Britain 'may be forced to bail out tax havens'

[D-Mack]

Britain could be forced to bail out one or more of its offshore tax havens at huge cost, according to early drafts of a Treasury report, because the economic crisis has wrecked their finances.

Offshore expert Michael Foot will next month set out a number of options to government ministers in the report as anxiety grows within Whitehall over the health of Britain's overseas territories and crown dependencies.

Senior insiders say early drafts of Foot's report suggest that the government may need to make provisions for the financial failure of British tax havens. Experts suggest the failure of a major tax haven could potentially cost the UK tens, if not hundreds, of millions of pounds.

Government officials say they are aware that some British overseas territories are facing serious problems which could get worse. In the event of further economic deterioration, they could become failed states and be dragged into the illegal drugs trade, Whitehall insiders warn.

..

http://www.guardian.co.uk/business/2...-need-bailouts

[tfthorpe]

Re: Britain 'may be forced to bail out tax havens'

Speaking from the Isle of Man (I don't know much about the other locations mentioned):

If, a few years ago, the UK government had asked us to to give them helpful advice about how to run their finances as well as ours, we might have obliged. If they asked now, given how they have behaved recently, we would probably tell them to go take a run and jump...

Tim.

[don]

Re: Britain 'may be forced to bail out tax havens'

Any suggestion that Britain will have to rescue offshore financial centres would be extremely controversial as tax havens drain the UK economy of an estimated £25bn annually through their role in aggressive tax avoidance and evasion.


The Isle of Man is facing problems associated with the collapse of Icelandic bank, Kaupthing, which had a business on the island. It may be forced to spend hundreds of millions of pounds to compensate savers who have been unable to claw cash back from Kaupthing.

both from article cited above.

[tfthorpe]

Re: Britain 'may be forced to bail out tax havens'

Hello Don,

Yes, I read the article. I think you might be inviting more comment on the points raised? I might be tempted to rant and raise my blood pressure, so preferred the option of a short comment and move on...

This is a little piece of drama with which the journalist wishes to fill the UK reader with moral indignation that their money might be taken and given to villains. He has little evidence but relies on insinuation and the presentation of partial information. I only commented because it includes my country of residence in the list of possible villains.

I think that the UK taxpayer has very good reason worry that their money is to be taken and given to villains. It's already happening, to the tune of hundreds of billions. I suspect that poster "hayekvindicated" could tell you all about that.

If, as I fantasized, the UK government had instead asked the IoM government for advice, they would probably have been told:

1) Don't run a deficit, stick to what you can raise from taxes.
2) If a bank fails, let it. Do what you reasonably can to reimburse the depositers.

That's what we have done/are in the process of doing.

The article says that one of the governments mentioned wants to borrow some money to cope with the recession. Well. The horror.

Tim.