Tax havens benefit the economy.

[Magda Hassan]

Cancer and child pornography benefit the economy as well.....

No surprise that he represents the Cities of London and Westminster with in which lies the Corporation of London.

Tax havens benefit the economy, say Tory MP

A conservative MP has spoken out in defence of tax havens and against what he called "a one-sided debate that demonstrates a fundamental lack of understanding of their role in the global financial market".

Mark Field, MP for Westminster, defends tax havens and argues they help rather than hinder the economy Photo: Gavin Gough / Alamy






By Sean O'Hare

4:38PM GMT 01 Nov 2011
6 Comments



Westminster MP Mark Field sought to dismantle the arguments put forward by the likes of Nicholas Shaxson, author of Treasure Islands, an exposé of the secret world of offshore tax havens, and NGOs such as Action Aid, who often present the world's problems as solvable through the retrieval of money supposedly siphoned offshore.

In an attempt to balance the "one-sided" debate on international finance centres (IFCs), Mr Field argued that UK corporate tax avoidance via international finance centres was, in reality, significantly lower than the £25 billion claimed by the TUC, and advised the UK government to think twice before imposing more regulation on these jurisdictions.

The UK, in fact, had much to thank offshore finance jurisdictions for, particularly those with which it has a constitutional relation through its Crown Dependencies and Overseas Territories, said Mr Field at the Sovereign Group seminar at the Caledonian Club last week.

In a reference to the UK's participation in the current G20 summit, Mr Field said: "The UK has a constitutional relationship with half of the top 30 offshore finance centres.

"Therefore it is essential that the UK plays an active role to ensure that any international regulation is appropriate and does not place unnecessary burdens on the UK financial sector, or on the wider UK economy which is a major recipient of investment capital raised through small IFCs.


"Together the Crown Dependencies make a significant contribution to the liquidity of the UK market. Together they provided net financing to the UK banks of $332.5bn in the second quarter of calendar year 2009.
"These funds are largely accounted for by the 'up streaming' to the UK head office of deposits collected by UK banks including Lloyds Banking Group and Royal Bank of Scotland, as well as Barclays, HSBC, Santander and a number of building societies."
Treasure Islands author Nicholas Shaxson, who Mr Field believes overlooks or conveniently ignores these benefits in order to present offshore centres as "shady totalitarian islands responsible for most of the world's current ills", said: "As I explain clearly in Treasure Islands, tax havens hoover up business from around the world and feed it into the City of London. This is a major reason why the City of London has become so powerful, so separate from the real economy, and so hard to reform. It is nothing to boast about."
In a bid to dismiss the age-old belief that tax havens attract investors purely because of their tax regimes, Mr Field argued that it is a combination of their political stability, familiar legal systems, quality of service, lack of foreign exchange controls, and tax and legal neutrality that make them ideal locations to deposit money.
The current financial crisis, he continued, had more to do with poor regulation and mistakes made onshore rather than offshore, and if the EU pressed ahead with its intention to harmonise tax systems across international borders "it could potentially represent the end for healthy tax competition and possibly represent a further strike upon the Zero-10 regimes so ably defended earlier this year by Jersey and the Isle of Man."
Tax harmonisation and cooperation, added Mr Field, was simply Brussels-speak for exporting high tax models on continental Europe to low tax jurisdictions.
Nicholas Shaxson responded to this by saying: "There is a permanent regulatory race to the bottom' between jurisdictions as each seeks to attract flighty global capital.
"Tax havens with their fast and flexible' lawmaking lead this race. Financiers wield the threat: don't tax or regulate us too much or we'll run offshore. So the race goes on. You will also find that a lot of the exotic instruments behind the subprime mess were located or listed offshore. Tax havens are never the only cause, but they were a major factor.
"As for competition between countries, it bears absolutely no economic relation with healthy competition between firms in a market.
"If a company fails, it is sad, but this creative destruction' is a source of capitalism's dynamism. it is healthy. But what happens if a country cannot compete? A failed state? Tax competition is anti-democratic and unremittingly dangerous."
Concluding the speech with an effort to dismiss perhaps the most damaging accusation levelled at international financial centres, that they support capital flight out of developing countries, Mr Field said: "Organisations such as the Commonwealth Secretariat, which represents many developing countries among its 54 members, have sought to recognise the value of developing international financial centres as a route to economic development and prosperity."
Mr Shaxson replied: "We should be concerned for local tax haven populations. But weigh up the interests of 60,000 people in Cayman against the interests of 600 million Latin Americans and a billion Africans, and it is clear what matters. And those who do best out of financial business in tax havens like Cayman are typically white foreigners, not locals."
http://www.telegraph.co.uk/finance/perso...ry-MP.html