Black into White
A decade of engagement
7th April 2009
It was a cold, wet day in April 1998 and the clocks were striking thirteen as the Isle of Man Treasury team considered the apparently Orwellian implications of the OECD’s Harmful Tax Competition Report.
Eleven years ago is a long time and it is easy to forget that in 1998 there was still a strong constituency in the Isle of Man which felt we should resist the perceived bullying tactics of this Paris based international bureaucracy.
However, wiser and far seeing counsel prevailed and a commitment was made in January 2001 to constructively engage with the OECD. Better to be in the tent than outside peering in. The early meetings with the OECD were frosty. Decades of stereotypical thought and offshore piracy had to be broken down by forensic presentation of the Isle of Man’s position and the forging of a relationship built on trust and personal friendships.
The Isle of Man’s early entry into the process enabled it to influence events.
This influence is manifested technically by the Model TIEA containing several clauses which the Isle of Man suggested.
It is also manifested by the Isle of Man being able to impart to the OECD the reality and concerns of micro-states like the Isle of Man seeking to make their way in a fast moving and at times frightening globalised world.
Additionally, I do believe that representatives of the Isle of Man such as Ian Kelly and John Cashen kept the whole process together during the early period of the initiative. I can recall one meeting of the Global Forum in Malta in July 2001 when John Cashen did, by his diplomatic skills, keep the whole of the “offshore” contingent onboard.
The White List is a tangible achievement of the work of Mr Cashen and Mr Kelly and latterly Malcolm Couch and Mark Shimmin.
Over the last decade there have been moments when the Isle of Man did begin to query whether the OECD would in turn deliver on its side of the bargain. The constant dredging up by other countries of the 1998 list naming and shaming the Isle of Man was a persistent irritant.
Indeed, there were many voices both onshore and offshore who questioned the wisdom of signing TIEAs before a “level playing field” had been established elsewhere. The Isle of Man regarded the “level playing field” as a shield not a sword, a negotiating device to use sparingly. It perceived it was in the Isle of Man’s interest to be seen as a co-operative jurisdiction whatever other jurisdictions chose or chose not to do.
That is not to say there were not lively debates both inside and outside Government as to the correct course to set. At times it did feel we were caught between the turning tide of international opinion (accelerated by the global downturn) and the strong commercial winds blowing eastwards from competitor jurisdictions.
It is a testament to the Treasury Minister steersman under the strategic aegis of COMIN and Tynwald that the Isle of Man held true to its course, delivered on it commitments and has had its trust in the OECD validated by the G20.
The OECD list and the anticipated favourable IMF country report to be published within the next 6 months provides a platform for the Isle of Man to do business with the global community as a responsible member of it.
Going forward the central issue will not be so much tax havens or offshore but rather cooperative or non-cooperative jurisdictions.
The platform’s bar will likely be raised too as the world will have to evolve to a workable system of automatic exchange for reasons not only of tax information but also of prudential monitoring of flows of capital. I believe the Isle of Man should join the process at an early stage to help inform and draft an international standard for automatic exchange as it did with the TIEA.
There will be many challenges ahead for the Isle of Man in the coming months as banking in particular retrenches and jobs are lost. A new operating model for the Isle of Man economy will have to be formulated to take account of the new world facing us.
If the Isle of Man tackles this with the same energy, commitment and vision which collectively we tackled the OECD’s initiative, we have a good chance of maintaining our prosperity. It will not be a time for faint hearts. The success of the OECD engagement has shown, however, that the Manx are at their best when faced with adversity. Quocunque jeceris stabit! |
