Island needs alternatives to financial sector
THERE is no doubt that the current exposure of the Paradise Papers, plus the recent Panama Papers, has refocused the need once and for all to put a stop to the activities of tax havens. Some tax avoidance is perfectly legal yet deemed to be unethical. It is up to governments to close tax loopholes, not just to call them unethical.
Whether our States members believe Guernsey is well-regulated or not, we will not be able to withstand the forthcoming international attack on some of our activities. The pressure from the current leaders of the Labour Party in the UK will force an extremely weak Conservative government to tighten up taxation rules, especially in its Dependencies. They will have to do this in order to have any chance of being re-elected in the next election.
We must therefore, as a matter of absolute urgency, look at how our island can survive a substantial downturn in the financial sector of our economy.
As I have said before, we have an asset that we have only marginally exploited. It is, of course, the sea and our location.
Obviously we can never go back to the ship-building activities of the 19th century, but we could embrace the desire for people to own yachts in the 21st century. We already have one successful yacht builder on the island. We should consult him as to how the island could encourage this activity, whether it is to build medium price or luxury yachts. I believe that we should build a dry dock and fuelling berth for larger yachts somewhere in the St Sampson’s area. We have plenty of maritime expertise to assess the viability of this idea from retired and active sea pilots, and harbour masters.
These activities would create a need for a well-trained labour force. A specialist training college would be needed and should be established to coincide with an increase in maritime activities.
In the immediate future we should pressure our States members to change the ridiculous tax anomaly regarding trading subsidiaries of foreign-owned companies operating in Guernsey.
An attempt was made and, I understand, two large retail companies now pay income tax, but this needs to be extended to cover all types of companies that currently pay no Guernsey income tax. The States’ argument has been that they pay TRP and their employees pay income tax. Locally-owned companies’ shareholders however pay
tax at 20% on top of TRP and employees’ tax.
This means not only is the States losing revenue but locally-owned companies are faced with unfair competition.
I challenge the States to at least deal with this simple anomaly now, even if the thought that the finance industry collapsing is too difficult to contemplate or seriously deal with.
T. C. TILDEN-SMITH,
Les Landelles,
Rue de la Foire,
Castel,
GY5 7DJ.