Tag: Corruption

Just What – Or Rather Who – Is Driving Theresa May on Brexit?

Two in theory separate but in practice closely-aligned groups of anti-democratic vested interests are influencing, with her concurrence, Theresa May’s obdurate pursuit of a Soft-Remain Brexit-In-Name Only       

Note: longer and updated version of the article originally published at The Conservative Woman on Wednesday 24th October 2018

On the “what” of Theresa May’s catastrophically-inept, stubborn, secretive, submissive and duplicitous conduct of the United Kingdom’s Brexit negotiations, there is little room for doubt.

The original story, of her deceitful complicity in the covert No 10 operation that gestated her infamous Chequers Plan – which she obstinately persists in clinging to, despite its manifest flaws and rejection by both colleagues and Brussels alike – has received extensive media coverage.

Since then, the details of her successive capitulations to, and appeasement of, the EU’s intransigence, such that the position she is now reduced to claiming is a meaningful EU exit that delivers the Referendum result is scarcely distinguishable from continuing membership at all, have received equally widespread publicity.

In summary, having let herself be totally outmanoeuvred on the Northern Ireland backstop – with the connivance, on this and much else, of  a Civil Service opposed to Brexit in principle and resolved either to dilute it to insignificance, or thwart it altogether – she now proposes a £57 billion-costing, non-voting vassal-state transition until 2022, before a permanent Customs Union, adherence to EU Internal Market rules, inability to strike external trade deals, continuing subservience to the European Court of Justice, and possibly also even surrendering domestic control over tax policy.

And that’s disregarding her also signing away UK Defence and military autonomy to the incipient European Defence Union on the sly.

What UK Gov has agreed re EU Defence

So there’s no lack of knowledge or detail about what May is doing.

In contrast however, the “why?” of May’s incompetent, disingenuous and potentially-disastrous, yet doggedly determined prosecution of a soft-Remain (non)-Brexit has received little attention in comparison. This may be an understandable omission in the urgency of reporting and analysing day-to-day developments: but it’s surely as equally important. It’s time we started considering the possibilities seriously.

First, is it just an admittedly truly staggering level of ignorance and incompetence, but nothing more? May’s failings of both competence, intelligence and leadership are hardly either unknown or doubted: indeed, I’ve argued myself earlier this year that she should be ousted and replaced on those grounds alone.

But it does seem unlikely that anyone could be merely incompetent to May’s degree. Nor would it account for the combination of calculated deviousness and intolerant-of-dissent petty authoritarianism by which she had her Chequers Plan formulated behind the backs of Cabinet, MPs, Party and country, then pre-cleared with Merkel, before imposing on her Cabinet without prior warning, on pain of dismissal. Other factors must surely be in play.

A conspiracy theory occasionally advanced is that the myrmidons of the Deep-State – or the New-Class Establishment Elite if you prefer – which always was and remains viscerally opposed to Brexit, have something on May and/or her husband which would be acutely embarrassing, even resignation-inducing, if revealed, and can therefore control her approach to Brexit. Adherents hint darkly for example, about how the Home Office Inquiry into allegations of Westminster organised child sexual abuse was effectively neutralised during her reign.

But is this not also unlikely for a self-described “goody two-shoes” whose idea of taking daring risks is skipping though a field of wheat? Besides, if so, wouldn’t she have anyway used her 6-year tenure as Home Secretary to ensure that any such material was safely buried, as Jack Straw is widely rumoured to have done with MI5 files on the New Labour hierarchy’s past Communist allegiances?

In her Sunday Telegraph article of 21st October, Janet Daley suggested that a submissive May is surrendering to the EU’s playing hardball with her in the Brexit negotiations because both it and she are impressed by the constant stream of out-of office Referendum-repudiating Remainer politicians dancing attendance on it in Brussels, assuring it that Brexit can be stopped if it continues to display the intransigence it has to date.

I don’t buy this. If the EU is knowledgeable enough about current UK politics to know that May is in deep trouble, and is a pushover, then it’s surely also knowledgeable enough about current UK politics to know that the opinions of the Unreconciled Continuity-Remainer political claque epitomised by Blair, Clegg, and Major actually carry very little weight in UK. The theory that May is capitulating to its intransigence because it thinks that they represent UK public opinion and that she is in fear of it, seems to me to just not stand up.  

For what it’s worth, my theory is this: that May is knowingly, in effect willingly. being held hostage by, and dancing to the tune of, two nominally separate but very closely aligned groups.

Theresa's Puppet-Master Olly RobbinsFirstly, the Number 10, Cabinet Office, and Foreign Office officials, in whose hands – having little discernible knowledge, judgement or confidence of her own – she has been ever since taking office, who are reportedly uniformly opposed to Brexit, and of whose private and unreported contacts behind the scenes with EU officials we are unaware.

Secondly, the pro-Remain side of Big-Business that’s essentially crony-corporatist rather than competitive free-market capitalist, and which channels its collective view to Government through the CBI, which represents predominantly that particular type of business organisation.   

There a reason why May, instinctively a big-government statist, might be particularly receptive, both to the blandishments of this particular lobby, and to the idea that “business” equals the CBI.  

To the extent that she is ideologically wedded to anything at all, May seems much more inclined to the EU’s preferred model of state-interventionist, crony-corporatist “Rhenish capitalism” than she does to the quintessentially Anglosphere small-state, low-tax competitive free-market model of capitalism. She did after all join the Conservative Party in 1973 when it was led by Heath, who thought very much along those lines.

Remember, too, the CBI was fiercely pro-Remain, despite its undistinguished record of having being wrong about almost every major issue for the last 100 years. including nationalisation, Prices and Incomes Policy, the Exchange Rate Mechanism, and, most of all, the UK joining the Euro.

EU Lobby LandCBI-type pro-Remain Big-Business finds EU membership most congenial. First, the EU’s regulation-heavy regime is highly susceptible to corporate lobbying – in 2016 there were an estimated 37,000 lobbyists in Brussels alone – for regulation and restrictive practices that favour the interests of large producers over those of consumers, and which tend to entrench oligopoly rather than generate competition. In addition, the EU’s secretiveness and lack of transparency at the very least facilitate outright corruption.

Second, the large CBI-type corporates that do the lobbying have the economies of scale to cope with the mountains of EU-originating red tape, forced compliance with which cripples their smaller, nimbler potential rivals, especially innovative start-ups. And the deal which May currently wants to accept would in effect keep all UK business, not just the mere 15-20 per cent of it involved in exporting to the EU, subject to the EU regulation which Big-Business specifically lobbies for in pursuit of its own anti-competitive interestContinuing membership for all intents and purposes thus acts acts as a barrier to entry for its competitors.

There has already been persuasive circumstantial evidence of Big-Business complicity in, if not influence on, the Government’s conduct of Brexit. Readers will remember how, in the earlier iteration of Project Fear about a No-Deal Brexit, in the run-up to May’s infamous Chequers Summit, Business Secretary and arch-Remainer Greg Clark emerged as not merely been the willing mouthpiece of pro-Brussels, crony-corporatist Big-Business, but perhaps its persuasive script-writer too.

And it’s still going on. But keep that name in mind. Because for some time, there have been unsubstantiated rumours that the same Greg Clark – possibly the ideal choice for the role of the Government’s Big-Business’ fixer, being so utterly uncharismatic and unremarkable as to be virtually anonymous – had long assured Japanese motor manufacturers in the North-East that Britain would be remaining in the Customs Union come what may, despite all the guarantees for public consumption that Brexit would involve exit from both it and the Single Market.

Corroboration, however, is now starting to emerge. In an article for Conservative Home on Tuesday 16th October, Stewart Jackson – former Peterborough MP and more recently Chief of Staff to David Davis when the latter was May’s Brexit Secretary – openly called Greg Clark’s dealings with Nissan “dubious”and condemned Clark’s refusal to publish his correspondence with the company, despite Clark having pledged to do so to the House of Commons.

Jackson went to say that pro-Remain Chancellor Philip Hammond, plus Clark and his officials, were briefing, from January of this year, that the UK would be staying in the Customs Union, and that the Irish backstop was the cleverest possible wheeze to ensure that this happened. Significantly, perhaps, those allegations have not been refuted.

Jackson is not alone. Recently, Daniel Moylan, former both deputy chairman of Transport for London and chairman of Crossrail, has openly disparaged online the anti-Brexit “fightback of vested interests and their Cabinet advocates”, and also speculated  whether, as now seems highly likely at least, such a secret promise was indeed given by Clark, with May’s blessing, to the motor industry.

If so, then it would at the time have been totally inconsistent with the vision of Brexit that May was publicly advancing so clearly in her Lancaster House and later Mansion House speeches. And even now, the UK negotiating team appears to be closing down every significant element of Brexit: one by one: laws, trade deals, money.

The theory, therefore, about why May is prosecuting Brexit in the way that she is – deceitfully and secretively negotiating the softest of Soft-Brexits, not in the wider interests of the British people and economy and honouring the Referendum result and her own 2017 Manifesto pledges, but in the narrow sectional interests of anti-Brexit Whitehall and pro-Remain Big-Business – at least appears plausible.

And it leads on to another, equally intriguing, one.

For two years, the Cameron and then May Governments have been excoriated for having failed to plan in advance for the possibility of a Leave vote in the EU referendum, for instructing officials not to prepare for one, and for not doing very much to plan its implementation for several months afterwards.

But what if we were all looking in the wrong direction, and Plan B was there all the time, hiding in plain sight? What if a contingency plan for a Leave vote was prepared, in secret, and the title of that contingency plan was: ‘Theresa May’? And prepared because it had been determined, at the deepest, innermost levels of the State, that whatever the Referendum result, even an 80:20 win for Leave, Britain’s exit from the EU could not be allowed to proceed?

May coronation July 2016 1On this theory, there was an intention that a Leave vote would never be honoured if it occurred, but muted, if not thwarted. So did Cameron assist by resigning to be conveniently replaced, in a rigged MPs-only coronation, by a Theresa May who, although a Remainer, had basically spent the entire campaign hiding behind the sofa, so that she was available and not too tainted by it when Cameron resigned?

A May who then proceeded, under the sway of, and with the full co-operation and support of, the equally pro-Remain, anti-Brexit Civil Service, backed up by a similarly inclined Big-Business and reliably on-message media, purposely to delay, dilute and diminish Brexit, including calling the unnecessary 2017 General Election? 

By writing, in concert with her closest confidantes only, a Manifesto whose contents even Cabinet Ministers were unaware of, and hardly saw before its launch? And then by deliberately throwing the election via a lacklustre campaign and crucial manifesto gaffe on long-term social care halfway through it, in order to weaken her own Commons majority and thus make it harder to get any pro-Brexit legislation through an anti-Brexit Parliament?

Fanciful? Maybe. But we live in strange political times. Who would have thought, three and a half years ago, that in the Autumn of 2018 we would have a Prime Minister whom large parts of her party believe to be complete disaster, but is kept in place out of genuine fear of her being replaced by a 1970s Trotskyist throwback as Leader of the Opposition?

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The Overpowering Stench of Treachery

The sheer scale and level, exposed by the past week’s revelations, of Theresa May’s deceit and double-dealing on Brexit have created an overwhelming miasma of perfidy that now envelops her, her Government, and her Party

Note: this is the longer (and updated) version of the article originally published at The Conservative Woman on Wednesday 18th July 2018.

If there was already a whiff of treachery surrounding Theresa May’s Machiavellian double-dealing revealed in her Soft-Remain (non)-‘Brexit’ plan sprung on her Cabinet at Chequers on Friday 6th July, then the past week has transformed it into nothing short of an overwhelming stench.

On Thursday 12th July, it emerged that May had not, as she claimed, merely ‘shown’ her plan to German Chancellor Angela Merkel: as many had suspected, correctly as it turned out, it had actually been submitted for approval. At the Chequers ‘summit’, the now-resigned former Brexit Secretary David Davis was, reportedly, told by May that her plan could not be changed, because ‘I have already cleared it with Angela Merkel’.

What an admission. Britain’s head of government requesting approval of her plan for Brexit, (if the ‘Brexit’ label can any longer be accurately applied to it all) before its disclosure even to her own Cabinet, from a foreign leader who, if not an enemy, must certainly be regarded as an adversary.

2018.07.12 Me Theresa Chamberlain Betrayal in our timeWas May really so naïve as to imagine that its content would not immediately be relayed to Michel Barnier and the EU’s negotiating team? If so, that surely beggars belief. Several less than flattering comparisons with Chamberlain’s 1938-1939 undue deference to Hitler inevitably followed, but were hardly excessive. May’s No. 10 Downing Street team reacted by issuing an (unconvincing) denial of the words allegedly used to Davis, but, tellingly, not of their substance.

Then, late on Saturday 14th July, came the bombshell. Former (and also-resigned) Minister of State at the Brexit Department, Steve Baker, revealed the covert, cloak-and-dagger operation, mounted by 10 Downing Street and presided over by May, not only deliberately to foil a Brexit which would fulfil the pledges of May’s 2017 General Election Manifesto and her Lancaster House and Florence speeches, so as to engineer as a substitute for it the Soft-Remain plan presented to the Chequers ‘summit’ as an unalterable fait-accompli, but also secretly to use the Brexit Department’s functions and output as deception and camouflage to fool Ministers, MPs and the public into believing that a genuine Brexit was being pursued.

Baker’s quotes were, and are, political dynamite, and almost defy belief:

An establishment elite, who never accepted the fundamental right of the public to choose democratically their institutions, are working towards overturning them.’

‘The Brexit Department was effectively a Potemkin structure designed to distract from what the Cabinet Office Europe Unit was doing for the Prime Minister’

May had willingly deceived not just us, the voting public, but even her own Ministers and MPs. She mobilised them to defeat the Lords’ Brexit-wrecking amendments in the House of Commons over the past few weeks, so as to preserve the façade of a plausible-sounding Brexit. At the same time, she was presiding over a secret plot cynically to deceive and exploit her own Brexit Department as a camouflage to conceal her Cabinet Office Europe Unit’s backstairs operation to procure her preferred Soft-Remain (non)-Brexit, in collusion with the EU negotiators.

In hindsight, it’s easy to see why the Eurocrats refused to negotiate with us on the basis of May’s fabled ‘Red Lines’, if they were at the same time being privately sounded out on what became the Chequers Deal. The ineradicable suspicion is that Brussels was being secretly assured all the time that our ‘official’ negotiating stance was mere theatre for the consumption of the gullible masses, and that the UK would accept whatever crumbs were chosen to be dropped from the Brussels table, at whatever cost.

Almost simultaneously, from sources close to Airbus, came allegations that May’s arch-Remainer inner circle had manipulated it into issuing, in the week preceding the Chequers ‘summit’, its much-publicised dire warnings about the dangers for jobs and exports of a No-Deal Brexit.

However, this commentary, by someone with the technical knowledge to know, suggests that the reality is rather more prosaic and long-term, and that subordinating the commercial imperatives of aircraft manufacturing to fulfilling the short-term expediencies of politicians with an agenda isn’t always the wisest course.

Whatever its effect, Airbus’ ‘welcome’ anti-Brexit contribution had, it was said, been agreed after discussions with the Government – presumably signifying Business Secretary and arch-Remainer Greg Clark having been not merely the willing mouthpiece of pro-Brussels, crony-corporatist big-business, but also its helpful script-writer too.

That, in the midst of all this, both Business Minister Andrew Griffiths’ forced resignation after sending over 2,000 ‘lewd’ texts to two female constituents, and the Government awarding a £2billion RAF contract, not to its compliant partner-in-deception Airbus, but to Boeing, passed almost without comment, spoke volumes.

Political observers were still trying to digest the Baker revelations when May herself appeared on the BBC’s The Andrew Marr Show on Sunday 15th July: though not before claiming, somewhat incredibly in The Mail On Sunday that she was ‘fighting for the Brexit that the British people voted for’, but later contradicting herself by issuing her ‘Back my Brexit, or I’ll abandon any Brexit’ threat.  How the latter was meant to assist the former was unclear.

Predictably, May’s interview with Andrew Marr did not go well. It culminated in what May obviously intended to be the takeaway soundbite, but which backfired spectacularly. Her “People may have voted with their hearts, but I have to be hard-headed” remark successfully managed to disparage 17.4 million Leave voters by condescendingly portraying them as merely un-thinking and emotion-driven.

It emerged later that day that, as if No 10 threatening dissenting Ministers with a walk home from Chequers on Friday 6th July wasn’t petty enough,  Conservative Central Office was now apparently contemplating threatening to withhold centrally-disbursed funds from Brexiteer Tory MPs.

2018.07.16 Strafford Tory threats de-fund Brexiteer MPsAlthough, if true, its enthusiasm for this may be tempered by the prospect of some of the £4million loans extended to it from constituency associations being recalled and used locally to support Brexiteer MPs, it did tend to show May’s claque behaving more like the henchmen of a paranoid Mafia boss than the office of the Prime Minister in a democracy.

The morning of Monday 16th July brought what is arguably the next phase of the Remainer-Elite’s Project Overturn Referendum, Justine Greening’s proposal for a second vote on  Brexit. Which is curious, to say the least, given her January 2017 assertion that, although she was a pro-Remain campaigner and voter, nevertheless ‘we have to respect the overall democratic result.’

Greening re 2nd Ref via Change Britain

If incredulous initial observations, that this was less likely to be an original idea conceived by Ms Greening, hitherto most noted for proposing that individuals be empowered to change their gender merely by ticking a box on an official government form, than a pre-planned, scripted, intervention using her as the designated mouthpiece, may have been merely churlish, the subsequent trenchant criticism and the  widespread derision heaped on her suggested Referendum question – two Leave options to split the Leave vote, but only one option for Remain – was more than justified.

Justine Greening's 2nd referendum planThe afternoon of Monday 16th July saw May make a statement to the House of Commons on the previous weekend’s NATO summit. Standing at the Despatch Box, and with a completely straight face, she criticised Russian President Vladimir Putin for ‘undermining democracy’. Not for the first time, she gave the impression that her brain simply does not connect her mouth with her memory.

The House then debated the Taxation (Cross-Border Trade) Bill. After (rightly, but, predictably, for the wrong reasons) May had accepted four amendments tabled by Brexiteers of the backbench European Research Group, the consequences of which would be effectively to render May’s Soft-Remain (non)-Brexit Plan unacceptable to the EU, the most die-hard Tory-Remainer MPs retaliated by actually voting with Labour, the Liberal-Democrats and the SNP, against the Government trying to pursue the Ultra-Soft Brexit they claim to want.

We thus saw alleged ‘Conservatives’, plotting with Leftists to prevent the Government honouring the very Manifesto commitment on which those same ‘Conservatives’ had been content to stand for election and be elected, a mere 13 months ago.

On the morning of Tuesday 17th July, those same die-hard Tory-Remainer MPs were reported to again be aiming to defeat their own Remainer-dominated Government in further debate on the Cross-Border trade Bill that evening. Despite knowing full well that, should they succeed in defeating the Government, that could precipitate a General  Election whose outcome was likely to be a Corbyn-led Government, no fewer than 12 of them voted with Labour and other Leftist parties in a way that reflected starkly their anti-Brexit recalcitrance and desire to see it halted it in its tracks, whatever the cost to their Party.

The 12 Remainer rebels

They failed. Thanks to 5 brave Labour-Brexiteers defying their Party and voting with the Government, not to ‘support the Tories’ but to uphold democracy, the Government won the vote by 307 votes to 301. This almost certainly means that the May-Robbins Soft-Remain (non)-Brexit Plan will be dead on arrival in Brussels, containing provisions that the EU could probably never accept.

However whether a Prime Minister, who by now evidently lacked the authority even to persuade MPs to award themselves five extra days’ paid holiday by bringing Parliament’s Summer Recess forward, would have even noticed is in itself debatable.

To an extent, the Greening proposal and the Parliamentary antics of the die-hard Tory-Remainer MPs are peripheral to the reek of deliberate betrayal now pervading the May Administration and the upper reaches of the Conservative Party. But they are nevertheless an integral part of it.

With the possible, and even then disputable, exception of Blair on Iraq, I personally cannot recall in recent political history an example of a Prime Minister practising sheer anti-democratic duplicity and deception on a level and scale equivalent to what has been revealed about May in the past week.

While pretending to be implementing the democratically-expressed wishes of the British electorate, she has in fact been systematically deceiving her own Cabinet, Ministers, MPs, activists, voters, and the public, in order to manifest the wishes of a small coterie which clearly regards both the demos and the institution of democracy with undisguised contempt, and as something to be ignored, if not covertly circumvented, if it delivers an outcome uncongenial to them.

Moreover, the Party that she nominally – and I use the word advisedly – leads cannot escape the charge of complicity in her perfidy. Which other Ministers were in on the plot? Who knew what, and when? At the very least, that the majority of its MPs, even now, support her desire to mute if not negate the largest mandate for one specific policy in British political history leave them open to that charge.

Were her chicanery and double-dealing, and their own charlatanry, restricted to matters of domestic politics, they might, though still egregious, evade the ultimate accusation of treachery. But they are not. They prejudice and endanger, not only the enduring public consent for our constitutional settlement and the continuing validity of our democracy, but also the nature of our relationship with a foreign power who, though it may not be an enemy, is arguably an adversary and certainly not, in this matter, a friend. It is this latter element which surely makes the accusation of treachery tenable.

The present ‘Conservative’ Party, at least in its higher echelons of command, has been exposed this past week as a morally-bankrupt cesspit of political putrefaction, a rotting, decaying husk. In another, perhaps better, time, a Prime Minister accused of what Theresa May now, with justification, stands accused of, would have been defenestrated within days, if not hours. That she is allowed to cling insecurely to office, incompetent and ineffective in everything she does except calculated betrayal, is the visible manifestation of the overpowering stench of treachery that envelops her and her Party.

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Tax-Havens: Also A Force For Good

Far from being solely amoral, piratical facilitators of crime, kleptocracy and evasion, so-called tax-havens in fact also play a valuable role in promoting economic efficiency and curbing State-predation  

Tax havens Panama CitySo-called tax-havens have a bad reputation. In public and political minds, influenced almost wholly by the clamour of either wilfully-ignorant or Leftist-populist media and political hacks, they’re all, without exception, places solely where unsavoury associates of autocrats and plutocrats soak up the sun in between furtively stashing suitcase-loads of ill-gotten gains in anonymous numbered accounts.

As we’ve recently seen all too starkly. Because one of the main features to become glaringly obvious in the Panama Papers leaks, and in the domestic political furore in the UK which has followed it, is a self-evidently widespread inability (or possibly unwillingness) of the politico-media class and commentariat to differentiate the few truly-nefarious tax-havens from the more numerous well-run and properly-regulated offshore financial centres (OFCs) – they are decidedly not the same thing: or to distinguish illegal loot-hiding, money-laundering and tax-evasion, by corrupt despots, criminals and others, from the entirely legal use of OFCs in perfectly legitimate investment and tax-avoidance.

As so often, reality is both more complex, and more nuanced, than media-driven populist perception.

For a start, on the basic issue of definitions. The OECD lists four criteria which a territory or jurisdiction must fulfil in order to qualify as a tax-haven, as opposed to an OFC:

  1. Imposing no, or only nominal, taxes, even domestically
  2. Lack of transparency
  3. Laws and practices that discourage or even prevent automatic exchange of [tax-purposes] information with other governments on the beneficiaries of its tax regime
  4. No stipulation that the activity domiciled in its jurisdiction be substantive

On these criteria, there are relatively few true tax-havens: even the OECD lists only four, and, on its Automatic Exchange Of Information criteria, a mere two.

Tax havens Waterfront Grand CaymanMoreover, and more importantly, the vast majority of the Crown Dependency and British Overseas Territory OFCs, which Labour leader Jeremy Corbyn incorrectly labelled as tax-havens and proposed arbitrarily supplanting their democratically-elected governments to place them under direct rule from Westminster, don’t even fall into the “tax-havens” category at all.

So when no-one seriously opposes measures to prevent, detect and punish both those who undertake criminal tax-evasion, money-laundering and loot-concealment and the few residual disreputable genuine tax-havens which do facilitate them, the real objections by governments, commentators and so-called social-justice campaigners to the legitimate use of OFCs or any low-tax jurisdictions must originate from elsewhere.

Those objections arise from two principal, and unsurprising, sources. Firstly, the misunderstanding, derived from popular fallacies, of the economic good that low-tax jurisdictions promote: and secondly, the competitive threat they represent to the otherwise-unconstrained power of high-taxing, high-spending states to extract taxes from their economies and populations almost ad infinitum.

To address one of the most popular fallacies – that money deposited in OFCs or low-tax jurisdictions is somehow irretrievably “lost” to the global economy. This is just arrant nonsense.

First, it wrongly assumes there is a fixed amount of global capital whose geographical distribution creates a zero-sum game, where any partial deployment of it to Location A must automatically reduce that available in Locations B-Z. In fact global capital is both dynamic, and fungible, and continues being created in those parts of the so-called “losing” mainstream onshore economies that aren’t sensitive to geographically-differing tax rates.

Tax Havens BermudaSecond, it assumes that all capital deployed to low-tax jurisdictions stays there, static. This isn’t necessarily the case – small islands generally don’t have much potential for domestic infrastructure investment or large-scale economic activity – and it’s especially not the case in a period of low or even negative real interest rates. Although the total of assets located in an OFC may change only slowly, that ignores the stock-vs-flow issue, where many of its components parts may be being directed into other forms of investment in other locations, and subsequently repatriated, on a regular basis.

Inasmuch, too, as the location of capital and/or assets in the low-tax jurisdiction encourages their investment to generate a return not achievable if based in a higher-tax jurisdiction, the OFC is actually promoting more FDI in the investment location. In this way, the availability of low-tax OFCs makes them conducive to an increase in overall international investment and in global capital, not its depletion. They are not “poaching more than their fair share” of international capital, but acting as a conduit for its more productive and optimal investment back into mainstream onshore economies.

Third, international systems of taxation don’t always cope well with avoiding the dangers of double-taxation. If you’re an investor (and remember, you may well be, even via an ISA or your employer’s pension scheme) in a fund set up in a country that levies a withholding tax on redemption payouts, but those redemption payouts aren’t taxable domestically in your own country, then recovering the tax that’s been wrongly withheld from you is going to be difficult. By providing a tax-neutral environment, low-tax OFCs perform a valuable role in making sure that your investment, even an indirect one, isn’t taxed twice. That benefits you.

Tax havens Mossack Fonseca PanamaFourth, the fallacy assumes the “losing” country is automatically forced to raise its own domestic tax-rates to replace the tax-revenue “lost” when assets are relocated to a low-tax OFC. Countries, however, don’t operate in isolation from their international environment: lower tax-rates in other jurisdictions act as a restraint on mainstream onshore governments’ own tax-rate policies. Both firms and workers in those economies therefore benefit in purely micro-economic terms from overseas low-tax OFCs, in the form of lower taxes domestically than might be levied otherwise.

Next, low-tax OFCs also fulfil a vital function in providing a safe harbour for wealth legitimately created and held, against the tendency of inherently corrupt, dictatorial  & kleptocratic regimes to predate on it.

Depending on the definitions chosen, there are approximately 170-190 countries in the world: but only a minority are full democracies where the government is subject to the rule of law and scrutiny by a free Press. The Economist Intelligence Unit’s Democracy Index 2014 in fact lists a mere 24 as full democracies and a further 52 as flawed, out of a total of the 167 rated, leaving over 90 regimes described as either hybrid or (the majority) authoritarian. Perhaps not surprisingly, there’s a correlation between the latter categories and the Transparency International Corruptions Index 2015’s assessment of the most corrupt countries.

Most & Least Corrupt Countries 2014

These are countries where even if, against all the odds, an honest entrepreneur, investor or businessman manages legitimately to amass capital and assets, they are liable to be arbitrarily seized at any time by the regime, either unashamedly or via a quasi-criminal or complicit judiciary, and confiscated. By existing at all, low-tax OFCs furnish a safe refuge for such assets. In this role, rather than encouraging or facilitating corruption, they are in fact operating so as to thwart it.

Benefits of Tax CompetitionLastly, low-tax OFCs form a valuable macro-economic brake on the overall ability of excess-spending, excess-taxing governments to otherwise levy punitively-high taxes without restraint. In the absence of the tax-rate competition provided by lower-taxing jurisdictions, it’s unlikely that governments, viscerally-disinclined on both ideological and electoral grounds to curtail State intervention and largesse, would not take the opportunity to impose economically-damaging higher taxes generally. 

It’s primarily for this reason that the member-states of supranational political unions like the EU are so enthused by the prospect of cross-border harmonisation of taxes, or centralised democracy-proof pan-European fiscal control, as the corollary to curbing the legitimate activities of low-tax offshore financial centres. 

The vocal but unthinking critics of low-tax OFCs, in their haste to condemn what they see as the obvious, miss a point – that they are also a force for good. The existence, and legitimate activities, of low-tax OFCs both promote greater economic, capital-allocation and investment efficiency, and indirectly benefit employers, employees and consumers in the mainstream onshore economies by protecting them from excess State predation.     

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