...if it wants to attract wealthy financiers - like him and his mates presumably.
In a frank (if disastrously-timed for the Government) interview, Lord Fink says that the tax-haven status of offshore destinations such as the Cayman Islands, Monaco and Lichtenstein helps them to attract investment that could otherwise be serviced out of the UK - if only George Osborne would do something about the pesky British tax code. ‘If you want to be a successful business and attract invisible earnings to the UK, you have to be based offshore’ Fink reckons.
Showing either a starling degree of political naivete or a penchant for poking wasps nests (MT will leave you to decide on that point, dear reader), Fink goes onto add ‘It’s a case where the Revenue has been penny wise and pound foolish. I have never understood it but it is something the Revenue has always been paranoid about.’
Crikey. Where has he been for the past four years? His own government is in the middle of a very high profile campaign against offshore tax avoidance which even Dave and wee Georgie have publicly backed. Even if it goes against their laissez faire grain, it’s easy to see why - the UK has £1tn of debt and we all have a part to play in clearing it. That behoves our leaders to inculcate a sense of common endeavour and equal treatment - special pleading by the finance industry, whilst hardly unexpected, doesn’t do much to achieve this. In fact it smacks of Leonora Hemsley’s famous quote that ‘Only the little people pay taxes.’ Especially when the pleader is such a senior figure in the party in question.
To be fair to Fink, he says that offshore vehicles often have nothing to do with tax evasion per se, but are rather a technicality necessary to the function of international investment funds because otherwise investors from one country end up paying tax in, and according to the rules of, another. Heaven forbid.
It’s exactly this kind of lowest-common-denominator pragmatism which accounts for the signal failure of the financial sector to rehabilitate its public standing since the fall of 2008. Decisions about what are socially acceptable and unacceptable ways to make a crust define a nation’s character and identity - just because money can be made this way somewhere in the world, does not mean that we should do it here. Sometimes the grown-up thing is to restrain oneself for the greater good.
Not much chance of Fink or his chums taking that message on board though. If this Government really was brave enough to indulge in some unpopular tax policies, far better to announce a five-year moratorium on Capital Gains Tax for start-up businesses. True, it would also result in a small number of people getting very rich, but unlike giving hedgies an onshore tax haven it would also stimulate growth and generate jobs and real wealth for the entire nation.