Zero-10 'is best option' for finance industry

A LEADING member of the finance industry backs a zero-10 corporate tax regime. There have been reports of a swing towards the zero-20 option, which would halve the size of the black hole in public finances when reform is introduced in 2008.

But Bob Moore, Butterfield Bank managing director and chairman of the Guernsey International Business Association, has reasserted that finance firms should pay the lower rate.

'I believe that marketing the island as an international finance centre will be very difficult in a zero-20 environment, given that competing jurisdictions will have a lower rate of tax on their finance sector service providers,' he said.

Mr Moore said that it was important to have the ability to market the island to the outside world and much of that was to do with perception.

He added that the sector would continue to bring economic benefits to the island, as its track record showed it had in the past, if zero-10 were in place.

'I believe that behind the zero-20 analysis there is a view that the finance sector will not be able to compete effectively in the future and that is a view with which I personally disagree.'

Mr Moore said that these people seemed to believe that the industry would not have as much business, even with zero-10, and so wanted to make short-term gains. It was just a short-term response because in the long-term this tax intake would reduce as firms moved away.

He said that if you took a more positive approach, then zero-10 had to be the way forward.

'I am very confident that with a competitive tax platform, the finance industry will be able to continue to generate significant growth, which will mean strong opportunities for career paths for Guernsey people in the finance sector.'

Mr Moore said that in both the fund administration and investment management sectors, there had been spectacular growth in the past few years.

He added that the private banking sector had made a very strong recovery after a quiet period between 2001 and 2003 that resulted from international market conditions, not because of the state of the local industry.

The dot-com bubble burst and there were the effects on confidence resulting from the 9/11 terrorist attacks.

'The Guernsey finance industry on a level playing field is performing very strongly and we will continue to do so if we are on an equally competitive tax platform going forward.

'That undoubtedly creates the need to examine the other aspects of Guernsey's total tax regime.'

Mr Moore said that Giba was currently consulting its members on the whole package.

'Through our consultation we have found that the great majority of Giba member firms favour having an internationally competitive tax platform, which is critical to promote the island as an international finance sector and to generate significant benefits for the Guernsey economy.'

He said that consultation was continuing and the responses on the whole of the package would be made public in the future.

Giba will soon present its views to deputies.