Britain May Have To Bail Out ‘Bankrupt’ Tax Havens

Britain may have to bail out bankrupt tax havens because a clampdown on tax avoidance and the recession has ruined their economies, according to a leaked Treasury report.

Offshore finance expert Michael Foot is drafting a report on the government’s options and financial responsibilities towards the economies of overseas territories and crown dependencies.

The Treasury suggests the Government may have to make a provision of tens of millions of pounds to bail out the struggling former tax havens.

The irony is that Britain led a global campaign to close them down as tax avoidance schemes and evasion were siphoning £25 million a year out of the UK.

Presumably the government balanced the debit of tax gained from closing down the tax havens against any credit of aid payments that may go out to sustain their struggling economies.

Recently, the Cayman Islands asked the government for permission to raise £278 million in loans to plug a cash deficit in the economy - claiming no cash was available to pay civil servants.

The request was refused and the island’s government was told to look at raising income and property taxes instead.

Offshore

British dependencies and territories in trouble are thought to include Jersey, Guernsey, the Isle of Man, Bermuda, the Cayman Islands, Gibraltar and the British Virgin Islands - among the world’s most important tax havens.

The Guardian says Foot is concerned that tourism on Caribbean islands is also down and making problems worse.

The Treasury has clearly stated that it is not “the business of bailing out tax havens”; while the Foreign Office said overseas territories are responsible for their own finances.

Meanwhile, Jersey is projecting a £100 million budget deficit.

The Isle of Man is facing issues over the collapse of Icelandic bank, Kaupthing, which had a business on the island and may have to spend hundreds of millions of pounds to compensate savers.

Guernsey faces similar problems over the collapse of a Channel Island subsidiary of another Iceland bank, Landsbanki.

Britain has imposed direct rule and suspended the government of the Caribbean Turks and Caicos islands following allegations of corruption.

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