| 09 March 2008
These last two weeks have seen the 'offshore' tax haven of Liechtenstein in
the pillory for trying to preserve banking secrecy, while governments around
the world brazenly deal in stolen goods in order to pursue those of their citizens
who have invested money in a 'no tax' jurisdiction.
There are some very slippery moral concepts here, and some that are not so
slippery. Starting with the latter, we have to understand that States consider
themselves to be above the law, and outside the moral structures that people
are supposed to inhabit. It's therefore OK for a State to commit an offence
that is imprisonable in almost every civilized country on earth, on the supposition
that people who prefer to keep their financial dealings private are necessarily
committing tax offences.
This means that large numbers of perfectly honest individuals, who pay all
their taxes, are going to be subject to investigation and possible harrassment
simply because they were unlucky enough to find themselves on the stolen list
of Liechtenstein account holders. Given the lamentable record of government
in protecting personal data, it is a fair bet that many of them are going to
find themselves totally deprived of the confidentiality they thought they enjoyed.
The slippery bit comes over whether banking secrecy should be permitted at
all. The governments which have been crying foul over Liechtenstein's secrecy
laws in the past two weeks are of course themselves highly secretive, but have
been energetically pursuing 'transparency' when it comes to jurisdictions which
charge low rates of tax, in case citizens should try to shelter money away from
high domestic tax rates.
No-one would argue that people should be allowed to hide from their tax liabilities;
on the other hand, a world in which a government can readily obtain information
about any of its citizens' world-wide financial dealings would seem to be one
large and scary step too far.
The problem - and a lot of other ones - is caused by the principle of taxation
of worldwide income for a resident, and the accompanying idea that you can only
be resident in one country. This principle suits governments, but is increasingly
at odds with the way that people actually live.
The solution is to have an independent and trustworthy worldwide body that
confidentially monitors individuals' total income, and to allow States to tax
that income in proportion to the time that an individual spends in them. But
don't hold your breath!
You have been reading an entry on the following blog:
Jeremy Hetherington-Gore Unleashed
Jeremy tackles the difficult issues head on!
Contact: jeremy@lowtax.net
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