4 ms·

In a new code of conduct, the EU insisted that all members (as well as those jurisdictions that wanted equal access to its market, such as Jersey) tax local and

In a new code of conduct, the EU insisted that all members (as well as those jurisdictions that wanted equal access to its market, such as Jersey) tax local and non-local companies the same. This was the turning point for Jersey, in case you missed it in a fairly long piece. I wonder why Jersey didn't simply raise the corporate tax rate to 1%, and lower its citizens taxes to 1%. They still would have come in far below most of the rest of the world in corporate tax rates[1], but would have wildly increased their revenues. As it happens, they ended up losing their financial industry anyhow. [1]https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

branchless 11y ago
This is why Cameron wants to have some "red lines" with the EU. He's terrified they are going to strangle The City.
- wavefunction 11y ago
  For those of us that are unfamiliar with the special situation with The City, can you perhaps elaborate a bit? I'm curious to learn more about what you're alluding to.
  - digi_owl 11y ago
    As best i understand, since Thatcher dismantled UK industry it has been the one thing keeping the nation "afloat".
    - wavefunction 11y ago
      That's not really what I'm referring to. I understand that you are referencing the status of London as one of the main financial capitals of the world but I'm looking for more about the allusions towards some sort of special tax situation perhaps. Or maybe I'm misreading the allusions.
      - digi_owl 11y ago
        I think it is not so much about tax as it is about regulations. Something akin to a EU-wide Glass-Steagall.
  - robocat 11y ago
    the City of London Corporation, the local-government authority for the 1.2-square-mile slab of prime real estate in central London that is the City of London. The corporation is an ancient, semi-alien entity lodged inside the British nation state [snip] the corporation is an offshore island inside Britain, a tax haven in its own right. http://www.newstatesman.com/economy/2011/02/london-corporation-city http://www.newstatesman.com/economy/2011/02/london-corporati...
    - leg100 11y ago
      What makes it "a tax haven in its own right"? Is it subject to different taxation than the rest of London or the UK?
      - pjc50 11y ago
        No, it isn't. It's a strangely-constituted local authority. Combined with the "Guilds", which are effectively trade associations that hold dinners and occasionally public events in historical dress. It's a very cliquey environment, but that doesn't make all the conspiracy theories true. When people say "the city", they often mean "the UK financial industry", in the way that Americans say "Detroit" meaning "the US car industry". What the "city" may well get is favourable interpretation of complex ambiguous tax arrangements. That's the argument against e.g. Vodafone. What the "city" is afraid of is changes in EU law that seem highly technical but have the effect of damaging its business. The Tobin tax is one example. (London in general benefits from the stupid way property tax is done in the UK with finite "bands", so a family house and a multistorey mansion pay the same annual tax, but that's a separate issue.)
  - chriswarbo 11y ago
    The City of London is a special area inside London, which is filled with financial companies. https://en.wikipedia.org/wiki/City_of_London#Criticism https://en.wikipedia.org/wiki/City_of_London#Criticism
  - yoshamano 11y ago
    CGP Grey does a really good job giving an overview of the history of The City of London. https://www.youtube.com/watch?v=LrObZ_HZZUc https://www.youtube.com/watch?v=LrObZ_HZZUc Along with another video about the governing structure of The City of London. https://www.youtube.com/watch?v=z1ROpIKZe-c https://www.youtube.com/watch?v=z1ROpIKZe-c
    - wavefunction 11y ago
      Thanks!
charlesdm 11y ago
It's a race to the bottom. There are plenty of jurisdictions (i.e. BVI) with 0% companies. Most of these are used as SPVs to own property, shares, etc somewhere. If you can pay 1% or 0%, and it doesn't really matter where the company is based, which one do you pick?
- bmelton 11y ago
  The one with the best combination of real estate rates, corporation friendly body of law, best bargain labor pool on training and pay, best distribution access (for physical goods) or network infrastructure (for digital goods), etc etc. Taxes are a cost of doing business, and yes, businesses will optimize that cost wherever they can, but paying 1% less in taxes isn't a bargain if it increases your costs or lessens competitive ability elsewhere.

branchless 11y ago

This is why Cameron wants to have some "red lines" with the EU. He's terrified they are going to strangle The City.

wavefunction 11y ago
For those of us that are unfamiliar with the special situation with The City, can you perhaps elaborate a bit? I'm curious to learn more about what you're alluding to.
- digi_owl 11y ago
  As best i understand, since Thatcher dismantled UK industry it has been the one thing keeping the nation "afloat".
  - wavefunction 11y ago
    That's not really what I'm referring to. I understand that you are referencing the status of London as one of the main financial capitals of the world but I'm looking for more about the allusions towards some sort of special tax situation perhaps. Or maybe I'm misreading the allusions.
    - digi_owl 11y ago
      I think it is not so much about tax as it is about regulations. Something akin to a EU-wide Glass-Steagall.
- robocat 11y ago
  the City of London Corporation, the local-government authority for the 1.2-square-mile slab of prime real estate in central London that is the City of London. The corporation is an ancient, semi-alien entity lodged inside the British nation state [snip] the corporation is an offshore island inside Britain, a tax haven in its own right. http://www.newstatesman.com/economy/2011/02/london-corporation-city http://www.newstatesman.com/economy/2011/02/london-corporati...
  - leg100 11y ago
    What makes it "a tax haven in its own right"? Is it subject to different taxation than the rest of London or the UK?
    - pjc50 11y ago
      No, it isn't. It's a strangely-constituted local authority. Combined with the "Guilds", which are effectively trade associations that hold dinners and occasionally public events in historical dress. It's a very cliquey environment, but that doesn't make all the conspiracy theories true. When people say "the city", they often mean "the UK financial industry", in the way that Americans say "Detroit" meaning "the US car industry". What the "city" may well get is favourable interpretation of complex ambiguous tax arrangements. That's the argument against e.g. Vodafone. What the "city" is afraid of is changes in EU law that seem highly technical but have the effect of damaging its business. The Tobin tax is one example. (London in general benefits from the stupid way property tax is done in the UK with finite "bands", so a family house and a multistorey mansion pay the same annual tax, but that's a separate issue.)
- chriswarbo 11y ago
  The City of London is a special area inside London, which is filled with financial companies. https://en.wikipedia.org/wiki/City_of_London#Criticism https://en.wikipedia.org/wiki/City_of_London#Criticism
- yoshamano 11y ago
  CGP Grey does a really good job giving an overview of the history of The City of London. https://www.youtube.com/watch?v=LrObZ_HZZUc https://www.youtube.com/watch?v=LrObZ_HZZUc Along with another video about the governing structure of The City of London. https://www.youtube.com/watch?v=z1ROpIKZe-c https://www.youtube.com/watch?v=z1ROpIKZe-c
  - wavefunction 11y ago
    Thanks!

charlesdm 11y ago

It's a race to the bottom. There are plenty of jurisdictions (i.e. BVI) with 0% companies. Most of these are used as SPVs to own property, shares, etc somewhere. If you can pay 1% or 0%, and it doesn't really matter where the company is based, which one do you pick?

bmelton 11y ago
The one with the best combination of real estate rates, corporation friendly body of law, best bargain labor pool on training and pay, best distribution access (for physical goods) or network infrastructure (for digital goods), etc etc. Taxes are a cost of doing business, and yes, businesses will optimize that cost wherever they can, but paying 1% less in taxes isn't a bargain if it increases your costs or lessens competitive ability elsewhere.