The Caymanian Compass of 4th September featured an article entitled, France Blacklists ‘tax havens.”
In this article, the Compass reported that France has named Bermuda, the British Virgin Islands, and Jersey in its official list of “uncooperative tax havens,” despite all three jurisdictions having signed tax information exchange agreements.
The Compass is quite right to take France to task for its criticisms of such havens, as retaliation to France’s persecution of free trade in the financial industry is long overdue.
France has long been one of the principal drivers of the Organization for Economic Cooperation and Development. The OECD was founded in 1961 “to stimulate economic progress and world trade.” Unfortunately, it has devolved into an entity whose focus is to deteriorate the progress of those countries that offer greater economic freedom than its member countries. Indeed, in recent years, France has boasted that one of its goals is to create uniform taxation worldwide.
In its earlier years, the OECD would issue a list of suggestions for cooperation and, one country at a time, most of the world complied. Over the years, these lists morphed from suggestions to requirements, as threats of blacklisting were more prominently used by the OECD. Those nations who complied were placed on a White List.”, whilst those who did not were placed either on a “Grey List” or “Black List.”
Every few years, the OECD would “up the ante” with further requirements and those who had cooperated were challenged yet again to comply.
Forty years ago, we in the Cayman Islands had to confess that the OECD’s stated objective of “ending money laundering” held validity. Consequently, our banks ceased to accept clients who arrived on private planes with suitcases full of money – money that was considered to have had its origin in the drug trade.
However, as each new round of demands from the OECD has come, the demands have taken a turn to imply that any difference in Cayman’s financial laws (or those of similar jurisdictions) somehow amounts to money laundering and/or other crimes. This claim has been arbitrary in the extreme, yet Cayman and similar jurisdictions have continued to cave to each successive round of OECD demands.
Further, as the Compass article states, even when jurisdictions comply fully with OECD demands, France and other member countries continue to threaten to blacklist them.
Incredibly, this criticism is ramping up dramatically, even as the OECD turns a blind eye to its member countries when they practice the very same policies the OECD describes as “criminal.”
So, as the OECD’s actions belie its propaganda, what is its true goal? It would appear that, far from seeking a level playing field, it wishes to control the laws of the world’s smaller financial centres in such a way that they lose their value to their potential clients. If this can be achieved, the citizens of the OECD member nations would have no choice but to accept that their wealth is trapped at home and they are, in effect, tax slaves within their own countries.
To add insult to injury, the fact that OECD members are not fully subject to OECD standards would, in fact, reverse the process, attracting funds from the smaller financial centers to other destinations, such as Delaware in the U.S.
If we in Cayman were to project out the direction that the OECD is taking, the logical conclusion is that, once they have eliminated all of the advantages that exist for investors in countries such as ours, the final step will be the insistence that we will be blacklisted if we do not establish income tax and raise its level to, say the 75 percent level that now exists in France.
This, it is claimed, would merely “create a level playing field,” but this is not so. Historically, whenever any country or group of countries makes demands that another country must change its laws to suit the agenda of the larger jurisdiction, the “bully” mentality does not end when equality is reached. Instead, it continues until the smaller jurisdiction has become thoroughly subjugated to the larger one.
If France truly believes in equal standards, and seeks what is best for its people, it would do better if it were to diminish the size of its own government and lower its own taxes to the point that its people regained the economic freedom to create prosperity.
Cayman is a shining example of the level of prosperity that can be achieved when taxes remain as low as possible and free enterprise is able to thrive.
“Tax haven” has been treated as a dirty word by France and the OECD. In fact, a haven is exactly what it says – a place where people may exercise freedom and escape oppression from others. Here in Cayman, we still have an economic freedom that is well-beyond that of the French people, but our freedom is threatened by France and the OECD.