Paying tax 'not an issue for funds industry, it's how'

INCLUDING funds business in the island’s 10% tax bracket remains ‘under review’ – despite recognition that it could be difficult to achieve.

INCLUDING funds business in the island’s 10% tax bracket remains ‘under review’ – despite recognition that it could be difficult to achieve.

In the States Budget debate earlier this month, Treasury and Resources minister Gavin St Pier (pictured) said that bringing fund management into the 10% bracket ‘has not been ruled out’.

The previous month, at an investment funds conference, he had told industry representatives that extending the 10% element of zero-10 to fund managers was a ‘significant challenge’.

‘Defining in statute “administration” and “management” is challenging because the different roles may not be easily identifiable – and could be open to manipulation... so trying to extend the 10% rate to the funds sector while safeguarding Guernsey’s competitive position is a significant challenge.’

Comments for: "Paying tax 'not an issue for funds industry, it's how'"

A.J.

LIGHT? TUNNEL? VISION? SENSE? COMMON?

Scary_Fairy_tales

So, GSP, it's a tad difficult to get tax out of one of the most lucrative, thus powerful, some may say, aspects of the local finance industry, so you're carefully treading eggshells and water, telling us all the reasons it's so difficult (transl:'not possible"?) and in the process, purely coincidentally I am sure, not so subtly reassuring the funds industry that paying their dues is not a given.

I worked for a great chap once who said to me, 'don't come to me with problems, come to me with solutions.'

Yet another thorny issue for your department to deal with, GSP, and yet more lilly livered, wishy washy, pathetic attempts to not appear too 'contentious', in other words, not deal with the issue.

You have only been in office a short time, some would say, too short to judge, but thus far, you have been offered ample opportunity on at least two occasions, namely your department's loss of 2.6 million of our money and the HSSD overspend debacle, to show your gumption, and failed spectacularly to do so.

Did you not gather that making 'difficult decisions' was part of the remit of being a politician? Did no one tell you? Or was being a politician simply a career choice for you?

Your 'too difficult to deal with' tray must be full to bursting right now, and I for one am utterly p*ssed off with it.

GM

If you knew the first thing about tax, you'd know exactly why it is so difficult to achieve. It's got nothing to do with not wanting to do it.

The actual funds themselves are exempt from tax. That's not a problem.

The local fund administration companies will also be easy to tax, exactly the same as the fiduciary service providers.

The difficulty is in taxing the fund manager vehicles, ie the vehicles which themselves advise the funds. Those are the management vehicles which generate substantial performance fees and carried interests for the managers. Those are vital to attracting the funds themselves. If the fund manager vehicle is located here, then the fund administration, and thus tge employment of local administrators, is far more likely to be here as well.

The fund managers can choose any one of a multitude of jurisdictions to be based in. We have worked extremely hard to promote Guernsey over the past decade, successfully too. They wouldn't pay tax in any of the competing jurisdictions, so once again if we start taxing them then we would be driving them away towards Jersey, Isle of Man, Cayman, Bermuda etc., and they will take the fund administration jobs with them. In what possible way does that benefit Guernsey?

So before you very unfairly attack Gavin St Pier for being very honest in explaining how difficult the problem is to solve, please do your research.

A common theme amongst several posters on similar threads is a total unawareness of the concept of global competition, all of whom would pounce to grab our highly desirable business if we were to make stupid, reckless decisions about taxing them and driving them away. If we followed that route then we would not only have no business left to tax, but we would also lose all the existing tax revenue from employment of thousands of locals. Not sure about you, but in my book that's called cutting off your nose to spite your face, as far more tax then has to be collected off all remaining Guernsey taxpayers.

Scarlett

GM. I have never claimed to be a fiscal genius and quite honestly bow to your experience and expertise on this subject (and that of pensions - see my recent post on that board), however, I am tired of GSP telling us all the reasons he can't do things.

We know there's problems, he's employed to find the solutions, and thus far, I remain singularly unimpressed by his ability to do so.

GM

Scarlett

I have every confidence in Gavin St Pier finding a solution.

The fact that he hasn't found it yet, or perhaps isn't able to go public on it yet (whatever he says is immediately dissected by global clients of our finance industry thanks to the Internet, and its extremely sensitive) is another matter. I would rely entirely on his honesty. Give him time. It's not straightforward and lots of expert advice needs to be taken before anything can be announced.

Backchat

His solution will be to increase the taxes that the ordinary Guernseyman has to pay

Scarlett

I remain confident he will find a solution which that sector finds most appealing, GM.

Whether that solution will suit the rest of us as much, remains to be seen...!

Royston Gauno

Interesting choice for the poster, doubtless with considerable cost, Amber is to stop as sure as Red Light follows Amber, perhaps apt or was T&R conned into thinking Traffic Lights mean ready steady go ?

Scarlett

It's the 'palms up' supplicating hand gestures that get me.

Maybe the caption for this one should read, 'what can I do? I'm just a politician!!'

(if you look really hard, you can see the strings being manipulated by Mike Brown, a la Thunder Birds...or is that the Muppets....?) ;)

Dani

Im actually glad we have Gavin working on this. He has the know how to get it right first time, which is so important to our competitiveness and reputation.

When you think how many people actually could tackle this that stood for election...

It makes me wonder do States members get training to upgrade their skill sets? Things like project management?

Royston Gauno

If they do, its not from The Book of Highway Code eh ..

kevin

Lets hope he doesn't steam in like he did with the mortgage relief interest plan then!

Our States deputies should have an obligation to seek feedback from the public before jumping in feet first - after all, we pay their wages.

Scarlett

The difference being, Kevin, implementing the cessation of mortgage relief was for for Joe Public to suck up, whilst this one is for the gods of the finance industry.

Purely coincidentally, whacking the man in the street's pocket appeared to be an 'easier' task than this, and one he was quite happy to justify and implement, with the result being the same, i.e. more cash generated for the island, whilst this one is 'difficult'.

- before you say I don't understand, GM, with respect, I do, just perhaps from a slightly different angle - ! :)