by the Le Sueur/Ozouf group of politicians who claimed that we did not know what we were talking about.

Having put Jersey's finance industry into a position of great uncertainty for over a year with the subsequent loss of business, the politicians responsible for this fiasco realised that the only way out of their difficulty was to alter the deemed distribution section so that shareholders in Jersey companies would be treated in the same way as foreign-based companies trading in Jersey where shareholders pay no tax on their profIts until they were distributed.

Therefore, to suggest that those who supported zero-ten have been vindicated and that those who opposed it now have 'egg on their face' is totally wrong. We are the ones who were vindicated by the first European decision.

What your editorial also failed to recognise is that this change to zero-ten is now going to create enormous opportunities for tax evasion by local shareholders.

It now means that if an individual in a Jersey company builds up a substantial sum of profits over a number of years and then decides that he no longer wishes to run his business and sells it he gets all his profits tax free because there is no capital gains tax in Jersey.

The Chief Minister has already announced that this new version for zero-ten will lead to a loss of at least £10 million in revenue to add to our fiscal problems. How is this to be recovered? Another rise in GST?

To suggest that anyone involved in this fiasco that has cost Jersey over £10 million in lost revenue deserves any praise or credit is an absolute travesty and another excursion into Cloud Cuckoo-Land.